GST Course

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Globalisation refers to the growing economic interdependence of countries across the globe through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology. Its major impact on developing countries is acceleration of liberalization of foreign trade and investment.

“Foreign trade” refers to trade between two or more countries. All countries participating in international or foreign trade import those goods and services from abroad which they are less efficient to produce or cannot produce at all. Similarly, they export those goods in the production of which they are more efficient due to their geographical condition and expertise of their labour force. In modern times there is no country, which does not participate in international trade, as no one cannot afford to be self-reliant.

There are three different type of Foreign Trade:

  1. Import Trade: Import trade refers to purchase of goods by one country from another country or inflow of goods and services from foreign country to home country.
  2. Export Trade: Export trade refers to the sale of goods by one country to another country or outflow of goods from home country to foreign country.
  3. Enterpot Trade: Enterpot trade is also known as Re-export. It refers to purchase of goods from once country and then selling them to another country after some processing operation.

As per the Ministry of Commerce & Industry in current scneario, Imports of merchandise, during April 2018 were valued at US $ 39.63 Billion (Rs 260,084.67 crore) which was 4.60 per cent higher in Dollar terms and 6.43 per cent higher in Rupee terms over the level of imports valued at US $ 37.88 Billion (Rs. 244,380.52 crore) in April 2017.

Imports of Services, during March 2018 were valued at US $ 10.28 Billion (Rs. 66,841.93 Crore) registering a positive growth of 1.35 per cent in dollar terms as compared to positive growth of 3.01 per cent during February 2018 (as per RBI’s Press Release for the respective months).

Exports (including re-exports) of merchandise, during April 2018 were valued at US $ 25.91 Billion as compared to US $ 24.64 Billion during April 2017 exhibiting a positive growth of 5.17 per cent. In Rupee terms, exports were valued at Rs. 170,052.96 crore in April 2018 as compared to Rs. 158,913.79 crore during April 2017, registering a positive growth of 7.01 per cent. 

Exports during March 2018 were valued at US $ 16.83 Billion (Rs. 109,456.91 Crore) registering a positive growth of 7.16 per cent in dollar terms as compared to negative growth of 3.84 per cent during February 2018 (as per RBI’s Press Release for the respective months).

Export and Import are governed by Foreign Trade Policy (FTP) of India. As per FTP, all the exporter or importer or by the licensing/Regional Authority or by any other authority for purpose of implementing the provisions of Foreign Trade (Development & Regulation) Act, the Rules/orders made thereunder and the provisions of Foreign Trade Policy are required to follow the procedure specified by Director General of Foreign Trade (DGFT), an attached office of the Ministry of Commerce & Industry, GOI. All the procedure or amendments shall be published by means of Public notice.

For the purpose of Import and Export, the person is required to obtain license from DGFT along with Importer Exporter Code (IEC) unless exempted.

“Person” means Importer or Exporter.

A person can apply to DGFT in following manner:

  1. Make filling/submission of all applications online, till the time the facility for online application is not available, applications will continue to be received at the counter.
  2. For speedy disposal of applications, "Counter Assistance" will function in all offices of DGFT. An FTDO shall be in charge of counter in each office. On presentation of application at the counter, applicant would be advised whether his application is complete or there is any deficiency that needs to be rectified.
  3. Counter Assistance may also be availed of for amendments of minor nature/enquiries. Applications, in such cases, will be received in regional offices at counter against a proper receipt. Authorisation/license /list /enquiry shall be returned after carrying out necessary amendments/giving necessary reply as far as possible on the same day, across the Counter.

After obtaining the license from DGFT import/exporter are required to obtain Importer-Exporter Code (IEC) number from the office of Director General of Foreign Trade (DGFT). However this number is not necessary for imports from Nepal and Bhutan. An IEC allotted to an applicant shall have permanent validity unless cancelled by the competent authority. The IEC will cover all branches/divisions/units/factories of the applicant.

The steps involved in applying and acquiring Import Export Code (IEC):

Online Procedure:

  • Application form can be obtained from IEC is available online from the website of DGFT, and might be downloaded;
  • An application should be made in form no. ANF 2A
  • A bank account and PAN (permanent account number ) are mandatory prerequisites for applying for an IEC;
  • Parts A, B, and D of an IEC application form are needed to be filled in and submitted for acquiring a new code;
  • Filled in the application must be signed by the applicant on every page;
  • Together with the application certain documents are required to be submitted;
  • The documents that are required to be submitted are – copy of valid PAN; copy of bank certificate; and photograph of applicant;
  • A payment of Rs.250/- (Two hundred fifty rupees only) as the IEC application fee, should be sent along with your applications. This money needs to be sent by EFT (electronic fund transfer) directly to DGFT;

Offline Procedure:

  • For offline submission, a demand draft for Rs.250/-(Two hundred fifty rupees only) payable to Regional Office of DGFT needs to be submitted;
  • For offline submission documents required are -self-certified copy of PAN; copy of banker’s certificate attested by bank, and two passport size photographs;
  • A self-addressed envelope with Rs.30/- (Thirty rupees only) must also be sent with filled in application form and requisite documents.

Note: New provisions as per FOREIGN TRADE POLICY - 2015-2020-with the implementation of GST, PAN of an entity will be used for the purpose of IEC, i.e., IEC will be issued by DGFT with the difference that it will be alpha numeric and will be same as PAN of an entity. Application for IEC will be made to DGFT and applicant’s PAN will be authorized as IEC.

Apart from above an exporter is required to obtain Registration-cum-Membership Certificate (RCMC) which is valid for five years ending 31st March of the licensing year, unless otherwise specified. It is a membership with Export Promotion Council (EPC). EPC is a body under Government of India, which has been given the task of Promoting Exports. This Body organizes various Trade shows, Helps Exporting Community with their problems, acts as a connection between Exporting Community and Government. Hence RCMC is related to Exports only and not Imports.

After obtaining the above mentioned license and authorization before the clearance of the goods an Importer is required to comply with following standards or Act based on the product imported:

  1. Bureau of Indian Standards (BIS): Importation of ITC (HS) classification of Export and Import items is subject to the provision of mandatory Indian Quality Standards. For the compliance of this requirement the manufacture/exporter of these products to India are required to obtain a registration with Bureau of Indian Standards (BIS).
  2. Prevention of Food Adulteration Act, 1954: Importer of all edible/food products including tea, domestic sale and manufacture are required to comply with the quality and packaging requirement mentioned in Prevention of Food Adulteration Act, 1954.
  3. Environment (Protection) Act, 1986: Importer of textile and textile article is permitted subject to the provision of Environment (Protection) Act, 1986. For the purpose of this act an import consignment should be accompanied by a pre-shipment certificate from a textile testing laboratory accredited to the National Accredition Agency of the Country of Origin. In case the certification is not available, the consignment will be cleared after getting a sample of the imported consignment tested and certified from any of the agencies indicated in Public notice.
  4. Import of alcoholic beverage is classified in ITC (HS) Classification of Export and Import items is subject to various mandatory requirement as stipulated by various State Governments.

“ITC (HS) Classification” is a compilation of codes for all merchandise/goods for import/export. All the import/export policies for all the goods are indicated against each item in ITC (HS) schedule. 

“Import” as per Custom Act, 1962 means bringing goods into India from a place outside India. The FTP regulates import of goods.

It can be done in following manner:

  1. Goods imported by Sea
  2. Goods imported by Air
  3. Goods imported by Land
  4. Goods imported by Post
  5. Goods imported by passengers as their baggage
  6. Ship stores considered to be imported and charged to custom duty

Import by Sea, Air and Land is governed by normal provision of Custom Act, 1962 and for remaining there is special provision.

“Goods” as per Section 2(22) of the Custom Act, 1962, Goods include:

  1. Vessels, aircrafts and vehicle
  2. Stores
  3. Baggage
  4. Currency and negotiable instruments
  5. Any other kind of movable property

For the purpose of import, goods have been divided into following categories:-

  • Prohibited Goods: not permitted to be imported at all e.g. Narcotic Drugs
  • Restricted Goods: imported against a license or subject to certain conditions e.g. Firearms and ammunition
  • Canalised Goods: permitted to be imported only through State Trading Enterprises (STEs).
  • Free Goods: can be imported without any license or condition

The provision for procedure for importation of goods are given in Section 29 to Section 38 and Section 46 to Section 49 of Custom Act, 1962.As discussed below:

Arrival of Vessels and Aircrafts in India (Section 29): As per this provision, vessels or aircrafts entering to India from outside India should land at custom port or custom airport. Howsoever the Central Board of Excise and Custom can permit landing of vessel or aircrafts at any other place other than custom port or custom airport.

In failure to comply with this provision the Person in charge will be liable to pay penalty and confiscation of the imported goods.

“Persons in Charge” means 

  • Vessel- the master of vessel
  • Aircraft-the commander or the pilot-in-charge of the aircraft
  • Railway train- the conductor, guard or other person having the chief direction of the train
  • Any other conveyance- the driver or other person-in-charge of the conveyance

Import Manifest or Import Report (Section 30): As per the provision, at the time of arrival of vessel on the approved custom port or airport the person in charge is responsible to deliver the import manifest. 

Import Manifest is a detailed information given to customs regarding the goods in vessel/aircraft which is brought in at the authorized port/airport. 

Entry Inward (Section 31): refer to the permission granted by proper officer to the master of vessel to unload goods. It is granted only when IGM has been filled by the master of vessel. However, if proper officer is satisfied that there is sufficient cause for non-filling of vessel, then he can grant entry prior to filling IGM. This provision is applicable only on vessel.

Unloading/loading of the Goods:

  • Section 32: The imported goods cannot be unloaded unless it is not mentioned in the IGM or permitted by proper officer.
  • Section 33: Unloading/loading of the goods can be done only at the authorized places as per the provision of Custom Act.
  • Section 34: Unloading/loading of the goods can be done under the presence of the Customer officer until and unless Board by the notification allow the proper office to permit the unloading of the goods in the absence of proper officer.
  • Section 35: In case were the ship cannot come to the shore for unloading/loading of the goods due to non-availability of berth or due to some other reason in that case goods is transferred to the boat. In this situation goods should be accompanied by a boat note to be called as water-borne until and unless proper officer exempt it.
  • Section 36: The goods cannot be unloaded/loaded on Sundays or other holidays observed by the Customs Department, or any other day after working hours.
  • Section 37: Proper officer may, at any time, board any conveyance carrying imported/exported goods and may remain on such conveyance for such period, as he consider it necessary.
  • Section 38: Proper officer may require the person in charge of any conveyance to produce any document or answer any question and such person shall be bound to comply with the same.

Clearance of the Goods:

  • Goods with Custodian (Section 45): Till the time imported goods are not cleared for home consumption or are warehoused or are exported for transshipment, they shall remain in the custody of such person as may be approved by Principal Commissioner/Commissioner of Custom know as custodian.
  • Bill of Entry (Section 46): It is an application made by the importer to the proper officer for clearance of goods. The application can be made in following manner:
  • Electronic Declaration to the Custom Computer System through network facility as per the norms of The Bill of Entry (Electronic Integrated Declaration) Regulation 2011.
  • Manual Declaration is allowable in case where electronic submission is not feasible.

Based on the purpose of goods an importer can make three types of Bill of Entry:

  • Form 1 (White)- for Home Consumption
  • Form II (Yellow)- for warehousing (into bond)
  • Form III (Green)- for ex-bond clearance for Home consumption (ex-bond)

For the purpose of clearance and duty, four copies of Bill of entry are generated:

  1. Original: meant for the customs authorities for assessment and collection of duty.
  2. Duplicate: to the custodian for release of the goods.
  3. Triplicate: for the importer
  4. Quadruplicate: copy to be presented to the bank or RBI for the purpose of making remittance for the imported good.
  • Clearance of Goods for Home consumption (Section 47): Under this section proper officer permit the clearance of the goods once he is satisfied that the goods entered into home consumption are not prohibited and appropriate duty and any charges payable are paid.

In the regime of GST, Countervailing Duty(CVD) and Special Additional Duty (SAD) will be subsume in GST and import of goods and services in India would be treated as inter-state and will be attracting the provision of IGST, however, Basic Customs Duty will continue to do its round in the import bills as per Custom Act.

An importer can clear the goods after paying Custom Duty and Integrated GST Tax.

  • Disposal of Goods not Cleared (Section 48): Goods imported into India which are not cleared for home consumption or warehoused or transshipped within 30 days of their landing or within such further time as Assistant Commissioner of Customs may allow or if the title to any imported goods is relinquished, such goods may, after notice to the importer and with the permission of the proper officer be sold by the custodian.
  • Storage of imported goods in warehouse pending clearance (Section 49): In case of imported goods, whether dutiable or not, are entered for Home consumption but the importer is not sure about its clearance. In this case, he may apply to Assistant Commissioner/Deputy Commissioner for the permitting the storage of goods in Public warehouse for a period of 30days or in Private warehouse in can public warehouse is not available. However such goods is not to be considered as deemed to be warehoused goods and provision of warehouse will not apply.

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Category Custom, Other Articles by - CA. Sakshi Singh 



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