Challenges in Paying Duties, Taxes and More: Importer/Exporter Woes

A Custom duty could be understood as a tax imposed on the import and export of goods. The Indian government uses this duty to increase its revenue and regulate the movement of goods across international borders. Now we will have a look into the challenges facing customs administration.

What do you mean by Custom Duty?

All imports as well as some exports from the nation are subject to customs duty, a form of indirect tax. Taxes levied on the import and export of goods are referred to as import tariffs and export duties. Worldwide, tariffs are applied to the import and export of goods to raise money and/or shield home businesses from outside competition. Tobacco and alcohol are two products that have tariffs imposed on consumers to discourage public use.

It is levied according to the value of the goods or the dimensions, weight, and other similar criteria according to the goods. If the duties are based on the value of the goods, then they are called ad valorem duties, while the duties based on quantity/weight are called specific duties. Composite duties on goods are a combination of value and various other factors.

Exemption from Customs Duty Meaning

Custom duty exemption means that the central government of India has the right allow not to any duty to be charged on a particular item under the Customs Act of 1962. This can be done for a good that is strategic or secret or intended to be used for charitable purposes.

Types of Exemptions

Below are the types of duty exemptions-

Exemption from Customs Duty in India

There are several types of custom duty exemptions in India including exemptions for

• Oil India Limited (OIL)/ Oil and Natural Gas Corporations Limited (ONGC)
• Importation of classified goods by the government
• Imports for India’s defense needs are only for military hardware and software or research and development units under DRDO
• Central Policy Organization imports to equip their forces
• Exemption of goods from duty only on importation based on advance license (no actual user condition)
• Crude and petroleum product
• Raw materials for the production of CRGO steel, iron scrap, and nickel cathode.

Challenges Facing Customs Administration

The challenges facing customs administration are-

• Exporters are required to pay customs duties and interest for failure to fulfill export obligations under Advance Authorization, EPCG, and EOU Schemes. The licensing authority, under the DGFT, can close the case after payment.
• Customs duty and interest payments are not available online on the EDI system, requiring manual deposit in authorized banks. Banks require certification from customs authorities, which can be time-consuming and potentially corrupt. This leads to multiple visits to the customs office, resulting in a wastage of time and money.
• The Handbook of Procedure-2023 states that duty and interest payments should be made online through the EDI system, without verification or certification. This aligns with the Handbook of Procedure, but it can be avoided by creating an online facility. However, this practice contradicts the Handbook mandate, leading to harassment and contravention.
• Individuals or firms often face difficulties in depositing duty against show cause notices or confirmed duty demands and are often penalized for contravention of the Customs Act, 1962, regardless of their IEC status.
• Section 129DD of the Customs Act, 1962 requires appeals to be filed with a fee of Rs.1000/-. Banks refuse to accept this fee without certification, leading to commutation charges and other charges.
• The next issue involves a 7.5%/10% pre-deposit for appeal filing, which cannot be paid online through the ICEGATE portal or manually through TR-6 Challan, requiring certification from Customs authorities.
• The Customs Act and Rules do not require payments to be certified by Customs authorities, allowing for easier payment to the exchequer, despite challenges faced by individuals.
• To pay excise duty/service tax payments online through the ACES portal, users must provide their old login ID and password. If unavailable, they must contact the excise/service tax authorities. This complex procedure is unnecessary for making payments to the government.

Focusing on Problem Solving

A few problems can be addressed through-

Facilitation of trade and security

• Making sure the settlement process moves quickly and effectively in light of the increasing number of transactions.
• Coordinating the shift from a small number of high-value, bulk shipments to a large number of low-value, individual shipments.
• Controlling risks as a result of importers’ and the e-commerce supply chain’s ignorance.
• The sufficiency and correctness of the data received or quality assurance.
• Defining the function and duties of e-commerce companies to support governments.

Fair and efficient collection of duties and taxes

• Identification of misuse or misuse for purposes of illicit trade.
• Ensuring compliance with the rules of classification and origin.

Society protection

• Establishment of a specialized unit to search the web for information that could be useful in the prevention, detection, investigation, and prosecution of customs-related crimes.
• Enhancing international cooperation and ensuring that mutual legal assistance agreements are in place to allow for investigations or prosecutions when websites are hosted outside a state’s territory.
• Make the most of existing technologies, especially those related to data analysis.

Conclusion 

There might be other circumstances that we haven’t yet come upon. Resolving these issues can relieve government workers of needless workload strain while also saving time, money, and energy for people who plan to pay regardless. In this context, proactive measures by the government are required. Should this occur, it would represent an additional stride in supporting the ease of doing business.

In case of any query regarding the challenges facing customs administration, a team of expert advisors from Legal Window is here to assist you at every step. Feel free to reach us at admin@legalwindow.in.