30-Day Series on the Customs Act 1962 and FTP 2023 – an initiative of Author CA NAVJOT SINGH where the author will dissect core provisions, recent jurisprudence and practical compliance strategies under the Customs Act 1962 and the Foreign Trade Policy 2023.
Advertisements
1. Executive précis
The Bill of Entry is the statutory declaration that triggers every act of import assessment in India.
- Legal base – Section 46 of the Customs Act 1962 requires an importer (or a licensed Customs Broker) to present a Bill of Entry electronically before the goods are cleared.
- On submission, the Customs Automated System generates a unique entry number; from this moment, valuation, tariff classification, rate of duty and policy compliance are locked in and the Risk Management System decides the level of scrutiny.
2. Types of Bill of Entry and Their Statutory Hooks
| # | Type | Purpose | Statutory Link | Date for Rate of Duty | Practical Notes |
| 1 | Home- Consumption | Direct clearance into the domestic market | Section 46 Customs Act | Section 15 (1)(a): date of presentation | Duty must be paid within one working day (Section 47); AEOs may defer. |
| 2 | Warehousing / Into-Bond | Transfer to a customs‑bonded warehouse without duty | Section 46 + Chapter IX | Section 15 (1)(b): date of ex‑bond clearance | No duty now; interest on Basic Customs Duty starts after 90 days. |
| 3 | Ex‑Bond / Clearance for Home‑Consumption | Duty‑paid clearance out of warehouse | Section 68 Customs Act | Section 15 (1(b): date of this BoE | Captures any change in tariff or exemption while warehoused. |
| 4 | Provisional (under guarantee) | Where value, quantity or quality is uncertain | Section 18 Customs Act | Provisional at first; inimizes on reassessment | Bond for differential duty + 10 % security; interest from original entry. |
| 5 | Courier / Postal / E‑Commerce | Expedited processes under Courier Imports and Exports Regulations | Section 90 Customs Act & rules | Same as Type 1 | Value ceiling of ₹ 5 lakh per consignment for express clearance. |
3. The Assessment Prism
- Tariff Classification – governed by the First Schedule to the Customs Tariff Act 1975 and the Six General Rules of Interpretation (landmark: Commissioner of Customs v. Sony India Ltd.).
- Valuation – Section 14 and the Customs Valuation (Determination of Value of Imported Goods) Rules 2007 (landmark: Eicher Tractors Ltd. V. Commissioner of Customs).
- Rate of Duty – Basic Customs Duty under Section 12 Customs Act, Integrated GST and Compensation Cess under Section 3 of the Customs Tariff Act (case: Hyderabad Industries Ltd. V. Union of India).
- Foreign Trade Policy Compliance – Importer‑Exporter Code, licence conditions, end‑use restrictions and duty‑exemption scheme obligations.
4. End‑to‑End Clearance Workflow
| Step | Action | Reference | Practical Tip |
| 1 | Verify import policy status (free / restricted / prohibited) for the eight‑digit ITC‑HS code. | Para 2.03 & 2.17 FTP 2023; ITC‑HS | Screen early to avoid detention. |
| 2 | Arrange import‑related documents (invoice, packing list, contract, insurance, BL/AWB, certificate of origin, etc.). | Regulation 10 of BoE (EID&PP) Regulations 2018 | Keep scans ready for e‑SANCHIT upload. |
| 3 | File electronic BoE on ICEGATE before arrival or within prescribed time. | Section 46 Customs Act | Early filing inimizes late fees. |
| 4 | Self‑assess classification, valuation and duty through the integrated declaration. | Section 17(1) Customs Act | Add assists under Rule 10(1)© where applicable. |
| 5 | Pay duty as per self‑assessment or reassessment. | Section 47 Customs Act | Deferred‑payment facility for AEO Tier II/III. |
| 6 | Goods examination (if selected) and issuance of Order‑out‑of‑Charge. | Section 17(5) Customs Act | Proper labelling reduces exam time. |
| 7 | Maintain records for five years and respond to audits. | Sections 99 & 28AAA; CBIC Audit Regs 2023 | Keep valuation worksheets handy. |
5. Worked Valuation Illustration
Scenario: Import of industrial valves from the United States
Invoice price USD 20 000 (₹ 16 60 000 at ₹ 83)
Ocean freight USD 2 000 (₹ 1 66 000)
Insurance USD 200 (₹ 16 600)
Design charge paid in India ₹ 1 00 000
| Computation | Amount (₹) |
| CIF value (83 × 22,200) | 18,42,600 |
| Add: assists (Rule 10(1)(c)) | 1,00,000 |
| Assessable value | 19,42,600 |
| Basic Customs Duty @10% | 1,94,260 |
| Social Welfare Surcharge @10% | 19,426 |
| Sub‑total | 2,13,686 |
| Integrated GST @18% | 3,88,131 |
| Total duty payable | 5,44,977 |
6. MOOWR Scheme & the New Section 65A—Where Warehousing
Meets Assessment
6.1 MOOWR at a Glance
- Enabled by Section 65 Customs Act; operationalized through the Manufacture and Other Operations in Warehouse Regulations, 2019 (MOOWR).
- Core features: duty deferment on both BCD and IGST, no export obligation, no minimum investment, single digital account, and record-based (not physical control) compliance.
- Intersects with FTP because MOOWR units may simultaneously avail Advance Authorization or EPCG;
6.2 Section 65A—Game-Changer for BoE & IGST
| Clause | What it says (Finance Act 2023 insertion) | Practical impact on MOOWR operations | Assessment link |
| 65A(1)(A) | Goods admitted for Section 65 operations must have IGST & Compensation Cess paid upfront; only BCD can be deferred. | Deferment benefits now limited to BCD; working capital rises. | IGST forms part of landed cost for valuation worksheets. |
| 65A(1)(B)(i) | Importer must file a BoE for Home-Consumption (not warehousing) before depositing goods in the warehouse. | Two BoE streams: “full duty paid” vs “IGST paid only.” Customs EDI distinguishes them. | BoE date under S. 15 fixes BCD rate; IGST already paid. |
| 65A(1)(B)(ii)/(iii) | IGST & Cess to be paid again if goods move from one warehouse to another unless already discharged. | Limits inter-warehouse transfers without tax. | Check duty ledger before transfers to avoid double-tax. |
| 65A(1)(B)(iv) | Bond under S. 59 still required, but amount equals unpaid BCD only. | Lower security outlay than old “all-duty” bond. | Bond number referenced in assessment order. |
| 65A(1)(C) | Unpaid BCD must be settled before ex-bond clearance. | Duty deferment window now ends on domestic clearance; no interest. | Ex-bond BoE under S. 68 will trigger BCD payment. |
| 65A(2) | Grandfathering: stocks warehoused before the notified date keep old (full deferment) benefit. | Maintain separate inventory ledgers for pre-65A and post-65A goods. | Audit officers will verify timestamped BoE numbers. |
| 65A(3) | Government may exempt specific goods/sectors from 65A through notification. | Watch CBIC alerts; IGST deferment may revive for priority sectors. | Update ERP tax codes when exemption issued. |
Industry note: The amendment is not yet notified (as on 18 May 2025), so full IGST deferment under MOOWR still applies today, but businesses should calibrate pricing and cash-flow models in anticipation.
7. Availing Duty Exemption Schemes under FTP 2023
Foreign Trade Policy (FTP) 2023 offers several duty‑exemption schemes that can dramatically reduce or defer customs levies on inputs and capital goods. Properly pairing these schemes with the Bill of Entry process ensures cash‑flow efficiency and compliance.
| Scheme | Purpose | Imports Covered | Core Conditions | FTP 2023 Reference |
| Advance Authorisation (AA) | Duty‑free import of inputs for physical export | Raw materials, components, fuel, oil, catalysts | Satisfy export obligation (EO) within specified timeframe; no IGST exemption unless separately notified | Para 4.03 4.36 |
| Duty‑Free Import Authorisation (DFIA) | Post‑export duty‑free replenishment / replacement of inputs | Inputs used in manufacture of export product | Transferable after EO fulfilment and realisation of export proceeds | Para 4.37 – 4.44 |
| Export Promotion Capital Goods (EPCG) | Concessional 0% or 3% duty on capital goods for producing exports | Capital goods (machinery, spares, fixtures) | Average export obligation + specific EO over 6 years; IGST payable unless exempt | Para 5.01 – 5.20 |
| SEZ Procurement | Duty‑free supply to Special Economic Zone units/developers | Raw materials, capital goods, consumables | Supplies count as export for DTA seller; comply with SEZ Rules 2006 | Chapter 6 |
| Deemed Export Benefits | Refund of duties/taxes on supplies regarded as exports (e.g., EPC contracts) | Goods manufactured in India supplied to EOUs, nuclear projects, etc. | Recipient/supplier to file e‑applications on DGFT; no physical export | Para 7.01 – 7.12 |
Practical 7‑Step Flow to Avail FTP Duty‑Exemption Schemes
- Identify export product or service roadmap and select appropriate FTP scheme (AA, DFIA, EPCG, etc.) based on input profile and capital intensity.
- Register on the DGFT portal (www.dgft.gov.in) and ensure IEC, RCMC, and digital signature are active.
- Prepare online application with BoE‑linked data: product ITC‑HS codes, input–output norms, past export turnover, and proposed export obligation.
- Submit application on DGFT portal, pay fee, and track issuance of licence/e‑Authorisation; download PDF bearing digital QR code.
- At import stage, file Bill of Entry quoting licence number and scheme code; execute bond or bank guarantee with customs as required.
- Maintain separate records of imported goods, production, and exports; upload export data periodically on DGFT portal to monitor EO fulfilment.
- Apply for redemption/closure: obtain Export Obligation Discharge Certificate (EODC) from DGFT and submit to customs for bond cancellation.
8. Takeaways for Practitioners and Businesses
- File the Bill of Entry early and electronically—this single act locks duty rates, valuations and policy compliance.
- Apply correct HS classification supported by catalogues and rulings to avoid demands and penalties.
- Plan valuation thoroughly: add assists, design fees and royalties up‑front; audits focus on hidden costs.
- Leverage FTP 2023 duty‑exemption schemes (AA, DFIA, EPCG) but track export obligations in a calendar.
- Use bonded warehousing or MOOWR to defer Basic Customs Duty; budget for upfront IGST once Section 65A is notified.
- Maintain digital records and reconcile BoE data with GST returns monthly to pre‑empt mismatch notices.
- Secure Authorized Economic Operator (AEO) status for deferred duty payment and fewer examinations.
- Monitor CBIC and DGFT notifications; a single change in policy can affect duty liability or licence validity overnight.
Feedback /suggestions welcome at CA Navjot Singh | navjot.singh@taxtru.in | +91 9953357935
Share this content: