Assessment of Customs Duty

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Assessment of Customs Duty

Central Excise Rules, 2002 define assessee and assessment. The customs duty must be assessed for the purpose of duty payment. The assessment here refers to two types of assessment. Firstly, assessment includes the self-assessment of duty and this is done by the assessee himself.

Secondly, it includes provisional assessment under Rule 7 of the Central Excise Rules, 2002. Here, assessee refers to any individual who has to pay the assessed duty. Assessee may also refer to a producer or manufacturer who produces excisable goods. Duty is paid when the goods are taken out of the warehouse and without the payment of duty no imported goods can be moved out of the warehouse.

Requisites for the Purpose of Assessment

Classification and Rate of Duty

For the assessment of a duty, it is imperative to first classify goods (imported) as per the Tariff schedule. In case any goods fall under the category of exempted goods, the effective rate of duty must be ascertained. It must also be ensured that if any other duties or taxes or cess is applicable to the imported goods.


If the duty is based on an ad-valorem basis, valuation must be in accordance with the methods as stated in the previous section. The total value is calculated as the product of unit value and total quantity.


As per the rule 6 of Central Excise Rules, 2002, the assessee himself has to make assessment of the duty applicable based on the correct classification and valuation. After the assessment, the assesse has to pay the required duty. It was introduced in Finance Act, 2011. After the self-assessment by the assessee, the assessment is scrutinised by a customs officer. In case during the scrutiny, the assessment is found incorrect, a reassessment can be done.

The assessee has to give in writing an application for the assessment of goods in case he is unable to make the assessment himself. The concerned customs officer may also make provisions so as to levy the duty on a provisional basis under specific conditions. These conditions may include a case where the officer is unable to verify self-assessment or when he finds it necessary to levy duty on a provisional basis.

Date for the Determination of the Rate of Duty and Tariff Value

Rule 5 of Central Excise Rules, 2002, describes the provisions for the determination of rate of duty and the tariff value.

Provisional Assessment

As discussed before, the officer may assess the imported goods on a provisional basis. The provisional assessment may take place under two situations:

  • In case the importer is unable to provide the supporting documents or information asked for the assessment of bill of entry or shipping bill, he can request the designated officer at the customs department for a provisional assessment of the goods.

  • In case the designated officer at the customs department may want to conduct further enquiry for the assessment of duty even after the submission of all required documents.

For the purpose of assessing duty on a provisional basis, the customs officer must make an assessment of the duty to be paid on a provisional basis. The provisional duty is an estimate and not the final duty to be paid. After this, the importer has to execute a bond. The amount of bond is the difference between the final duty that may be assessed and the provisional duty.

The bond terms are stated so that the importer has to pay the difference amount between the provisional duty and the assessed duty (if he paid less in the provisional duty). If the provisional assessment is made because some document was not submitted by the importer, he must submit the same within the time period of a month.

First Check & Second Check Clearance Procedure

You have already studied the first check and second check in the import procedure in the previous section. The import documents along with the B/E are assessed by an assessing officer after the B/E has been noted in the Import Noting Department. The assessing officer verifies the documents submitted. In case he finds that the goods must be examined in order to find the correct value and classification, he orders for the physical examination of the goods. The order for physical examination is given on the back side of the B/E.

The examination order is shown to the officer who examines the goods. The physical examination report is provided on the back side of the B/E and is sent to the assessing officer. The assessing officer at this stage has a responsibility of verifying the physical examination report with the details provided by the importer. The officer also verifies the classification and value of goods. After this, the officer also mentions the basic duty and any other additional duty and taxes (if applicable). At the end, the assessing officer signs the B/E.

Next, the B/E is sent for countersignature by the assistant commissioner. The duty amount is calculated and mentioned on the B/E. The importer has to deposit this amount in the customs treasury. After the amount is deposited, the original B/E is retained by the concerned official and a duplicate B/E with clearance permission on its reverse side is given to the importer. This stage is called the out of charge. After this, the importer collects his goods from the warehouse. This entire process constitutes the first check.

Now, there may be cases where the appraising officer allows taking the imported goods after the second check. In the second check method, the duty is calculated and paid after the assessment. The appraising officer also orders for the examination of imported goods on the back side of the duplicate of the B/E. The importer has to submit the goods to the examining staff after he has paid the duty. The importer can collect his goods from the warehouse after the goods are given the out of charge order.

Clearance Through Electronic Data Interchange (EDI) System

In India, Indian Customs Electronic Data Interchange System (ICES) is in place for the clearance of imports. In an EDI environment, all the documents related to import are processed electronically. All the departments and agencies involved in the processing of import documents can exchange information and documents electronically.

It can be said that the Indian Customs EDI System (ICES) helps in facilitating trade that can be done without the use of papers. The Indian Customs EDI System (ICES) has been developed jointly by Central Board of Excise and Customs (CBEC) and National Informatics Centre (NIC).

With reference to the import procedure, the B/E is processed electronically. For processing the B/E in an EDI (computer supported) environment, the following steps are performed:

  • The importer or his CHA files the B/E through the service centre. The importer is required to submit the copy of invoice, packaging list, and a signed declaration. The documents can also
    be submitted through Remote EDI System (RES).

  • At the service centre, a checklist is generated after the importer files the B/E with the service centre. This checklist must be verified by the importer and submitted to the service centre after correcting any errors and signing the checklist. In RES, the data provided by the importer is evaluated and it leads to two types of events. In case there is any discrepancy in the data, the importer is sent a message about the same. In the second case, if the data is valid and no error is found, the data is accepted by the system and acknowledgement is sent to the importer.

  • After the data is accepted by the system, the B/E is generated in an electronic form, which is accessible by the group appraiser. At this stage, the appraiser assesses the B/E. After this, the B/E is marked to the audit appraiser who performs the audit of the B/E. Now, at this stage, the B/E appears on the screen of the group assistant commissioner. If the B/E is approved by the group assistant commissioner, the TR-6 challan along with the
    examination order is printed in the service centre.

  • There may be cases when the appraiser may find errors in the tariff classification or declared value and he may raise query for the same. In such cases, it is the duty of the importer to call up at the service centre and enquire if there is any query for his B/E. The importer must resolve queries (if any) through the service centre.

  • At this stage, the importer has to make payment of duty through customs treasury or through an authorised bank.

  • The concerned officer of the bank enters the payment details on their EDI terminal. At this stage, the B/E appears on the appraiser’s screen.

  • At the time of the examination of goods, the importer has to present B/E and the duty payment challan.

  • The concerned customs officer enters his report (after due examination) in the EDI system. After complete examination, the appraiser gives the out of charge order. This order is also given in the system. The system prints two copies of the B/E, one copy is given to the importer and the other is maintained for records.

  • If during the examination, any discrepancies are found, they are sent to the group appraiser along with the comments of the customs officer who performed the examination.

  • The group appraiser may revise his assessment or even raise a query based on the examination report and comments of the examining officer.

End Use Bonds and Execution of Bonds

There may be cases when the importer wants to avail duty-free assessment or take advantage of the exemptions on some goods. For availing such benefits under different schemes (such as Export Promotion Scheme), it is necessary for the importer to execute an end use bond. The bond must have bank guarantee or some other surety.

The bond must be executed in a prescribed format with the appraising officer. In case, the importer is unable to execute a bond, the normal amount of duty as prescribed in the tariff schedule is applicable on those imported goods.

Examination of Goods and Green Channel Facility

As mentioned earlier, all the goods that are imported must be examined so as to verify that the information regarding the imported goods provided in the B/E is correct. For the purpose of examination, samples are drawn from the whole consignment of the imported goods. The importer may request for the examination of goods just before the duty assessment in case he does not have full information regarding import goods.

As discussed earlier, the customs officer may also order for the examination before duty assessment as per his judgment. Such examination is the first check. The importer must request for first check along with the reason for such check at the time of filing B/E. The appraiser mentions the examination order on the back of the B/E and returns the same to the importer. The importer then takes this B/E to the place where the examiner scrutinises the goods. The examiner records his findings in an examination report.

If the group appraiser has asked for the samples, the samples are sealed and sent to the group. The importer then takes the B/E to the assessing officer for the calculation of duty and the B/E is then signed and countersigned by the assessing officer and the assistant commissioner respectively. The goods may be examined under the second check. Green channel facility for import means that imports are cleared without going through the usual examination.

The government provides the green channel facility to importers and exporters of those goods for which it wants to promote. This facility is restricted for a few particular importers,such as Hyundai, MRF, and Philips India. These importers have to file a declaration at the time of filing the B/E. No physical examination is done for goods. However, the physical examination may be carried on under special circumstances. For example, if the customs officials have any doubts regarding the goods description and quantity, the physical examination may be allowed.

Payment of Duty

The payment of duty must be made through TR-6 challan and authorised banks only. The importer must verify the bank and branch before payment. The bank furnishes all the payment details in the TR-6 challan and submits it to customs authorities. E-payment of duty should also be made. This is because since 2012, e-payment has been made mandatory for the importers that are registered under the Accredited Clients Programme (ACP) and those who pay duty more than ₹1 lakh or more per B/E.

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