economic reforms BBA STUDENTS

What is Research? Write a note about Features, Characteristics and Limitations of research

What is Research? Write a note about Features, Characteristics and Limitations of research

Meaning and Definition of Research
Research in simplified terms means searching for the facts searching for the replies to the various queries and also for the solutions to the various problems. Research is an inquiry or an investigation with a specific purpose to fulfill, it helps in clearing the various doubtful concepts and tries to solve or explain the various unexplained procedures or phenomenons.

According to the encyclopedia of social science, research can be explained as ‘the manipulation of generalizing to extend, connect or verify knowledge.’

The features that a good research procedure must possess are –
1. Should be systematic in nature.
2. Should be logical.
3. Should be empirical and replicable in nature.
4. Should be according to plans.
5. Should be according to the rules and the assumptions should not be based on the false bases or judgments.
6. Should be relevant to what is required.
7. Procedure should be reproducible in nature.
8. Controlled movement of the research procedure.

Qualities of a good researcher can be summarized as – 
1. Method of approach – The researcher should adopt correct procedure for identifying a problem and then for working on it, to find a solution for that problem.

2. Knowledge – The researcher should be well aware and should have complete knowledge and information of the field of investigation so that he can go in for correct planning and then implementation of the correct and effective methods for selection of the problem and then for solving it.

3. Qualification – The researcher should have a good back ground of study, which will enable the researcher to have a better knowledge and understanding of the subject.

4. Attitude – The researcher must have a vision of his own, an aim with some objectives to achieve something.

5. Should have an open thinking.

6. Should be stable, having consistent thinking.

7. Should be honest, sincere, brave and ambitious.

Characteristics of research – 
1. Research is based on the scientific method.
2. Helps in answering various pertinent questions.
3. It is an organized, planned and patient investigation or a critical enquiry.
4. It has logical roots, helping to establish facts or principles.

Limitations of research – 
1. Problems of collection of data and conceptualization may occur.
2. Repetition problems.
3. Outdated and insufficient information system may cause problems.
4. Sometimes lack of resources becomes an obstacle.
5. Nonavailability of trained researchers.
6. Absence of code of conduct.

What are the various types of research?

What are the various types of research?

1. Pure research 
a. Also called as the fundamental or the theoretical research.
b. Is basic and original.
c. Can lead to the discovery of a new theory.
d. Can result in the development or refinement of a theory that already exists.
e. Helps in getting knowledge without thinking formally of implementing it in practice based on the honesty, love and integrity of the researcher for discovering the truth.

2. Applied research 
a. Based on the concept of the pure research.
b. Is problem oriented.
c. Helps in finding results or solutions for real life problems.
d. Provides evidence of usefulness to society.
e. Helps in testing empirical content of a theory.
f. Utilizes and helps in developing the techniques that can be used for basic research.
g. Helps in testing the validity of a theory but under some conditions.
h. Provides data that can lead to the acceleration of the process of generalization.

3. Exploratory research 
a. Involves exploring a general aspect.
b. Includes studying of a problem, about which nothing or a very little is known.
c. Follows a very formal approach of research.
d. Helps in exploring new ideas.
e. Helps in gathering information to study a specific problem very minutely.
f. Helps in knowing the feasibility in attempting a study.

4. Descriptive research
a. simplest form of research.
b. More specific in nature and working than exploratory research.
c. It involves a mutual effort.
d. Helps in identifying various features of a problem.
e. Restricted to the problems that are describable and not arguable and the problems in which valid standards can be developed for standards.
f. Existing theories can be easily put under test by empirical observations.
g. Underlines factors that may lead to experimental research.
h. It consumes a lot of time.
i. It is not directed by hypothesis.

5. Diagnostic study
a. Quite similar to the descriptive research.
b. Identifies the causes of the problems and then solutions for these problems.
c. Related to causal relations.
d. It is directed by hypothesis.
e. Can be done only where knowledge is advanced.

6. Evaluation study 
a. Form of applied research.
b. Studies the development project.
c. Gives access to social or economical programmes.
d. Studies the quality and also the quantity of an activity.

7. Action research 
a. Type of evaluation study.
b. Is a concurrent evaluation study.

Explain Data Presentation and Processing

Explain Data Presentation and Processing

Introduction
After the collection of the data has been done, it has to be then processed and then finally analyzed. The processing of the data involves editing, coding, classifying, tabulating and after all this analyzation of the data takes place.

Data Processing
The various aspects of the data processing can be studied as follows

1. Editing of data: – This aspect plays a very vital role in the detection of the errors and omissions and then helps to correct these errors. By this step, there occurs a large amount of increase in the degree of accuracy, consistency and homogeneity. By this method, coding and tabulation of the data is done and also scrutiny in a very careful manner of the completed questionnaires takes place.

Editing of the data can be done in the following two stages:-

• Field Editing – In this step, the reporting firms are reviewed by the investigator and then the translation of what the latter has noted in the abbreviated form takes place. This stage of editing, views writing of the individuals and proper care is taken during this step, in order to avoid correction of the errors simply by the guess work.

• Central Editing – This step is done after the completion and the return of all the forms of schedules to the headquarters. In this type of editing, edition of all the forms is done carefully and thoroughly by a single person only in a small study and by a small group of persons in case of a large study. The errors may be corrected by the editor and he should be aware of the various instructions and the codes that are given to the interviewers while editing.

2. Coding of Data: – This step involves assignment of some symbols, either alphabetical or numerals or both, to the answers. By doing this coding of the data, analysation of the data can be performed in a much efficient manner but a very vital point to be kept in mind here is that there should be no errors while assigning the codes or should be at the minimum possible level.

3. Classification of Data: – The step of classification in general terms can be defined as the arrangement of the data into groups and classes depending on the resemblance and the similarities. With the help of the classification of the data, the entire data can be condensed and this condensation can be done in such an elegant way that the various important characteristics can be very easily noticed. The various features of the variables can be compared and the data in a tabular form can be prepared.
With the classification of the data, one can highlight the salient characteristics of the data at a glance.

Types of Classification – 
a. Geographical Classification – Here classification of data takes place on the basis of a particular area or a particular region. For e.g. when we consider production of wheat state wise, this type of classification refers to the geographical classification.

b. Chronological classification – This type of classification involves classification of the data on the basis of the time of its occurrence.

c. Qualitative classification – Here classification of data takes place on the basis of some of the features, which are not having the ability of measurement. In a dichotomous or a simple type of the classification the division of the attribute or the feature takes place and two classes are formed after the division. One has the ability of possessing the attribute while the other does not possess the attribute.

d. Quantitative classification – In quantitative classification, the classification is done based on the attributes or the features that can be measured. Quantitative data can be further divided into two stages, namely discrete and continuous.

For a classification to be good in nature and working, it must possess the following set of features –

1. Data should be classified in such a way that it can be easily altered or changed with time, depending on the various situations and environment.

2. Classification of the data should be such that the data should be objective oriented.

3. A classification should never be rigid in nature, as in the case of the presence of rigidity, the classification of the data will not be able to correct the results.

4. Data classification should always be simple in nature and should also be very clear.

5. Should also be homogeneous i.e. data being kept in a particular class should be homogeneous in nature.

6. Stability forms a very major and a critical feature that should be present in a classification for it to be a good one. Stability in classification can be only achieved if minimum numbers of the changes are done in the data.

4. Tabulation of the Data – Classification of the data and the tabulation of the data have been observed to be interrelated. In this step of the tabulation of the data, data after it has been classified is then arranged in the form of the tables.

In general terms, it can be said that the tabulation of the data involves orderly arrangement of the data in columns and the rows and this step takes place after the classification of data has been done.
This step acts as the final step in the collection and compilation of the data and tabulating helps a great deal in the condensation of the data and also in the analysation of the relations, trends etc.. Tabulation can be of two types simple or complex.

Simple tabulation has the ability to answer questions based on one characteristic of the data while in the case of the complex tabulation two way tables or the three way tables are obtained two way tables are those which are having the ability to give information about two characteristics of the data and in the same way the three way tables are those which give information about three features of the data. But a very essential point to be kept in mind here is that in both these tables the characteristics should be interrelated.

Characteristics of a table – 
1. Should be given a particular number, distinct in nature which will help in its easy reference.
2. Should have a clear and concise title and the title should always be above the body of the table.
3. Should be given captions and stubs, which should be clear and concise and easy to follow.
4. Units of measurements that may be used should always be indicated.
5. Should be relevant to the requirements of the research study.
6. Should be logical, clear and simple.
7. No abbreviations should be used.
8. Information about the source from where the data has been taken should be provided at the bottom of the table.
9. Should be very accurate in nature.
10. Explanatory footnotes with the help of reference symbols should be provided beneath the table.

Types of table – 
1. Frequency table – This type of table is the simplest of all the other types of the table. This type of the table consists of the two columns. In one column, qualities or values of the different attributes are entered and in the other column, frequency of the occurrence against each category is entered.

2. Response table – In this type of the table, an answer table by the informant is recorded and this type of table involves the indication of the reaction in a positive or a negative manner.

Explain Data Analysis

Explain Data Analysis          

In this step, the data which is collected is arranged according to some pattern or a particular format and this analysation of the data is mainly done to provide the data with a meaning.

In the beginning the data is raw in nature but after it is arranged in a certain format or a meaningful order this raw data takes the form of the information. The most critical and essential supporting pillars of the research are the analysation and the interpretation of the data.

Both these aspects of the research methodology are very sensitive in nature and hence it is required that both these concepts are conducted by the researcher himself or under his very careful and planned supervision. With the help of the interpretation step one is able to achieve a conclusion from the set of the gathered data.

Analysis of the data can be best explained as computing some of the measures supported by the search for relationship patterns, existing among the group of the data.

Research depends a great deal on the collected data but it should be seen that this collected data is not just a collection of the data but should also provide good information to the researcher during the various research operations. Hence to make data good and meaningful in nature and working, data analysis plays a very vital and conclusive role. In this step data is made meaningful with the help of certain statistical tools which ultimately make data self explanatory in nature.

According to Willinson and Bhandarkar, analysis of data ‘involves a large number of operations that are very closely related to each other and these operations are carried out with the aim of summarizing the data that has been collected and then organizing this summarized data in a way that helps in getting the answers to the various questions or may suggest hypothesis.’

Purpose of Analysis of data 
The purpose of the scientific analysis was first explained by Leon Festinger and Daniel Katz and according to both of them; the purpose of the analysis of the data can be explained as follows –

1. Should be very productive in nature, with high significance for some systematic theory.
2. Should be readily disposed to the quantitative treatment.

Procedure for the Analysis of the data

Data collected can be used in the best possible effective manner by performing the following activities –
1. Carefully reviewing all the data collection.
2. Analyzing the data then with the help of certain suitable techniques.
3. Results obtained from the analysation of the data should then be related to the study’s hypothesis.

Analysation Steps
The various steps of the analysation of the data were given by Herbert Hyman and can be summarized as follows –

1. Tabulation of the data after conceptualization, relating to every concept of the procedure is done which ultimately provides an explanation based on the quantitative basis.

2. Tabulation in the same way is carried out for every sub group, which gives quantitative description.

3. To get statistical descriptions consolidating data for different aspects is brought into use.

4. Examination of such data is then done, which helps in improving the evaluation of the findings.

5. Different qualitative and non statistical methods are brought into the use for obtaining quantitative description but only if it is needed.

Types of Analysis

1. Descriptive Analysis – 
• Also referred to as the One Dimensional Analysis.
• Mainly involves the study of the distribution of one variable.
• Depicts the benchmark data.
• Helps in the measurement of the condition at a particular time.
• Acts as the prelude to the bi – variate and multivariate analysis.
• Such an analysis may be based on the one variable, two variables or more than two variables.
• Helps in getting the profiles of the various companies, persons, work groups etc.

2. Casual analysis – 
• Also referred to as the Regression Analysis.
• Has their root in the study of how one or more variables affect the changes in the other variable.
• Explains the functional relationship between two or more variables.
• Helps in experimental research work.
• Explains the affect of one variable on the other.
• Involve the use of the statistical tools.

3. Co – Relative Analysis – 
• Involves two or more variables.
• Helps in knowing correlation between these two or more variables.
• Offers better control and understanding of the relationships between the variables.

4. Inferential Analysis – 
• Involves tests of significance for the testing of the hypothesis.
• Helps in the estimation of the population values.
• Helps in the determination of the validity data which can further lead to draw some conclusion.
• Takes an active part in the interpretation of the data.

What is Research Design? Write About Factors Affecting Research design

What is Research Design? Write About Factors Affecting Research design

Introduction 
Designing of the research is done mainly to solve the problem of getting the various stages of the research under control. This control factor is very important for the researcher during any of the research operation. Preparation of the design for the research forms a very critical stage in the process of carrying out some research work or a research project.

Research Design in general terms can be referred to as the scheme of work to be done or performed by a researcher during the various stages of a research project.

With the help of the research design, one can very easily handle and operate research work as research design acts as a working plan, which is made by a researcher even before he starts working on his research project. By this, researcher gets a great help and guidance in achieving his aims and goals.

According to Russell Ackoff, research design is the process of making decisions before a situation arises in which the decision has to be carried out. It is actually a process of deliberate anticipation directed towards bringing an unexpected situation under control.

Russell Ackoff has in a great way explained about the research design in his book ‘Designs of Social Research’.

Meaning of research design
Like an architect prepares a blue print before he approves a construction – in the same way researcher makes or prepares a plan or a schedule of his own study before he starts his research work. This helps the researcher to save time and also save some of his crucial resources. This plan or blue print of study is referred to as the research design.

Research design is also called as the research strategy and the various steps or stages that a research design may include can be summarized as follows –
1. Research problem selection
2. Problem presentation
3. Hypothesis formulation
4. Conceptual clarity
5. Methodology
6. Literature survey
7. Bibliography
8. Collection of the data
9. Hypothesis testing
10. Interpretation of the result
11. Report writing

This specific presentation of the various steps in the process of research was given by Cook Jahoda.

Factors affecting research design
1. Availability of scientific information
2. Availability of sufficient data
3. Time availability
4. Proper exposure to the data source
5. Availability of the money
6. Manpower availability
7. Magnitude of the management problem
8. Degree of Top management’ s support
9. Ability, knowledge, skill, technical understanding and technical background of the researcher
10. Controllable variables
11. Un – controllable variables
12. Internal variables
13. External variables

Advantages of research design 
1. Consumes less time.
2. Ensures project time schedule.
3. Helps researcher to prepare himself to carry out research in a proper and a systematic way.
4. Better documentation of the various activities while the project work is going on.
5. Helps in proper planning of the resources and their procurement in right time.
6. Provides satisfaction and confidence, accompanied with a sense of success from the beginning of the work of the research project.

What are the steps in research design?

What are the steps in research design?

Following are the steps in research design:

1. The Problem – The first step involves the proper selection and then carefully defining the problem. By this researcher will be enabled to know about what he has to search, but it should be kept in mind that the problems selected should not be unmanageable in nature and also should not be based on the desires.

2. Objective of the study – The objective should be very clear in the mind of the researcher as this will lead to the clarity of the design and proper response from the respondents.

3. Nature of the study – The research design should be very much in relation with the nature of the study, which is to be carried out.

4. Data sources – The various sources of the data or the information should be very clearly stated by the researcher.

5. Techniques of data collection – For the collection of the required information, it sometimes becomes very necessary to use some especial techniques.

6. Social cultural context – Research design based on the social cultural concept is prepared in order to avoid the various study variations.

7. Geographical limit – This step becomes a necessity at this point of time as with the help of this step, research linked to the hypothesis applies only to certain number of social groups.

8. Basis of selection – Selecting a proper sample acts as a very important and critical step and this is done with the help of some mechanics like drawing a random stratified, deliberate, double cluster or quota sample etc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

How To Formulate Research Problem?

How To Formulate Research Problem?

Formulating the research problem and hypothesis acts as a major step or phase in the research methodology. In research, the foremost step that comes into play is that of defining the research problem and it becomes almost a necessity to have the basic knowledge and understanding of most of its elements as this would help a lot in making a correct decision. The research problem can be said to be complete only if it is able to specify about the unit of analysis, time and space boundaries, features that are under study, specific environmental conditions that are present in addition to prerequisite of the research process.

Research Process
Research process is very commonly referred to as the planning process. One important point to be kept in mind here is to understand that the main aim of the research process is that of improving the knowledge of the human beings.

The research process consists of the following stages –
1. The Primary stage :– This stage includes –
a. Observation – The first step in the research process is that of the observation, research work starts with the observation which can be either unaided visual observation or guided and controlled observation.It can be said that an observation leads to research, the results obtained from research result in final observations which can play a crucial part in carrying out further research. Deliberate and guided observations also play an important part in this primary stage. This method is very simple and helps a great deal in framing of the hypothesis as it is very accurate in nature but it also has some major limitations like some of the occurrences may not be open to the observation and the occurrences which may be open for observation may not be studied conveniently.

b. Interest – As studied in the above paragraph, research starts with the observation and it leads to a curiosity to learn and gain more and more about what has been observed. Hence it can be said that observation results in the creation of an interest in the mind of the researcher.The interest can be either academic in nature or it may be a policy making interest. It may be a self interest or a group interest. Group interest is also referred to as the social interest.

c. Crystallization – It can be defined as the process involving the designing of the definite form of research to be used in the study of the subject matter that has been observed. During this stage, the research project gets a concrete shape and structure.

d. Formulating a research problem – A research problem can belong to one of the following two categories – it can belong to the category in which there can be relationships between various variables or it may belong to the other category, which is based on nature. In the beginning, it is important for a researcher to find out the general interest or the subject matter, which he wants to study. By this the researcher will be able to state a problem more broadly and also in a much generalized form then the ambiguities linked to the problem can be referred and understood. This really supports in the formulation of a problem of a research. Although this process is not that simple and requires many fruitful discussions in order to achieve a proper conclusion or a decision.

e. Primary Synopsis – Before starting with the actual study work, it is very necessary for a researcher to prepare a summary or a plan about the activities he has to perform in connection with research operation. This will help him a lot to get a definite idea or an understanding of what would be written in the final report.

f. Conceptual Clarity – It is very much important for a researcher to have in depth knowledge and understanding of the subject or the topic he has to study as it helps a lot in achieving one’s goal and objectives in a much easier and also a comparatively much simpler way.

g. Documentation – The documents help in providing important information to a researcher, document is something in writing it can be a record, files or diaries etc. may be published or unpublished in nature. Documents can be extracted and can be used in the research work. Various documents can be classified as –

a. Personal documents –
• Written by or on behalf of individuals.
• May include autobiographies, biographies, diaries, memories, letters, observations and inscriptions.
• Can be used in research activities.

b. Company documents –
• Most important type of documents compared to other document types.
• Play an essential role in management research.
• May include balance sheets, files, records, policy statements, resolutions, performance records etc.

c. Consultants’ reports and published materials –
• Include professional consultants’ reports, commodity boards’ records, chambers of commerce, trade union documents etc.

d. Public documents –
• Can be published or unpublished in nature.
• Consist of government records, finance commission records, especial enquiry commission records, company law board reports, population census reports etc.
• Can be useful only if they are reliable.

h. Literature Survey – Having complete knowledge about the literature is almost a necessity for a researcher to be successful in his research operation. With the help of literature survey, one is helped in having correct concepts and also the right theories.

2. Secondary stage: – This stage of the research consists of all the features that are actually required to run a research project. This stage includes the following –

a. Research project planning: – Involves selection of the future courses of action for conducting and directing a research project. A research project plan gives a rational approach to research by which one is able to decide in advance about what to do, how to do, when to do, where to do and who is to do a particular task in a specific activity.

b. Research Project formulation: – After the planning of the project has been done the researcher follows this with a practical approach in order to carry out the project. This step of the secondary stage involves the systematic setting forth of the total research project, with an aim of conducting a systematic study.

c. Data collection: – This step involves the in depth meaning for the concepts that are to be investigated and looks forward to data analysis, data requirement etc… Sources of understatement or overstatement should be avoided and the data should be free from any type of error. The data collection planning should be done or implemented in a very careful manner, with the help of specialist researchers. The data should be good and meaningful in nature should not only be a collection of words but should provide meaningful information.

d. Classification and tabulation – Classification can be defined as the arrangement of the data into groups and classes depending on the resemblance and the similarities. By classification, the data can be condensed in a very elegant way by which the various important features can be easily noticed i.e. one can easily highlight the various salient features of the data at a glance. Tabulation of the data can be defined as the orderly arrangement of the data in columns and the rows this step also helps a great deal in the condensation of the data and also in the analysation of the relations, trends etc.

e. Data Analysis – In this step, the collected data is arranged according to some pattern or a particular format and this analysation of the data is done mainly to provide the data with a meaning. It is actually the computing of the some of the measures supported by the search for the relationship patterns, existing among the group of the data.

f. Testing of a hypothesis: – This step of testing acts as the back bone of the data analysis. Various tests like “t” test, “z” test. Chi square test are used by the statisticians for the testing of the hypothesis.

g. Interpretation of results: – It is very important that the results are interpreted into action recommendations and the results should be able to refer to a decision i.e. should help in drawing a conclusion.

3. Final Stage :- This stage involves –
a. Conclusions and recommendations – This act as the crux of the research project work. Recommendations are based on the conclusions obtained and further these conclusions are based on the interpretation of the results of data analysis. But a major point to be kept in mind here is that all these conclusions and the recommendations should be linked to the research hypothesis stated.

b. Report Writing - For the researcher as well as the reader, report writing is very crucial as it acts as the best way for communication between the two. Report written must be very simple in nature with easy language, high clarity. Report writing cannot be done by everyone and requires an especial skilled person for this purpose.

Various types of research design are as follow:

1. Research design for exploratory or formulative studies 
• In this type of design, a vague problem is selected and understood and is then followed by an exploratory research to find a new hypothesis and then carrying out conclusion research decisions to finally get new ideas.
• Aims at finding a new hypothesis.
• Individual surveys, referring to secondary sources of data etc. play an important role in such research designs.
• Reviewing related literature, following or surveying people having practical experience in the problem related field act as very important and most commonly used methods by an exploratory researcher.

2. Research design for conclusive studies 
Also referred to as the research design for the descriptive studies and is further divided as follows –

a. Case Study method – 
• Finds extensive use in commerce and industry.
• Very respectable method of teaching and research in management.
• Helps greatly in knowing the causes and the results of the incident of the phenomenon.

b. Statistical method – 
• Also trying to find its place in commerce and industry.
• Act as method of correlation and regressions, analysis, chi square etc.
• Has been made very rigorous and sophisticated by coming up of the computers.

3. Research design for experimental studies – 
• Explains the structure of an experiment.
• Involve plans for the testing of the causal hypothesis.
• Decides the number of observations to be taken and also the order in which experiments are to be carried out.
• Which randomization method to be used.
• Which mathematical model to be used for explaining the experiment.

This research design can be further categorized into the following –
1. Informal experimental design – 
• After only design.
• After only with control design.
• Before and after without control design.
• Before and after with control design.

2. Formal experimental design – 
• Completely randomized design.
• Randomized block design.
• Latin square design.
• Factorial design.

CUSTOMS DUTY

CUSTOMS DUTY

CHAPTER 1 - BASIC CONCEPTS.


1) Features of Customs Duty 

a) Customs Duty levied as per rates specified in Custom Tarrif CTA 1975
b) Export – Taking goods to a place outside India
c) Import – Bringing goods from place outside India
d) Out of India means beyond 12 Nm
e) Indian customs waters – 12 Nm to 24 Nm.
f) Customs duty is on goods

g) Goods include

- Vessels, Aircrafts & Vehicles
- Stores
- Baggage
- Currency
- Negotiable Instruments

- Any other movable property

h) Customs Duty is for Import & Exports

i) Dutiable goods are those which are chargeable to duty & on which duty has not been paid

j) Imported goods

- Brought in India
- From place outside India

- Not cleared for home consumption

k) Export goods
- Taken out of India

- To place outside India

l) Customs is payable on Re-import, free replacements and free supplies.

2) Important Definitions 

A) Goods 

· Customs duty is on ‘goods’ as per section 12 of Customs Act.

· The duty is payable on goods belonging to Government as well as goods not belonging to Government

· ‘Goods’ included

(a) Vessels, Aircrafts and Vehicles

(b) Stores

(c) Baggage

(d) Currency and negotiable instruments and

(e) Any other kind of movable property.

B) Dutiable Goods

· ‘Dutiable goods’ as any goods which are chargeable to duty and on which duty has not been paid.

· Thus, goods continue to be ‘dutiable’ till they are not cleared from the port. However once goods are assessed even at ‘Nil’ rate of duty, they no more remain ‘dutiable goods’

· Export goods as well as imported goods can be ‘dutiable goods’ if imported goods or export goods are not chargeable to duty, they will not be ‘dutiable goods’

C) Imported Goods

· Any goods brought in India from a place outside India, but does not include goods which have been cleared for home consumption.

· Thus, once goods are cleared by customs authorities from customs area, they are no longer ‘imported goods’

D) Export Goods

· ‘Export Goods’ means any goods which are to be taken out of India to a place outside India.

· Goods brought near customs area for export purpose will be ‘Export Goods’

E) Indian Customs Waters

‘Indian Customs Waters’ means the waters extending into the sea up to the limit of contiguous zone of India.

Contiguous zone of India comes immediately after territorial waters. The outer limit of contiguous zone is 24 nautical miles from the nearest point of basic line . Thus, area beyond 12 nautical miles and upto 24 nautical miles is ‘contiguous zone of India’. The Central Government has powers to take measures in this area for security of India and immigration, sanitation, customs and other fiscal matters.

Thus, ‘Indian Customs Waters’ extend up to 12 nautical miles beyond territorial waters.

Significance of definition of ‘Indian Custom Waters’ is as follows –

· Customs officers has powers to arrest a person in India or within Indian customs waters (section 104)

· Customs officer has powers to stop and search any vessel in India or within the Indian Customs waters, (section 106). If such vessel does not stop, it can be fired upon .If a vessel does not stop, it can be confiscated (section 115 (1) (c) )

· A vessel which is within Indian customs waters or which has been in Indian Customers Waters can be confiscated which is constructed or fitted in any manner for purpose of concealing goods. (section115(1) (a) )

Thus powers of customs officers extend up to 12 nautical miles beyond territorial waters.

F) Territorial Waters

Territorial water extend up to 12 nautical miles from the base line on the coast of India and include any bay, gulf, harbour, creek or tidal river. (1 nautical mile = 1.1515 miles = 1.853 Kms) Sovereignty of India extends to the territorial waters and to the seabed and subsoil underlying and the air space over the waters.

G) Exclusive Economic Zones

‘Exclusive Economic Zone’ extends to 200 nautical miles from the base-line. In this zone, the coastal state has exclusive right to exploit if for economic purposes like constructing artificial is lands (for oil exploration, power generation etc.) Fishing, mineral resources and scientific research . However, other countries have right of navigation and over – flight rights. Other countries can lay submarine cables and pipelines with consent of Indian Government. Such consent may be declined for protecting interest of India.

3) Types of Custom Duties.

i) Basic Customs Duty

Basic customs duty is levied under section 12 of customs Act. Normally, it is levied as a percentage of value of goods imported. The rates vary for different items, but general rate on non-agricultural goods at present is 10% [ w .e. f. 1-3-2007]

ii) Additional Customs Duty U/S 3(1) (CVD)

Additional customs duty’ is often called ‘Countervailing Duty’ (CVD).

This duty is equal to excise duty levied on a like product manufactured or produced in India. If like article is not produced or manufactured in India, the excise duty that would be livable on that article had it been produced in Indian is the base. If the product is livable with different rates, then highest rate among those rates is to be considered. The duty is livable on value of goods plus customs duty payable.

iii) Education Cess On Customs Duty

An education cess of customs has been imposed on imported goods w.e.f. 9-7-2004. The cess is 2% of the aggregate duty of customs. However, education cess will not be payable on Special CVD (SAD). Safeguard duty under countervailing duty, anti dumping duty, SAH education cess, Education cess itself on imported goods.

iv) Secondary & Higher Education Cess.[S.A.H.]

In addition to existing education cess, an education cess of 1% of the total duties of customs has been imposed on imported goods.

SAH education cess will not be payable on

(a) Special CVD or SAD

(b) Safeguard duty

(c) Countervailing duty

(d) Anti dumping duty

(e) Education cess

(f) SAH education cess itself

v) Additional duty under section 3(3)

In addition to CVD further additional duty can be levied by Central Government to counter balance excise duty livable on raw materials, components etc. similar to those used in production of such article

This levy has use when goods manufactured indigenously is exempt from excise duty. In such case, the indigenous manufacture will be loser to the extent of duty paid on inputs. This duty paid on his inputs is lost as final product is exempt from duty . This becomes additional cost to indigenous manufacturer. On the other hand, the imported goods do not have to pay CVD as the product is exempt from duty. The foreign supplier has not paid any excise duty on his inputs. He gets cost advantage to that extent. Section 3(3) is intended to offset such cost advantage to foreign supplier.

vi) Additional Duty Under Section 3(5) (Special CVD – SAD)

This duty is in addition to any other duty imposed under Customs Act or any other law

The Additional Duty U/S 3(5) can be imposed by issuing a notification. Such tax cannot exceed 4% of value of that article.

Purpose of the additional duty is to counter balance sales tax, VAT, local tax or other charges leviable on articles on its sale, purchase or transaction in India. The obvious intention is to provide level field to manufacturers in India who are manufacturing similar goods. Hence, it is termed as ‘special “CVD” or ‘SAD’(Special Additional Duty)

Value of article for purpose of levy of this additional duty is

(i) Assessable Value determined

(ii) + (ii) Basic customs duty payable. CVD payable u/s 3(1) + (iii) Additional duty payable u/s 3(3)

However, ‘value’ will not include following :

(a) Additional Duty payable u/s 3(5)

(b) Safe guard duty payable u/s 8(B) and 8 (C)

(c) Countervailing duty payable u/s 9

(d) Anti dumping duty u/s 9(A)

SAD has been imposed on all imported goods w.e.f. 1-3-2006 @ 4%,

vii) Protective Duties

Tariff Commission has been established under Tariff Commission Act, 1951. If the Tariff Commission recommends and Central Government is satisfied that immediate action is necessary to protect interest of Indian Industry. Protective customs duty at the rate recommended may be imposed under section 6 of Customs Tariff Act.

viii) Countervailing Duty on Subsidized Goods

If a country or territory pays any subsidy (directly or indirectly) to its exporters for exporting goods to India, Central Government can impose Countervailing duty up to the amount of such subsidv.

ix) Anti Dumping Duty on Dumped Articles

Often, large manufacture from abroad may export goods at very low prices compared to prices in his domestic market. Such dumping may be with intention to cripple domestic industry or to dispose of their excess stock. This is called ‘dumping’ and is an unfair trade practice. In order toavoid such dumping and to protect domestic industry, Central Government can impose, under section 9A of Customs Tariff Act, anti-dumping duty, if the goods are being sold at less than its normal value. Levy of such anti-dumping duty is permissible as per WTO agreement. Anti dumping action can be taken only when there is an Indian Industry producing ‘Like Articles’

x) Safeguard Duty

Central Government is empowered to impose ‘safeguard duty’ on specified imported goods if Central Government is satisfied that the goods are being imported in large quantities and under such condition that they are causing or threatening to cause serious injury to domestic industry. Such duty is permissible under WTO agreement. The only condition under WTO is that it should not discriminate between imports from different countries having Most Favored Nation (MFN) status.

Safeguard duty is a step in providing a need based protection to domestic industry for a limited period, with ultimate objective of restoring free and fair competition. Safeguard duty is targeted at remedying or preventing serious injury to domestic industry with a view to making it competitive and to enable it to stand on its own.

Government has to conduct an enquiry and then issue a notification. (Section 8 B (1) of Customs Tariff Act.)The duty, once imposed, is valid for four years, unless revoked earlier. This can be extended by Central Government, but total period of ‘safeguard duty’ cannot be more then ten years. (section 8B (4)). The duty is in addition to any other customs duty being imposed on the goods. (section 8 B (3)).

In case of imports from any developing country, safeguard duty can be imposed if import from that country exceeds 3%. If the Article originates from more than one developing countries and if imports from each developing country is less than 3%, safeguard duty can be imposed if imports from all such developing countries taken together exceeds 9% of total imports of that Article in India [proviso to section 8 B(1) of Customs Tariff Act as amended w.e.f. 13-7-2006]

xi) NCCD of Customs Duty

A ‘National Calamity Contingent Duty’ (NCCD) of customs has been imposed vide section 134 of Finance Act, 2003, On pan masala, chewing tobacco and cigarettes. Further, NCCD of customs of 1% has been imposed on PFY, motor cars, multi utility vehicles and two wheelers. NCCD of Rs 50 per ton is imposes on domestic crude oil. For purpose of calculation of NCCD, value will be same as calculated for purpose of CVD u/s 3(2) of Customs Tariff Act.

xii) Export Duty

Since Government activity encourages export, there is export duty on very few products. Articles on which export duty is leviable are given in second schedule to customs Tariff. At present, 25% export duty is imposed on luggage leather, 15% Export Duty is levied only on hides, skins and leather, and duty of 10% is levied on snake skins and lamb skins.

Export duty has been imposed on the following w.e.f. 1-3-2007 – (1) Iron ores (whether in form of lumps or fines ) and concentrates, all sorts @ Rs. 300 per metric tonne. (2) Chromium ores (whether in form of lumps or fines) and concentrates, of all sorts @ Rs. 2,000 per metric tone

There is no export duty on any other product.

xiii) Cess on Imports

Cess is levied on indigenous manufactured goods like sugar, Tea, Jute, Beedis, automobiles, Tobacco, Coffee, Rubber , Paper and paper board, iron ore, limestone and dolomite, manganese ore, chrome ore and coking and non-coking coal. This is recoverable as excise duty. If these are imported, corresponding cess will be payable

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CHAPTER 2 - IMPORTS PROCEDURE 


1) To be followed by person –in charge of conveyance 

- Arrive at customs port / air port only
- Submit import manifest to customs authorities within 12 hours of arrival
- Furnish list of stores on ship to be landed
- Keep excess stock under customs seal
- Start unloading only after customs authorities grant “Entry Inwards”

2) To be followed by Importer 

- Submit following documents

· Bill of entry

· Invoice

· Packing list

· GATT declaration form

· Importer’s / Cha’s Declaration

· Import license

· Certificate of country of origin

· L/C & bank draft

· Insurance documents

· Technology literature

· Test report

· DEPB (Original)

· Split up of value of spares, components & machinery

- Documents submitted by importer are checked & assessed by customs officials & then goods are cleared

- Date of presenting B.E. is relevant & rate of duty as applicable on this date is considered for calculating duty

- Heavy demurrage is payable of goods are not cleared from port within 3 days.

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CHAPTER 3 - EXPORT PROCEDURE

1) To be followed by person - in charge of conveyance 

- Vessel is granted ‘Entry Outward’
Loading can start only after this permission

- Shipping bill duly passed by customs

Officer is handed over to him

- Export Manifest / Export report in the prescribed form should be submitted before departure.

- Report should be declared as true by him.

2) To be followed by Exporter 

- Obtain business identification no. (bin)
From director general of foreign trade (DGFT)

- Open current A/C with designated bank for crediting duty drawback claims.

- If export is under DEPB, advance license etc. same should be registered at custom station.

- Submit shipping bill / Airway bill /Bill of export

- Assess goods for duty even if no duty payable

- Make appropriate declarations in prescribed Forms for :

(a) Drawback claim (b) DEEC Scheme (c) Adv. License

(d) DEPB Scheme (e) ARE –1 Declaration

- Complete excise formalities for export

- Follow prescribed procedures & submit necessary papers for claiming duty drawback

- Prepare & submit prescribed forms by RBI to enable RBI to ensure that export proceeds are received in India through proper banking channel only

- Prepare / Submit following documents

(a) Commercial invoice (b) Packing list

(c) Certificate of Origin (d) Pre-shipment Insp. Report

(e) Insurance Policy (f) L / C

(g) Declaration of value (h) Excise are – 1 form

(i) GR / SDF form for RBI (J) Letter showing Bin No.





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CHAPTER 4 - COURIER , POST & BAGGAGE 

1) IMPORT & EXPORT THROUGH COURIER

A) Import

i) Permitted by air from specified air ports & land custom Station. by land

ii) Maxm. Wt. allowed is 70 Kg. / Package

iii) Goods covered by any other Acts are not permitted

iv) Animals & its parts, Plants, Perishables, Stones, Gold, Silver, Chemicals, Publications containing incorrect Indian boundaries are not allowed

v) Life savings drugs are allowed

vi) Courier must be Registered with commissioner of customs

vii) Free gifts & samples up to Rs. 10,000 per consignment allowed

viii) Gem / Jwellery up to Rs. 25 lakhs per consignment allowed.

ix) Courier bags are kept separately & dealt with as per directions of commissioner of customs

x) He has to submit specified declaration & ‘Courier Bill of Entry’ in prescribed form

xi) Goods must be cleared by courier within 30 days of import otherwise they are disposed of by customs authorities.

B) Export

i) Permitted from specified air ports & land customs station

ii) Courier must file a statement before departure of any flight in prescribed form along with “Courier Shipping Bill”

iii) Free gifts Rs. 25,000 & samples Rs. 50,000 can be exported

iv) Export by EOU / SEZ / EHTP / STP units through authorized courier is permitted

v) Export of Gem / Jwellery Rs. 25 lakhs per consignment is allowed

vi) Goods must be exported within 7 days from customs area otherwise they are disposed of by customs authorities.

2) IMPORT & EXPORT BY POST

A) Import

i) Post parcels are allowed to pass from port / Air Port to foreign parcel Deptt. Without payment of custom duty.

ii) Post master hands over to principal appraiser customs

a) Memo of parcels from each country of origin

b) Parcel bill or sender’s declaration

c) Customs declaration & dispatch notes

d) Any other information required

iii) Post bags opened under supervision & control of principal appraiser customs

iv) Packets containing dutiable goods are presented to customs appraiser

v) Parcels opened by him are distinctly sealed & after assessment handed over to post master

vi) Post master hands over the parcels to the addressee on receipt of custom duty from him

vii) Gifts up to Rs. 10,000 can be imported without payment of custom duty

viii) Post parcels with customs duty less than Rs. 100 are exempted from custom duty.

B) Export

i) Goods must be covered by a declaration in a prescribed form

ii) Export of Indian / Foreign currency is not allowed unless accompanied by permit issued by RBI

iii) Goods up to Rs. 25,000 can be exported as a gift

iv) Export of purchases by foreign tourists allowed on submitting proof that payment was received in foreign exchange.

3) BAGGAGE RULES

A) Baggage includes –

i) Dutiable goods imported by

- Passengers

- Member of a crew

In his baggage

ii) Unaccompanied baggage if dispatched previously or subsequently within prescribed period.

Baggage does not include

- Motor vehicles, alcoholic drinks & goods imported their courier

- Articles imported under imported license for himself or for others

B) Following are general prohibitions

i) Indian / Foreign currency (above RBI limits )
ii) Narcotic drugs
iii) Domestic pets (If not as per health regulations )
iv) Exoctic Birds, wind orchids, wild life

v) Endangered species

vi) Ivory

vii) Reptile skins

viii) Antiques

C) There are 2 Channels 

i) Green Channel – Person not having any dutiable goods can pass through this. However if found carrying dutiable goods. Goods are confiscated & he is prosecuted.

ii) Red channel – Person having dutiable goods pass their this & submit declaration. Baggage checked by customs officer & appropriate duty is charged at 35% + 2% E.C. & 1% SAH. Education Cess. There is no SAD & CVD

D) Exemptions allowed for import through Baggage 

· Person transferring his residence to India is eligible to bring his personal & household articles to India without duty

· Bona fide baggage accompanying passenger is exempted from customs duty

This includes personal effects, wearing apparel & toilet requisites

· Laptop computer brought as baggage by person over 18 years of age (other than member of crew is fully exempt from customs duty

· Gold brought as baggage by a passenger of Indian origin or a person holding Indian passport. The duty is only Rs. 100 per 10 gms. For import of gold bars bearing manufacturer’s or refiner’s engraved serial number and weight expressed in metric units and gold coins. In case of other gold, including tola bars and ornaments (but excluding ornaments studded with stones or pearls), the duty is Rs. 250 per 10 10 gms. Up to 10 kg. gold can be brought by each eligible passenger

· Silver brought as baggage by a passenger of Indian origin holding Indian passport up to 100 kg. is chargeable to duty of Rs. 500 per kg. (plus education cess @ 2% and SAH education cess of 1% of duty), if the person was staying abroad for over six months. Duty has to be paid only in convertible foreign currency. No CVD is payable. Silver can be brought in any form, including medallions, coins and jewellary, except foreign currency coins and jewellery studded with stones or pearls. Out of the period of 6 months. Short visits up to 30 days are permitted, if the concession was not availed in such short visit.

· Customs duty is not payable if amount of duty is equal to or less than Rs. 100

· A passenger of 10 or more year of age is allowed general free allowance of Rs. 25,000, if the Indian Resident is returning from country other than Nepal, Bhutan, Myanmar or China . This allowance is also available to foreign citizens residing in India, after stay of more than three days. This allowance cannot be pooled with General Free Allowance of other passengers e.g. husband and wife bringing one item of Rs. 50,000 will not be permitted duty free. This General Free Allowance is not applicable to un-accompanied baggage.

The limit of Rs. 25,000 is reduced as follows –(a) Rs. 12,000 for passengers after stay abroad of three days or less(b) If the passenger is up to 10 years of age and is returning from country other than Nepal, Bhutan, Myanmar or China, the allowance is Rs. 6,000 if a person is returning after stay of more than 3 days & Rs. 3,000 it has stay was 3 days or less, (c) If the passenger is returning from Pakistan by land route, as specified in Annexure IV of baggage Rules, the general free allowances is Rs. 6,000 for passengers above 10 years and Rs. 1,500 for passengers up to 10 years. Of age.

· An Indian Resident or foreigner residing in Indian of Age 10 or more is entitled to lower rate of General free allowance of Rs. 6,000 if he is returning form Nepal, Bhutan, Myanmar or China after stay of more than 3 days, by route other than land route. Passenger up to 10 years returning from these countries after stay of more than 3 days is entitled to General Free Allowance of Rs. 1,500. There is no duty on personal effects.

· There is no general free allowance if a person is returning from these countries after stay of three days or less. There is no free allowance if passenger returns by land route from these countries, even if his stay abroad was more than 3 days. If the passenger is returning from Pakistan by land route the general free allowance is Rs. 6,000 for passengers above 10 years and Rs. 1,500 for passengers up to 10 years of age.

· An Indian passenger who was engaged in his profession abroad for over three months is allowed to import following duty free goods as additional allowance (a) Used household articles up to Rs. 12,000 ( e.g. linen, utensils, tableware,

kitchen appliances, an iron etc. )

(b) Professional equipment like portable equipments, apparatus and appliances

required in such profession, up to Rs. 20,000. The limit will be increased

to Rs. 40,000 if he was abroad for over 6 months. [The allowance is in

addition to General Free Allowance ]

This exemption of professional equipment is only for carpenters, plumbers

welders, masons and the like and not for items of common use like

cameras, type writer, cassette – recorder, computers, word processor etc.

· If the passenger was residing abroad for over one year, jewellery can be imported duty free up to Rs. 10,000 in case of gentleman passenger and Rs. 20,000 in case of lady passenger.

· A person who was working abroad and is returning to India on termination or work and who was staying abroad for at leas 365 days out of previous two years, is eligible to certain concessions. This is termed as ‘mini TR’ i.e. ‘Mini Transfer of Residence’. He is entitled to bring personal effects and household articles up to Rs. 75,000 duty free [ The limit was Rs. 30,000 upto 28-2-2002]. This allowance is in addition to General Free Allowance. The conditions are (a) These should be in possession of himself or his family and used for at least

six months,

(b) He shall be allowed to avail himself of this exemption only once in three

years,

(c) Items in Annex I, Annex II or Annex III to Baggage Rules are not allowed

under this rule,

(d) Goods should be contained in his bona fide baggage.

· Exemption to Baggage of Tourists – Following are the exemptions –

(a) Used personal effects of tourist and travel souvenirs are allowed duty free. Personal effects should be for personal use of the tourist and these goods, other than consumed should be re-exported when tourist leaves India for foreign destination.

(b) Tourists of Indian Origin (even if holding foreign passport ) other than those coming from Pakistan by land route as specified in Annexure IV of Baggage Rules, are entitled to General Free Allowance in addition to ‘ personal effects ‘.

(c) Foreign Tourists are permitted to bring articles up to Rs. 8,000 for making gifts. This can include up to 200 cigarettes or 50 cigars or 250 gms of tobacco and up to two liters of alcoholic liquor or wine. Duty will have to be paid for gifts over the value of Rs. 8,000 (Rs. 6,000 if they are coming from Pakistan)

(d) Tourists of Pakistani origin or foreign tourists coming from Pakistan or tourists of Indian origin coming from Pakistan, by land route as specified in Annexure IV of Baggage Rules, are entitled to bring used personal effects and travel souvenirs are allowed duty free. Personal effect should be for personal use of the tourist and these goods, other than consumed, should be re-exported when tourist leaves India for foreign destination. In addition, articles up to value of Rs. 6,000 for making gifts are permitted duty free.

(e) Tourists of Nepalese origin coming from Nepal or of Bhutanese origin coming from Bhutan are not entitled to any exemption.

· Import by foreign experts – Foreign experts assigned to India under various UN schemes etc. are permitted to bring various articles, including VCR, video camera and Air – conditioners. These are exempt from customs duty on obtaining certificate of undertaking from the expert. Duty will be paid by concerned ministry / department.

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CHAPTER 5 - EXEMPTION & REMISSION OF DUTY 

1) EXEMPTION :

Exemption in duty is granted in following ways

a) Government issues notification in the public interest and exemption is granted on items specified in notification after condition are fulfilled as per notification & W.E.F. date mentioned thereto

b) Imports for Exports by

FTZ, 100% EOU, Advance license, Job Work etc.

c) Specified imports for projects

d) Preferential rates for imports from specified countries

e) Lower rate in case of agreement by Govt. with some country

2) REMISSION :

a) Remission means waiver of duty

b) In following cases duty is remitted

i) Goods lost, Destroyed or Pilfered after unloading but before clearance for home consumption

ii) If importer abandon goods because

- Goods are deteriorated

- Duty is very high.

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CHAPTER 6 - OTHER PROVISIONS IN CUSTOMS 



1) WAREHOUSING 

a) Imported goods can be kept without payment of duty

b) Pay customs duty & take goods out of warehouse

c) Available to – Traders & Direct Importers

d) Opened at warehousing Stn. Approved by customs

e) Public & private warehouses

f) Bond is required from importer for movement of goods from customer’s port to warehousing Stn.

g) Period of warehousing–1 year & further 6 months by permission of commissioner & with permission of chief commissioner & unlimited period

h) Capital goods by E.O.U. – 5 Yrs. Warehousing

Other goods by E.O.U. - 3 Yrs. Warehousing

i) Warehouse is under physical control of customs officer & clearance can be only with his permission

j) If goods are damaged during warehousing no duty is payable

k) Goods can be cleared from warehouse only after paying custom duty

l) Importer must pay rent & other charges if not paid warehouse keeper can sell goods after giving notice to importer & with permission of customs officer

m) Owner of warehoused goods can relinquish title of goods any time before home clearance. He has to pay rent & other charges. He does not have to pay duty

n) With permission of customs officer warehoused goods can be dealt in any of the following wary :

- Mfg. & other operation for export or for home consumption

- Inspect goods

- Separate damaged / deteriorated goods

- Sort goods

- Change containers

- Show goods for sale

- Take sample of goods.

2) CUSTOMS HOUSE AGENT (C.H.A.)

a) Appointed by company to complete customs formalities and obtain clearance from port

b) He must have license

c) C.H.A. is responsible for all Acts. Of his employee

d) To become customs house agent prescribed examination must be passed

e) Employee of customs house agent is given I. card

f) License fee is Rs. 5,000

g) License cannot be transferred

h) Customs house agent must obtain authorization from cos. For which he is working .

i) Customs house agent has to execute bond in prescribed form

j) If rules & regulations are not followed (Frameed by customs ) his license is cancelled or suspended.

3) EXPORT ORIENTED UNDERTAKINGS ( E.O.U. ) 

· EOU can import inputs and capital goods without payment of customs duty.

· They can procure indigenous inputs and capital goods without payment of excise duty.

· Their final product should be normally exported, but they are allowed to sale part of their production within India, which is termed as ‘DTA’ sales i.e. sale in Domestic Tariff Area.

· EOU units have to follow provisions of

- Customers Act.

- Excise Act

- Income Tax Act.

- Foreign Exchange Management Act.

· EOU can be set up at various places in India declared as ‘warehousing stations’. There are over 300 such places.

· Only project having an investment of not less than 100 lakhs and above in building and plant and machinery shall be considered for establishment under EOU scheme.

· One crore investment criteria does not apply to units engaged in service sector, Software Technology Park(S.T.P.), Electronics Hardware Technology Park (E.H.T.P.), I.T. sector handicrafts etc.

· The EOU unit may be engaged in manufacture of goods, including repair, re-engineering, and rendering of services. However, trading units are not permitted.

· Special provisions have been made for EOU units for gold/ silver / platinum jewellery, agriculture, aquaculture, floriculture, horticulture, poultry, granites etc.

· EOU / SEZ / STP / EHTP / BTP unit can be set up with 100% foreign investment, except in few sectors where compulsory licensing is required. 100% foreign investment is sectors like arms and ammunition, explosives, atomic substance, narcotics and hazardous chemicals, distillation and brewing of alcoholic drinks and cigarettes, cigars and manufactured tobacco substitutes is not permitted. In some sectors, there is sectoral cap.

· The units should have positive Net Foreign Exchange Earning. (NFE). Net Foreign Exchange Earning shall be calculated cumulatively in block of five years, starting from commencement of production

· NFE = A – B, where A = FOB value of exports, B is the sum total of CIF value of all imported inputs and capital goods and all payments (like commission, royalty, fees, dividend, interest of borrowings) made in foreign exchange

· In case of EOU units, the whole factory is treated as a bonded warehouses. The bonding period is three years for raw materials, consumable and spares. However, for capital goods, the bonding period is 5 years. Bonding period of three years means inputs / consumable should be consumed for manufacture of export product within three years. If not, application for extension should be made. This period can be reduced by commissioner if goods are likely to deteriorate.

· The warehousing period can be up to five years in case of capital goods intended for use in EOU unit.

· The warehousing period can be up to five years in case of capital goods intended for use in EOU unit.

· The EOU units have to execute a bond in form B – 17 which is all purpose bond covering liability both of Central Excise & Customs. The Superintendent of Central Excise will give a certificate in prescribed form giving details of bond, name of input an its chapter number etc. Goods will be permitted to be cleared from customs without payment of duty on strength of this certificate. Re-warehousing certificate from assistant / Deputy Commissioner, CE should be submitted to customs authorities within 90 days. Otherwise, duty demand will be raised.

· Goods manufactured in EOU should e normally exported. However, since export market is often fluctuating and uncertain, these units are allowed to sell part of their products in DTA (Domestic Tariff Area ) i.e. within Indian, in terms of Foreign Trade Policy.

As per proviso to section 3(1) of Central Excise Act. in case of sale by EOU units, duty payable in case of DTA sale shall be equal to aggregate duties of customs which would be payable under Customs Act, if the goods are imported in to India.

4) SPECIAL ECONOMIC ZONES (S.E.Z.)

· China has made spectacular economic progress in recent years. Exports from China are growing at phenomenal speed. It was found that one major reason for growth in exports was due to ‘Special Economic Zones’ development by China. These are huge areas of thousands of hectares, where raw materials and capital goods can be imported without any duty and final product is exported. Excellent infrastructure is provided in these SEZs.

· India has also decided to introduce concept of SEZ in India. SEZ are like a separate island within country. These are treated as if they are outside India for customs purposes. Goods can be brought in SEZ without payment of customs duty or excise duty. Supplies to SEZ from other parts of India are treated as ‘ exports’ and are entitled to all export benefits. On the other hand, supplies from SEZ unit to any person outside SEZ is treated as ‘import’ by that person ad normal customs duty is payable.

· SEZ have full freedom of operations within SEZ and all facilities of import and export are provided within the zone itself.

· SEZ are grown engines that can boost manufacturing, augment exports and generate employment. private sector has been associated with the development of SEZs.

· More than 100 SEZs have been approved and are in various stages of development .

· SEZ and SEZ units will be exempt from all taxes like customs duty, excise duty, Central sales Tax, State Vat, Incomes tax etc. Supplies to SEZ from DTA (Domestic Tariff Area ) will be ‘export’ by DTA. Supplies from SEZ to unit in DTA will be ‘export’ by SEZ and ‘ Import’ by DTA unit.

· Goods manufactured in SEZ are ‘ excluded excisable goods’ and no excise duty is payable on them

· In order to encourage development and growth of SEZ, Special Economic Zones Act, 2005 was passed by parliament in May 2005. Basic purpose of the Act is smooth and hassle free operations in SEZ and a ‘Single Window Clearance’ for setting up an SEZ or a unit in SEZ .

Major provisions of the Act have been made effective w.e.f. 10-2-2006. SEZ rules have also been notified on the same date.

· Central Government has liberal policy for setting up such zones. SEZ can be

set up in public, private, joint sector or by Central Government or State

Government, Jointly or severally[section 3(1) of Act] Developer of such SEZ

can allocate fully develop plots to entrepreneurs on purely commercial basis.

Developer of SEZ can provide services like water, electricity, security,

restaurants, recreation etc. He can also develop township adjacent to SEZ.

Thus, integrated township plus manufacturing facilities will be provided in

SEZ. Proposal to establish a SEZ will be approved by Board of Approvals

(BOA).

The SEZ are expected to have world class infrastructure for efficient

manufacturing and service activities.

· Multi-product SEZs should have an area of 1,000 hectares or more. Minimum

35% area shall be earmarked for processing. Remaining 65%/ 75% area will be available for developing residential and commercial areas. Sector specific SEZ can be as small as 10 hectares, out of which 50% should be for processing and balance can be for residential and commercial areas. SEZ for Free Trade and Warehousing (FTW)shall have an area of 40 hectares or more with a built up area of not less than one lakh square meters.

· An entrepreneur can set up a manufacturing unit is SEZ. Normally, all his production will be exported. He should have positive NFE (Net Foreign Exchange Earnings].

5) DUTY DRAWBACK

· Manufacturers or processors can avail ‘ duty drawback’ Here, the excise duty and customs duty paid on inputs and service tax paid on input services is given back to the exporter of finished product by way of ‘ duty drawback’

· Drawback, in relation to any goods manufactured in India and exported, means the rebate of duty or tax, as the case may be, chargeable on any imported materials or excisable materials used or taxable services used as input services in manufacture of such goods.

· Incidence of un-rebated service tax and Fringe Benefit Tax (FBT) will be factored in various duty neutralization and remission schemes. No drawback is available on other taxes like sales tax and octroi.

· Drawback – When not eligible

(i) If sale proceeds of export goods are not received within time stipulated by RBI [This provision does not apply to goods supplied from DTA unit to SEZ unit.]

(ii) If no customs / excise duty is paid on the inputs or service tax is not paid

on input services

(iii) If imported inputs were obtained under Advance License (DEEC

scheme) without payment of duty

(iv) If importer avails DEPB or DFRC

(v) Goods manufactured under Customs Bond or Excise Bond where inputs

were obtained without payment of duty

(vi) Goods manufactured by EOU or a unit in Special Economic Zone (as

they obtain inputs without payment of duty )

(vii) If Cenvat was claimed on indigenous inputs. [In such case, excise portion of duty drawback will not be available ]

(viii) In case of negative value addition – i.e. selling price of exported goods is less than value of imported goods i.e. foreign exchange spent on import of raw material is more than FOB value of exports.

(ix) Jute batching oil used in manufacture of jute yarn, twist, twine etc.

(x) Packing materials used in manufacture of jute yarn, jute fabrics and jute manufacture.

(xi) Where specific rates are provided, drawback will not be paid if it is less than 1% of FOB. Value of the product, unless drawback claim per shipment is over Rs. 500

(xii) If wholesale market price of goods in India is less than the amount of drawback due.

(xiii) Exports to Nepal / Bhutan. However, exports to Nepal are eligible if payment is received under hard currency i.e. dollars, euro, Yen British pounds etc.

(xiv) No drawback of sales tax, Octroi or other taxes – drawback is of customs and Central Excise duties only.

(xv) Export of alcoholic liquor, cigarettes, cigar and pipe tobacco: as stores, to foreign going vessel of less than 200 tons.

(xvi) If goods exported by vessel of less than 1,000 tons: unless certificate is submitted that sale proceeds in foreign currency have been received and goods have landed at destination within three months.

(xvii) If drawback is less than Rs. 50

6) DEEMED EXPORTS 

India gets foreign aid from World Bank, Asia Development bank etc. for various prestigious projects in India for which global tenders are invited and India gets aid in foreign currency. Indian manufacturers and suppliers of services from India have to quote in competition with foreign suppliers. Evaluation of bids is done without considering customs duty. Since the supply of goods and service are for projects financed with free foreign exchange, these suppliers are treated as ‘Deemed Exports’. Similarly, supplies to EOU units and supplies against annual advance authorization are also ‘deemed exports’

These are so called because the goods and services do not leave the country. Suppliers of goods and services get payment in Indian rupees and not in foreign currency.

Following are treated as Deemed exports

a) Supply of goods against Advance Authorization or Advance Authorization for Annual Requirement / DFRC / DFIA.

b) Supply of goods to units located in EOU, STP, BTP or EHTP.

c) Scheme or supply of capital goods to holder of authorization under EPCG scheme.

d) Supply of goods to projects or turnkey contracts financed by multilateral or bilateral agencies against international competitive bidding.

e) Supply of capital goods to fertilizer plants.

f) Supply of goods to any project where import is permitted at zero customs duty and supply is make against international competitive bidding.

g) Supply of goods to power projects and refineries.

h) Supply of marine freight containers by EOU if the containers are exported within 6 month.

i) Supply to goods funded by UN Agencies and

j) Supply of goods to nuclear projects through competitive bidding (need not be international competitive bidding )

Benefits of deemed exports are available to manufacturer exporter only for supply of goods manufactured in India, and not to merchant exporters.

Benefits to Indian Supplier

The supplier are in India and supplier gets payment in Indian rupees. However, the Indian supplier is entitled to get following benefits.

· Refund of excise duty paid on final product.

· No excise duty is payable while clearing goods from factory against CT – 3 form to EOU. The Indian manufacturer is not required to reverse Cenvat credit availed on inputs.

· No Excise Duty is payable if supply is made against International Competitive Bidding.

· If Cenvat has been availed, only customs duty paid on inputs / components will be allowed as deemed duty drawback

· In respect of supplies made against advance authorization / DFRC / DFIA against ‘ deemed export’ the supplier is entitled to Advance Authorization / DFRC / DFIA for intermediate supplies

· The DTA unit can import inputs duty free under this authorization. Advance Authorization for intermediate supply / deemed export is issued to manufacturer – exporter for material required for manufacture of goods to be supplied under deemed export. Materials can be imported for deemed exports under Advance Authorization for Deemed Exports without payment of customs duty.