ASSESSMENT OF GOODS

-By Mrs. Monica Pradyot

Assistant Professor
SOL UPES
INTRODUCTION:
 Section 17 of the Customs Act, prescribes the method for assessment of duty.
 For example, under Subsection (1), after an importer has entered any imported goods or an
exporter has entered any export goods, the importer and exporter self assess the duty if any
leviable on such goods. As per sub-section 2 the self assessed goods may be verified,
examined or tested by the proper officer.
 Section 17 reads as follows:
(1) An importer entering any imported goods under section 46, or an exporter entering any
export goods under section 50, shall, save as otherwise provided in section 85, self-assess the
duty, if any, leviable on such goods.
(2) The proper officer may verify the self-assessment of such goods and for this purpose,
examine or test any imported goods or export goods or such part thereof as may be
necessary.
INTRODUCTION:
3) For verification of self-assessment, the proper officer may require the importer, exporter or any
other person to produce any document or information, whereby the duty leviable on the
imported goods or export goods, can be ascertained and thereupon, the importer, exporter or
such other person shall produce such document or furnish such information.
4) Where it is found on verification, examination or testing of the goods or otherwise that the self-
assessment is not done correctly, the proper officer re-assess the duty leviable on such goods.
5) Where any re-assessment done is contrary to the self-assessment done by the importer or
exporter regarding valuation of goods, classification, exemption or concessions of duty availed
consequent to any notification issued therefore under this Act and in cases other than those
where the importer or exporter, as the case may be, confirms his acceptance of the said re-
assessment in writing, the proper officer shall pass a speaking order on the re-assessment,
within 15 days from the date of reassessment of the bill of entry or the shipping bill, as the case
may be.
INTRODUCTION:

6) Where re-assessment has not been done or a speaking order has not been passed on re-
assessment, the proper officer may audit the assessment of duty of the imported goods or export
goods at his office or at the premises of the importer or exporter, as may be expedient, in such
manner as may be prescribed.
PROVISIONAL ASSESSMENT OF DUTY [SECTION 18]

 Notwithstanding anything contained in this Act but without prejudice to the provisions of
section 46,
(a) where the importer or exporter is unable to make self-assessment under section 17(1) and
makes a request in writing to the proper officer for assessment; or
(b) where the proper officer deems it necessary to subject any imported goods or export goods to
any chemical or other test; or
(c) where the importer or exporter has produced all the necessary documents and furnished full
information but the proper officer deems it necessary to make further enquiry; or
(d) where necessary documents have not been produced or information has not been furnished and
the proper officer deems it necessary to make further enquiry,
PROVISIONAL ASSESSMENT OF DUTY [SECTION 18]

 the proper officer may direct that the duty leviable on such goods be assessed provisionally if
the importer or the exporter, furnishes such security as the proper officer deems fit for the
payment of the deficiency, if any, between the duty as may be finally assessed and the duty
provisionally assessed.
 When the duty leviable on such goods is assessed finally or reassessed by the proper officer in
accordance with the provisions of this Act, then-
(a) in the case of goods cleared for home consumption or exportation, the amount paid shall be
adjusted against the duty finally assessed and if the amount so paid falls short of, or is in excess
of the duty finally assessed, the importer or the exporter of the goods shall pay the deficiency or
be entitled to a refund, as the case may be;
(b) in the case of warehoused goods, the proper officer may, where the duty finally assessed or
reassessed, is in excess of the duty provisionally assessed, require the importer to execute a
bond, binding himself in a sum equal to twice the amount of the excess duty.
PROVISIONAL ASSESSMENT OF DUTY [SECTION 18]

 The importer or exporter shall be liable to pay interest, on any amount payable to the Central
Government, consequent to the final assessment order or re-assessment order, at the rate fixed
by the Central Government.
RE-IMPORTATION OF GOODS (SECTION 20)

 When goods are re-imported into India, after exportation there from, such goods are liable to
duty and are subject to all the conditions and restrictions, if any, to which goods of the like kind
and value are liable or subject, on the importation thereof. The provisions relating to these
matters are found in Section 20 of the Customs Act, 1962.
 Section 20:
 If goods are imported into India after exportation there from, such goods shall be liable to duty
and be subject to all the conditions and restrictions, if any, to which goods of the like kind and
value are liable or subject, on the importation thereof.
DUTY ON PILFERED GOODS (SECTION 13)

 If any imported goods are

 pilfered after the unloading thereof and
 before the proper officer has made an order for clearance for home consumption or deposit
in a warehouse,
 the importer shall not be liable to pay the duty leviable on such goods except where such goods
are restored to the importer after pilferage.
 As per section 45(3), if any imported goods are pilfered after unloading thereof in a customs
area while in the custody of a person approved by the Commissioner u/s 45(1), that person shall
be liable to pay duty on such goods at the rate prevailing on the date of delivery of an import
manifest or an import report to the proper officer u/s 30 for the arrival of the conveyance in
which the said goods were carried.
DUTY ON PILFERED GOODS (SECTION 13)

 Section 13 does not apply for the warehoused goods.

 With effect of Amendment on 10-5-2013, there shall be no duty liability on a sample of goods
consumed/destroyed during the course of testing/examination.
 Section 13 deals with only pilferage. It does not deal with loss/destruction of goods.
 Conditions to be satisfied for exemption from duty:
(i) The imported goods should have been pilfered.
(ii) The pilferage should have occurred after the goods are unloaded, but before the proper
officer makes the order of clearance for home consumption or for deposit into warehouse.
(iii) The pilfered goods should not have been restored back to the importer.
GOODS DERELICT, WRECK,
ETC. (SECTION 21)

 Section 21 lays down that all goods, derelict,

jetsam, flotsam and wreck brought or coming
into India, shall be dealt with as if they were
imported into India, unless it be shown to the
satisfaction of the proper officer that they are
entitled to be admitted duty free under this Act.
GOODS DERELICT, WRECK, ETC. (SECTION 21)

 “Derelict” is a term applied to any property, whether vessel or cargo, left or abandoned in open
sea by persons in charge of it without any hope of recovering or intention of returning to it.
 “Jetsam” is where the goods are thrown into the sea with a view to lighten the ship in order to
prevent it from sinking.
 “Flotsam” is where the goods having been at sea in a ship, are separated from it by some peril.
The property in this case is not renounced by the owner by throwing them overboard and the
owner is entitled to recover the possession.
 “Wreck” refers to the property cast ashore within the ebb and flow of the tide after shipwreck.
The property involved may be a ship, a cargo or portion thereof.
ABATEMENT OF DUTY ON DAMAGED OR DETERIORATED
GOODS (SECTION 22)
 If any goods are found damaged and are examined by customs authority for that purpose on an
application made therefor, the duty can be charged only on the goods which are serviceable or
on the reduced value as may be determined by customs authority. Provisions in this regard have
been made under Section 22 of the Customs Act, 1962.
 Under Section 22, there is allowed abatement of duty on damaged or deteriorated goods under
Sub-section (1), where it is shown to the satisfaction of the Assistant/Deputy Commissioner of
Customs—
(a) that any imported goods had been damaged or had deteriorated at any time before or
during the unloading of the goods in India; or
(b) that any imported goods, other than warehoused goods, had been damaged at any time
after the unloading thereof in India but before their examination under Section 17, on
account of any accident not due to any wilful act, negligence or default of the importer, his
employee or agent; or
ABATEMENT OF DUTY ON DAMAGED OR DETERIORATED
GOODS (SECTION 22)
(c) that any warehoused goods have been damaged at any time before clearance for home
consumption on account of any accident not due to any wilful act, negligence or default of the
owner his employee or agent. Such goods are chargeable to duty in accordance with the provisions
of Sub-section (2). \
 Sub-section (2) lays down that the duty to be charged on the goods referred above shall bear the
same proportion to the duty chargeable on the goods before the damage or deterioration which
the value of the damaged or deteriorated goods bear to the value of the goods before the
damage or deterioration.
 Under Sub-section (3), the value of damaged or deteriorated goods may, be ascertained by
either of the following methods at the option of the owner, viz.:
(a) the value of such goods may be ascertained by the proper officer, or
(b) such goods may be sold by the proper officer by public auction or by tender, or with the
consent of the owner in any other manner and the gross proceeds shall be deemed to be the
value of such goods
REMISSION OF DUTY ON LOST, DESTROYED OR ABANDONED
GOODS (SECTION 23)
 Where any goods are lost or destroyed, except by way of pilferage, whether totally or partially,
even after the “out of charge” is signed but before they are physically removed from customs
area, the owner is entitled for remission of duty on such goods.
 Further, an owner of goods can surrender the title to the goods to customs before an order for
home consumption has been made and no duty need be paid on such goods.
 Section 23 relates to remission of duty on lost, destroyed or abandoned goods. It reads as
follows:
1) Without prejudice to the provisions of Section 13, where it is shown to the satisfaction of the
Assistant/Deputy Commissioner of Customs that any imported goods have been lost otherwise
than as a result of pilferage or destroyed, at any time before clearance for home consumption,
the Assistant/Deputy Commissioner of Customs shall remit the duty on such goods.
REMISSION OF DUTY ON LOST, DESTROYED OR ABANDONED
GOODS (SECTION 23)
2) The owner of any imported goods may, at any time before an order for clearance of goods for
home consumption under Section 47 or an order for permitting the deposit of goods in a
warehouse under Section 60 has been made, relinquish his title to the goods and thereupon he
shall not be liable to pay the duty thereon.

NOTE: The owner of any such imported goods shall not be allowed to relinquish his title to such
goods regarding which an offence appears to have been committed under this Act or any other
law for the time being in force
REMISSION OF DUTY ON LOST, DESTROYED OR ABANDONED
GOODS (SECTION 23)
• Section 23 applies only when there is no pilferage under section 13
• Burden of proof is on importer to prove loss or destruction under section 23
• Loss or destruction should be found before clearance of goods from the customs.
• This implies that the loss is forever and beyond recovery. The loss referred to in this section is
generally due to natural causes like fire, flood, etc. The loss of goods may be at the warehouse
also.
• Section 23 is applicable even for the goods warehoused.
DENATURING OR MUTILATION OF GOODS (SECTION 24)

 The Central Government may make rules for permitting at the request of the owner the
denaturing or mutilation of imported goods which are ordinarily used for more than one
purpose so as to render them unfit for one or more of such purposes; and where any goods are
so denatured or mutilated they shall be chargeable to duty at such rate as would be applicable if
the goods had been imported in the denatured or mutilated form.
 Denaturing is connected with liquid items and mutilation is associated with solid items. After
the process of mutilation or denaturing, the goods are classified as per the latest condition and
the lower rate as applicable after mutilation or denaturing will be taken for assessment. This
provision is importer friendly and this benefit is given to encourage him to undertake the
mutilation/ denaturing process in India.
 For example, you may import pure ethyl alcohol attracting 150% of Basic Custom Duty
and you may denature it by adding copper sulphate. Then after denaturing it is classified
as denatured ethyl alcohol which attracts only 5% Basic Custom Duty.
POWER TO GRANT EXEMPTION FROM DUTY (SECTION
25)
 Under the section, exemptions are of two kinds. One type which is in common use, is under
Sub-section (1), in public interest, where there is a general exemption in respect of any article
or class of articles. Such exemptions may be absolute or subject to certain conditions specified
in the relevant notifications.
(Notifications are in exercise of “sovereignty” i.e. legislative powers)
 Other is under Sub-section (2), the exemptions granted may be applicable to specific cases and
these will be by a special order. These have to be done in respect of any goods of strategic or
secret nature or for charitable purpose, which are stated in such order.
(Special order is an executive order because it is not required to be published and it grants
exemption specifically and not generally).
 No duty shall be collected if the amount of duty leviable is equal to, or less than, one hundred
rupees.
POWER TO GRANT EXEMPTION FROM DUTY (SECTION
25)
 Sub section (7) inserted vide Finance Act, 2014 provides that the mineral oils (including
petroleum and natural gas) extracted or produced in the continental shelf of India or
exclusive economic zone of India as referred to in section 6 and section 7, respectively, of the
Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act,
1976, and imported prior to the 7th day of February, 2002 shall be deemed to be and shall
always be deemed to have been exempted from the whole of the duties of customs leviable
on such mineral oils and any judgment, decree or order of any court, tribunal or other
authority, no suit or other proceedings in respect of such mineral oils shall be maintained or
continued in any court, tribunal or other authority.
 Notwithstanding the exemption provided under sub-section (7), no refund of duties of customs
paid in respect of the mineral oils specified therein shall be made.
 REFUND AND
RECOVERY
PROVISIONS
OF CUSTOM
DUTY
(SECTION 26 TO 28D)
REFUND OF EXPORT DUTY IN CERTAIN CASES
(SECTION 26)
 Where on the exportation of any goods any duty has been paid, such duty shall be
refunded to the person by whom or on whose behalf it was paid, if –
(a) the goods are returned to such person otherwise than by way of re-sale;
(b) the goods are re-imported within one year from the date of exportation; and
(c) an application for refund of such duty is made before the expiry of six months from
the date on which the proper officer makes an order for the clearance of the goods.
REFUND OF IMPORT DUTY IN CERTAIN CASES
(SECTION 26A)
 Where on the importation of any goods capable of being easily identified as such imported
goods, any duty has been paid on clearance of such goods for home consumption, such duty
shall be refunded to the person by whom or on whose behalf it was paid, if;
a) the goods are found to be defective or otherwise not in conformity with the specifications
agreed upon between the importer and the supplier of goods:
However, no duty shall be refunded where the goods have been worked, repaired or used after
importation except where such use was indispensable to discover the defects or non-conformity
with the specifications.
b) the goods are identified to the satisfaction of the Assistant Commissioner of Customs or Deputy
Commissioner of Customs as the goods which were imported;
c) the importer does not claim drawback under any other provisions of this Act; and
 REFUND OF IMPORT DUTY IN CERTAIN CASES
(SECTION 26A)
d)
(i) the goods are exported; or
(ii) the importer relinquishes his title to the goods and abandons them to customs; or
(iii) such goods are destroyed or rendered commercially valueless in the presence of the proper officer,
in such manner as may be prescribed and within a period not exceeding thirty days from the date
on which the proper officer makes an order for the clearance of imported goods for home
consumption under section 47.
 These provisions shall not apply to the goods regarding which an offence appears to have been
committed under this Act or any other law for the time being in force.
 No refund shall be allowed in respect of perishable goods and goods which have exceeded their
shelf life or their recommended storage-before-use period.
 CLAIM FOR REFUND OF DUTY (SECTION 27)

 As per this section-

(a) Any person who has paid the duty or interest or who has borne the incidence of duty or interest
can claim refund of duty by way of application.
(b) The application for refund is to be made to the Assistant Commissioner of customs or Deputy
Commissioner of customs.
(c) The application should be made before the expiry of one year from the date of payment of such
duty or interest. However the limitation period of one year shall not apply where duty or
interest is paid under protest.
(d) The application should be accompanied by such documentary or other evidence to establish that
the amount of duty or interest in relation to which such refund is claimed was collected from, or
paid by him and incidence of such amount is not transferred to any other person.
 CLAIM FOR REFUND OF DUTY (SECTION 27)

 Where the amount of refund claimed is less than rupees one hundred the same shall not be
refunded.
(2) If, on receipt of any such application, the Assistant/Deputy Commissioner of Customs is satisfied
that the whole or any part of the duty and interest, if any, paid on such duty paid by the applicant is
refundable, he may make an order accordingly and the amount so determined shall be credited to the
Fund.
 The amount of duty and interest, if any, paid on such duty as determined by the Assistant/Deputy
Commissioner of Customs shall, instead of being credited to the Fund, be paid to the applicant, if
such amount is relatable to the duty and interest paid by the importer or exporter.
 This was to keep outside the ambit of unjust enrichment, the refund of duty paid in excess by the
importer before an order permitting clearance of goods for home consumption.
 CLAIM FOR REFUND OF DUTY (SECTION 27)

 No refund shall be made if it is in contrary to any judgement, decree, order or direction

of the Appellate Tribunal or any Court or in any other provision of this Act or the
regulations made thereunder or any other law for the time being in force.
 INTEREST ON DELAYED REFUNDS (SECTION
27A)
 It provides for payment of interest on refunds of duty which is not paid to the applicant within 3
months from the date of receipt of application.
 It has also been provided that in case where appellate remedies are resorted to either by the
Department or by the assessees, the refund finally payable shall bear interest for the period starting
from the date immediately after the expiry of 3 months from the date of receipt of applications.
 INTEREST ON DELAYED REFUNDS (SECTION
27A)
 It may be specifically noted that:
a) interest will be paid only on the amount of duty which is finally held to be refunded.
Example: in case the assessee has claimed a refund of 60,000/- the Assistant/Deputy Commissioner allows a
refund of 10,000/- and on appeal the amount decided to be refunded is 30,000/- then the interest would be
payable on the amount finally decided to be refunded viz. 30,000/- for the period commencing from the
expiry of three months from the date of the refund application till its payment. Conversely, if the
Assistant/Deputy Commissioner has determined the amount due as refund at 30,000/- which on appeal by
the Department is reduced to 10,000/- interest would be payable for the aforesaid period only on the amount
of 10,000/-;
b) the interest will be paid at the rate to be fixed by the Central Government by issue of Gazette
Notification as simple interest, Interest on interest is not payable;
c) no interest is to be paid on any refund of fines or penalties; the provision has been made for payment of
interest only on delayed refund of duty amounts
INTEREST ON DELAYED PAYMENT OF DUTY
(SECTION 28AA)
 The person, who is liable to pay duty in accordance with the provisions of section 28,
shall, in addition to such duty, be liable to pay interest, at the rate fixed, whether such
payment is made voluntarily or after determination of the duty.
 Interest at such rate not below 10% and not exceeding 36% per annum.
 The Central government has fixed the rate of interest at fifteen per cent. per annum w.e.f
1.4.2016 under the section.