Export License

Many items of goods are free for exports without obtaining any license. Export licenses are only required for items which are listed in the Schedule 2 of ITC (HS) Classifications of Export and Import items. An application form must be submitted to the Director General of Foreign Trade (DGFT) for grant of Export License for these items.

The Export Licensing Committee under the Chairmanship of Export Commissioner considers such applications on merits for issue of export licenses. Export of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) items are also permitted under a license or prohibited altogether. Items which fall in negative list requires license. Negative list includes:

1. Prohibited Items - These items cannot be exported or imported. E.g.: Wild life, exotic birds, wood and wood products in form of logs, timber, pulp and charcoal.

2. Restricted Items - These are items, export or import of which is restricted through license. They can be imported or exported only in accordance with regulation of government.

3. Canalized Items - These items can be imported / exported through Canalizing agency. For an example, an item like gold, in bulk, can be imported only by specified banks like SBI and some foreign banks or designated agencies.

So every exporter should verify whether the exported product requires license or not. For this verification one should consider the following points:

  • Nature of Goods
  • Destination Port
  • Uses of Items
  • Detail of importing company

Customs Tariff Act 1975

Customs Act was passed in 1962 by parliament. Customs Act was treated as Revenue Act which consists of 17 chapters and 161 sections. The rules under customs act are:

  • Duty drawback rules 1995.
  • Baggage rules, 1998.
  • Re-export of imported goods.

Customs Tariff Act 1975

The rates of customs duty was indicated in the customs tariff act 1975 as amended from time to time under Finance Acts. This act contains 2 schedules. In first schedule, it defines the classification and rate of duty for imports. Import duty is levied only a few items. And in second schedule, it defines the classification and rate of duty for exports. Export Duty is levied only on a few items. It makes provisions for duties like anti dumping duty, protective duties etc.

Levy of duties of customs is regulated by the customs act 1962 while the rates of duties are fixed by the Customs Tariff Act 1975.

Import Duty of Taxable Event:It is the day of crossing of customs barrier and not on the date when goods landed in India and entered territorial waters.

Export Duty of Taxable Event: It is the day of crossing the customs barrier, but Export is complete when it crosses territorial waters.


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