| # Customs Authorization Overview When an enterprise wants to obtain the benefits of a specific import and/or export process as inward processing, an authorization from the customs authorities is required. Such an authorization is stored in the application as a customs authorization. This customs authorization specifies the information such as the type of authorization, the time frame during which the customs authorization can be used and the items and quantities for which the customs authorization is valid. Customs Authorization is issued to allow duty free import of material and products that are used in the export of goods (after making normal allowance for wastage of material). Also the material or product which is consumed during production, such as fuel, oil, and energy catalysts can be imported duty free. The modes of payment of the import duty is: Suspension: The payment of import duty is not required at the time of import. However, if the imported item or the compensating product is sold to a customer in the domestic country or if the item is not used (already available in inventory), at the time of closing the authorization process, import duty must be paid along with the interest. Draw-back: The payment of import duty is required at the time of import. However, the duty can be claimed back when the goods or compensating product is exported. Note Customs authorization is valid and can be used for a entity (company) and subsidiaries within the country related to the entity. Compensating and Import Product details When you apply for a customs authorization, you must specify the details of the material, product, or both to be imported (based on the Harmonized Commodity Description and Coding System (HSN) code) along with the material, product, or both to be exported (based on the HSN code). If the exact item code (such as specifications) is not known at the time of applying for the authorization, the authorization can also use HSN code. Customs authorization also specifies a rate of yield to express the quantity of the imported product to be used in the compensating product. The rate of yield is a measure to determine the number of imported products that are required to manufacture your processed products. If more than one end product is delivered or exported using the imported material or product, you can use the same form for all the exported products. Therefore, the imported products can be used for all the compensating products specified on the customs authorization. Quantity and Value details The custom authorities authorize quantity in metric unit to avoid misuse of the customs authorization. The quantity of the material or product applied for the import can be expressed in another unit of measure on the custom authorization form. Therefore, two units of measure can be listed on the form. However, you can also use the metric unit (wherever possible) on the authorization form. Example Steel plates can be ordered in pieces, but customs may authorize the plates in metric units such as kilograms. So quantities in both of these units are part of the authorization. This is valid for imported and compensating items. Both these item(s) must be applied in two units of measure on custom authorization form. Quantity or Value restriction (blocking) The quantities and or value on the authorization form can be blocked for the product to be imported. Period validity Each customs authorization is valid for a specified quantity and value. This validity can vary for the product to be imported and product to be exported. Related topics Currencies - overview |