Understanding Customs Duty Processing for India
Basic customs duty is calculated based on the assessable value of the item. Because the assessable value plus the calculated duty equal the base amount, the duty along with additional and special duty must be calculated in a specific order. The customs duty is calculated in the following order:
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The customs authority holds and assesses the goods being imported.
The duty payable must be paid to the customs authority before the goods are released.
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The customs authority issues a bill of entry (BOE) assessing the duty payable.
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Send the BOE to purchasing for processing.
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Pass the BOE to accounts payable where the third-party voucher is used to enter and pay the customs authority.
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Copy the purchase order (PO) into the third-party voucher to ensure that the items or distribution are reflected on the third-party voucher.
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Override the amounts copied into the third-party voucher from the PO and enter new custom duty codes (the amounts as shown on the PO are generally different from what is actually payable to customs authorities) using the Invoice Line Custom Duty Tax Detail page.
When a new customs duty is added to the voucher line, the amount should roll up to the header. Also, at the time of creation of third-party voucher for payment to custom authorities, receiving is not complete; therefore, the third-party voucher cannot be created on the basis of receipts.
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Pay the customs authority.
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After the payment is made, the goods are released and a receiver is entered.
Associate the receiver to the third-party voucher.
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Run the Landed Cost Extraction Application Engine process (LC_EXTRACT).
The Landed Cost Extraction process captures any variances between the PO calculated amount and the amount entered on the third-party voucher and correctly cost the inventory.
Note:
The customs duty assessable value should not be confused with the excise assessable value defined on the Item Tax Applicability page.