custom tariff regulations

We are small importers of products requiring no import licence under general category.

These products are imported in bulk in lose then packed in our own branded pack and sold to distributors & wholesalers (we do NOT sell directly to end users) with MRP stickers. There is no processing of these products in India; simply they are packed in India. So, no excise duty is applicable.


We offer bulk purchase discount 62-75% on MRP to our distributors/wholesalers. They in turn sell to retailers who finally sell to consumers at MRP or less (MOP).


Recently, we are being harassed by customs who argue that our import price is too low vis-à-vis MRP. Has to be paid on MRP and not on invoice value. We must clarify that we remit foreign exchange through our bank and then submit Bill of entry (obtained form our air couriers) tour bankers within 90 days from the date of import.


Our submission to customs: we are not selling directly to consumers; we offer up to 75% discount to our buyers, our net realisation is not more than 25% of MRP and marketing expenses apart from duty, octroi in Mumbai, air freight, packing cost.


Our questions:

  1. Can customs charge duty on MRP of products sold by us even though we are not directly selling to end consumers???
  2. If yes, what is the basis or formula under which this is done??? Pls give relevant rules.
  3. If not, what rules can we quote under the custom rule???

As far as custom valuation is concerned, they cannot do anything. They have no material to reject your transaction value and on these grounds they cannot succeed. In fact, the custom valuation done by you based on transaction value is the correct valuation under Setion 14 of the Custom Act and Custom Valuation Rules.

You should see the nature of goods. For may product, activity of packing repacking etc. amounts to manufacture under Central Excise. You should examine these provisions and if your product falls under definition of deemed manufacture, you may be very close to problem.


Thank you Mr Rajesh Kumar.


It is Screen Protector (made of plastic material) used to protect screen of mobile/digital camera. There is NO further processing involved as such. We buy in bulk and then pack it in a printed pouch (with our brand name), so I am told that it does not fall under any excise provision.


Only problem that we face is as mentioned earlier: custom people raise the question of “low import price” (they call it under valued), and its high MRP. But the fact remains that it is available in China at very low unit price of Rs. 15 per pc and we offer as high as 75% discount on average MRP of Rs. 200 to our distributors/wholesalers who again sell to retailers who then sell to consumers like you/me at less than MRP. Our landed cost + marketing expenses come to about Rs. 55 per pc. So in effect our net margin is about 30% but they always talk of MRP and duty on MRP.


The process undertaken by perfectly valid. The department has no case against you.

All that i fear that they may try to pressurise you in investigation. They may try to harass you into accepting illegal valuation done by them. Take assistance of a good lawyer in investigation, you will be protected.

law student

Mr. Rajesh is absolutely ryt...well done..




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