Customs Duty: Valuation, Classification, and Procedure
The building blocks
Customs duty is charged on goods crossing a border. A candidate must understand: the customs value of imported goods; the tariff classification of goods; the applicable rate structure; the point at which the duty becomes payable; the roles of the importer, declarant, and customs authority; and the procedures for entry, examination, and release. Also know the treatment of warehousing, temporary importation, and transit, and the rules on refunds and appeals.
Traps that recur in questions
The classic trap is valuation: questions often supply an invoice price and then add freight, insurance, and other costs to the border. Whether these are included depends on the valuation basis - under the transaction value approach, costs incurred up to the place of importation are typically added. Read the facts for what is included and what is not.
Second, classification: the same goods may attract different rates depending on how they are described. Questions test whether you identify the correct heading from the product description rather than the marketing name.
Third, duty versus other charges: customs duty, VAT on importation, excise, and surcharge may all apply to the same consignment but at different points and on different bases. Do not merge them.
Worked example
Goods are invoiced at 100,000, with freight to the border of 10,000 and insurance of 2,000. Customs value = 112,000. If the duty rate is 20 percent, duty = 22,400. Import VAT is then typically computed on the value plus duty, so if VAT is 15 percent, VAT = 15 percent of (112,000 + 22,400) = 20,160.
Rule of thumb
Build the customs value first, apply the rate, and then use value plus duty as the base for import VAT.