1

CUSTOM & EXCISE

SLIDE A 1

Zulhilmi b. Muhammad Nasir

JLD20802
Room: 1421
HP: 019-2934883
zulhilmi@unikl.edu.my

ABBREVIATIONS

ATIGA Asean Trade in Goods Agreement

AHTN Asean Harmonised Tariff Nomenclature
HS Harmonised System
IL Import Licence
EL Export Licence
CCCN Custom Co-Operation Council Nomenclature
SITC Standard International Trade Classification
MITI Ministry of International Trade and Industry
MAI Malaysia Automotive Institute

MIDA Malaysian Industrial Development Authority

MATRADE Malaysia External Trade Development Corporation
MPC Malaysia Productivity Corporation
MIDF Malaysia Industrial Development Finance Berhad

 VISION

VISION, MISSION & ETHICS

VISION
Making Malaysian Customs
services world class in 2015

ETHICS
Trustworthy Services,
Sincere and Dedicated
(A.B.I.D.)
Amanah Berkhidmat
Ikhlas Berdedikasi

Mission
Spurring economic growth,
preserving national
security and well-being of
the people through
revenue collection
services, facilitation of
trade and industrial and
ensuring adherence to the
laws through efficient and
effective means
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ORGANIZATION CULTURE
TRUST

T Togetherness (Bersatu Hati)

R Respect (Saling Menghormati)
U Understanding (Faham Memahami)
S Spiritual (Kerohanian
T Totality (Menyeluruh)
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RATIONALE OF THE PROGRAMME

Custom and Excise is an important area
require to understand by student who are
learning the Industrial Logistic.
Basic understanding on the Custom activities is
an important element for the student before
they go into the industry.
Understanding on the roles of Custom
Malaysia and its activities is an important
element and the student can apply this when
they unite the industry.

LEARNING OUTCOMES --- UNDERSTAND

1. Function of Royal Custom on handling all the
daily activities related to the industry logistics.
2. Evaluate the custom procedure related to
importation and exportation activities
3. Analyse the activities carried by custom on
liaison with the logistic industries
4. Demonstrate the understanding of student on
the societal, healthy, safety carried by custom
and the consequent responsibilities relevant in
industrial logistic practise.

THE OBJECTIVES

The features of custom and forwarding practices

The problem encounter in custom and forwarding
practices
The sensitivity to the ethnical issues involved with custom
and forwarding practices
The custom and forwarding procedure
The related document involving custom and forwarding to
reflect the sound of custom and forwarding operation

OVERALL ABOUT THE MODULE

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TOPIC 1
Introduction @
Background

CUSTOM

Role

Responsibilities
Objectives
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HISTORY
Exchequer @ Penghulu
Bendahari
1826
Gabenor

Powered by Sultan

Monitor by Board of Control

Tax Farmimg

The highest Collector

Government
Monopolies

License issuance until 1937

H.M Custom and

Excise
Jabatan Kastam dan
Eksais Persekutuan
Tanah Melayu 1948

Until 1948

Ordinan Kastam 1952 - 1957

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HISTORY
1.Maritime and harbour laws existed along with matters
pertaining to a tax structure involving the foreign and local
merchants.
2. Chief of the Exchequer responsible on tax matter
3. controlled all the revenue and Customs Officers and
looked after the palace building and equipment".
(R.J.W. Wilkinson "The Melaka Sultanate". JMBRAS VOL. XIII-Pt.2,
1935, p.31).

4. The portfolio in charge of tax collection was the Harbour

Master. He was entrusted by the king with the power to
enforce rules and Harbour Laws.
13

TAX ADMINISTRATION THE STRAITS SETTLEMENTS AND

FEDERATED MALAY STATES

The Straits Settlements Spore, Penang, Melaka, Labuan &

Dinding in Perak
Tax administration - supervised by Governor - Council
directly answerable to Governor General in Calcutta, India -
controlled by Board of Governors of East India Company
Government Monopolies (GM) as a body were operated the
activities.
GM active until 1937

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INTRODUCTION @ BACKGROUND

The Royal Customs Department Malaysia

Came effect on 22 Oct, 1934 was known as Trade and

Customs Department.
Function is to compile trade statistics, which is now
performed by the Statistics Department
In year of 1964, the Department was conferred with the
title ROYAL and from then onward the Department
was known as the ROYAL CUSTOMS & EXCISE
DEPARTMENT until early 2002.
Now the Department is known as the ROYAL CUSTOMS
DEPARTMENT.

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ROYAL CUSTOM DEPARTMENT

Johor
Melaka
Kuala Lumpur

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ROLE
Import Duty

Export Duty
Sales Tax
Excise Duty

Principally is a revenue
collecting department and
collecting various indirect text
such as :

Service Tax
Vehicle Levies
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IMPORT DUTY
Duty import rates vary according to the type of
imported goods. The rates imposed on each good
imported is describe in column 4 and 5 of the First
Schedule under the Customs Duties Order 1996.
It is possible that imported goods are exempted from
the import duty. However, it is not exempted from the
sales tax.

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EXPORT DUTY
Column 5 of The First Schedule under the Customs Duties
Order 1996 indicates the export duty rates imposed on
particular exported goods.

The word "Nil" printed in column 4 and 5 in the Customs

Duties Order 1996 indicates no export and import duties
will be levied on export and imported goods.

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SALES TAX
Rates on the sales tax levied are described in the Sales Tax Order
1977.
There are 3 different rates charges: 5%, 10%, 20% and 25% which are
levied on all imported goods other than those listed in the Sales Tax
(Exemption) Order 1980 which are exempted from the sales tax.
Other than the goods described above and those exempted from the
Sales Tax (Exemption) Order 1980, the sales tax levied would be either
5% or 10%
For imported goods, sales taxes are calculated and assessed by:
The value of the imported goods
Value of customs duty involved
Value of excise duty involved

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EXCISE DUTY

Duties are levied to selected products manufactured locally,

namely cigarettes, liquors, playing cards, mahjong tiles,
petrol, diesel and also motor vehicles
For manufacturer licensed under LMW under section 65/65A
of the Custom Act 1967, they are exempted from being licensed
under the Excise Duty Act 1976

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SERVICE TAX

Tax imposed on certain goods and services prescribed in

certain establishment. The good include food drinks and
tobacco, while the main service are provision of rooms for
lodging, meeting, convention, cultural and fashion show;
health services, professional and consultancy service
prescribed by legal, engineering, surveyor, architectural,
accounting, advertising, insurance company, motor vehicles,
service and repair centre's, telecommunication service,
security and guard services, secretarial club, golf clubs/resort,
estate agent, packing services, courier service, doctors, credit
cards companies, forwarding agents, hotels having more than
25 rooms and restaurants within or outside hotels are subject
to service tax
Generally the imposition of service tax is subject to a specific
threshold based on annual turnover ranging from
RM150,000.00 to RM500,000.00

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VEHICLES LEVIES

For the movement of transport

to or from Malaysia to other country

23

RESPONSIBILITIES

Cntnue

Assist the Government to formulate policies relating to

the indirect tax administration by identifying new tax
resources so as bring in more revenue
Plan, create and implement techniques for the efficient
collecting of revenue through the introduction of new
procedure and equipment
Introduce more effective methods to combat smuggling
which causes loss of revenue
Help promote the rapid growth of local industries of
administering tariff concessions, duty drawbacks,
establish of Free Industrial / Commercial Zones and
Licensed Manufacturing Warehouses.
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Cntnue

Conduct research in the valuation of goods for

purposes of collecting of duty and maintain a check on
the proper collection of duties
Act on behalf of other departments/ministries such as
Ministry of Trade, Ministry of Home Affairs, Department
of Agriculture, Department of Wildlife and Department
of Health to control import and export of goods which
are prejudicial to the interest of the country
Participate actively in the activities of international
bodies, such as the World Customs Organizations and
World Trade Organization.

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Cntnue

In ensuring proper implementation of responsibilities

the Departments duties and operations are carried out
through programmers specialization in line with
Modified Budgeting Systems such as:
Enforcement
Prevention
Management
Corporate

Planning and Development

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OBJECTIVE
To collect custom duties

Objective

To prevent loss of revenue

To assist industries
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CUSTOM & EXCISE

SLIDE A 2

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DATO' KHAZALI BIN HJ. AHMAD

KETUA PENGARAH KASTAM MALAYSIA

DATO' KHAZALI BIN HJ. AHMAD

KETUA PENGARAH KASTAM MALAYSIA

Royal Malaysian Customs Headquarters Ministry Of Finance

Complex,
No. 3 Persiaran Perdana,
Precinct 2, 62596 Putrajaya
Tel: 03-8882 2100/2300/2500
Call Center : 037806 7200
Contact Public Relation Dept

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ORGANIZATION STRUCTURE
Enforcement
Division

Compliance
Mgmt
Division

Internal
Tax
Division

Custom
Division

Corporate
Planning
Division
Technical
Services
Division

Director
General

KPSM
Division

AKMAL
Legal
Division

Enforcement
Division
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CUSTOM ORGANIZATION

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ORGANIZATION STRUCTURE

Director General of
Customs

Deputy Director
General
(Enforcement)

32

Deputy Director
General
(Preventive)

Deputy Director
General
(Management)

DATO' kHAZALI BIN HJ. AHMAD

KETUA PENGARAH KASTAM
MALAYSIA

33

34

35

REVIEW CLASS ON 15 JAN

History (1934)

Revenue
Collecting

Role
8 areas

Royal Custom

Responsibilities
3 Objective

Objective
Coverage
areas

Import

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IMPORT AND EXPORT

LEGAL PROVISION, DOCUMENTATION AND

PROCEDURES

37

IMPORT AND EXPORT

Goods can be imported and exported by land, air and sea
but only at the places listed in the First Schedule of the
Customs Regulations, 1977.
Airport

Port
railway
Land
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INTERNATIONAL AIRPORT
Peninsular Malaysia (22/5)
Malacca International Airport, Melacca
Bayan Lepas International, Penang
Langkawi International, Kedah
Kuala Lumpur International, Sepang
Senai International, Johor
East Malaysia (36/3)

Kota Kinabalu International, Sabah

Kuching International, Sarawak
Miri International Airport
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PORTS IN MALAYSIA
Kuah, Langkawi Teluk Ewa, Langkawi
Pulau Pinang, Butterworth
Lumut, Perak
Port Klang, Selangor
Melaka, Melaka
Pasir Gudang / Tanjung Belungkor / PTP
Kuantan / Tanjung Gelang
Kemaman
Pengkalan Kubor, Kelantan
Kota Kinabalu / Labuan / Sandakan
Kuching / Miri / Sibu,

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7 - MAJOR CONTAINER PORTS

1. Northport, Klang - Northport (M)
Bhd
2. Westports, Klang - Westports
Malaysia Sdn Bhd
3. Penang Port, Penang
4. Port of Tanjung Pelepas (PTP),
Johor
5. Johor Port, Johor
6. Bintulu Port, Sarawak
7. Sapangar Bay Container Port,
Sabah - Sabah Port Sdn Bhd

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LAND
Padang Besar, Perlis
Wang Kelian, Perlis
Bukit Kayu Hitam, Kedah
Pengkalan Hulu, Perak
Johor Bahru, Johor Gelang Patah, Johor
Rantau Panjang, Kelantan
Sindumin, Sabah
Tebedu, Sarawak Sungai Tujuh, Sarawak

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RAILWAY

Padang Besar, Perlis

Johor Bahru, Johor
Rantau Panjang, Kelantan

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IMPORT - DIAGRAM

Buyer

3 Objective

CUSTOM

V
Supplier

P
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IMPORT - DIAGRAM
Senai
Airport

Singapore

Bonded
Warehouse

CIQ

Importer
A

Importer
C

Importer
B - LMW

Pasir Gudang
Port

Sabah Port
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IMPORT

LEGAL PROVISION, DOCUMENTATION AND

PROCEDURES

Import flow

DECLARATION FORM
All goods meant for import and export either it is under import/export duty or otherwise
must be declared in writing in the respective forms; customs form No 1 for imported goods
and customs form No 2 for exported goods.
Declaration forms must be filled in detail including providing true information regarding the
number, description of packages/crates, value, weight, quantity and type of goods. The
origin of the goods will also need to be informed.
This applies for goods meant for exports as well where the final destination of the goods is
notified. Completed Custom forms will need to be submitted to Customs offices at the
place where the goods are to be imported or exported.

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1. INTRODUCTION

The Customs Department is one of the enforcement agencies

under the Ministry of Finance. The Department is entrusted to
collect revenue in the form of taxes as embodied under the various
act of Parliament.
Among the various acts under the jurisdiction of the Department
and relevant to business community are :
The Custom Act 1967
The Excise Act 1976
The Sales Tax Act 1972; and
The Service Tax Act 1975
Basically duties imposed on imports and exports serve a dual purpose.
Firstly, it is for revenue and secondly, it acts as tariff barriers for the
protection of local industries.
An additional barriers is imposed in severe cases and this takes the form
of conditional or total prohibition

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2.1 Presentation of documents at Customs Office

All documents relating to import/including inward manifest
and customs goods declaration must be submitted to Custom
office where the goods are imported.

2.2 Inward report of aircraft, vessel and vehicle

The basic of Custom accounting for imported goods is the

inward manifest or report of the carrying aircraft, vessel
or vehicle. Thus, the inward manifest must be lodge with
the Customs within a specified time after the arrival of the
carrier:49

INWARD REPORT OF AIRCRAFT, VESSEL AND

VEHICLE
Carrier

Responsible Person

When

a. Vessel sec 52,

Custom Act 1967

Master or Agent of the vessel Within 24 hrs after arrival and

before any cargo is unshipped

b. Aircraft sec 56
Custom Act 1967

Pilot or Agent of the Aircraft

At the time of arrival and before

the cargo is delivered

c. Rail sec .60

Custom Act 1967

Station Master

At the time of arrival and on

demand by the proper officer of
Customs.

d. Vehicle sec.78
Custom Act 1967

Person in control of goods

On arrival at the place of import

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2.3 The balancing of inward manifest constitutes a

significant exercise to both custom authorities and the ship
or aircraft agents. Meaning that every item of cargo listed in
the manifest must be accounted for and balanced by
custom declaration. As regards this balancing exercise, the
ship or aircraft agent is required to prepare and submit the
related outturn certificate to Customs.
Section 55, Custom Act 1967

2.4 Time of making Customs Declaration

The time for submitting Customs declaration differs with
the manner of importation and this may comprise :-

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A ) Dutiable Goods :i) Warehouse on first

Arrival or landing

Within one month of landing or within 3

days of receiving notice from Customs
Sec.78(2)

ii) Exempted from warehouse

At the time of arrival of goods at the

place of import Sec.78(2)

iii) Goods imported by road

At the time of arrival of goods at the

place of import Sec.78(2)

iv) Goods imported by post

On demand by proper officer of

customs Sec.78(3)

B). Non-Dutiable Goods

i)

Import by sea or air

Not later 10 days after the arrival of

vessel or aircraft Sec.81(1)

ii) Import by rail

At the time of delivery of the goods

Sec.82

iii) Import by road

At the time of arrival at the place of

import Sec.83
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METHOD OF ENTRY IMPORTED CARGO

The owner of imported goods has a choice in the method of entry and
dealing with the goods on the appropriate Custom declaration form :a) Clearance for home use on payment of Customs duties
-Form Customs 1 (1A if import value exceeds RM10,000.00)
b) Warehouse in a bonded warehouse without payment of customs duties until the goods are declared
ex-warehouse for home use or for export as the case may be.
-Custom Form No.1 duly stamped For Warehousing by Customs

c)

Clearance for home use from Licensed Warehouse must be declared in

Custom form no.9

d) Transshipment into another carrier for export to a foreign country

- Customs Form No.9
e) Transit overland in approved vehicle to another Customs port or Station for export to free
zone or to
foreign country Custom form No.8 and support by appropriate Security (Bankers Guarantee / General
Bond). When applicable, import license should be submitted if the goods are subject to prohibition.
f) Overland transit for removal and clearance at another Customs Station in Malaysia made of
transport must be approved and appropriate security must be furnished.
g) Transportation between Sabah or Sarawak or to West Malaysia or vice versa firstly, payment of
Customs duties should be settled and subsequently transported to Malaysia territories by way of declaring
in Custom Form No 3. If the goods are subject to control under Custom (Restriction of Movement) Order
1988, permission must be first obtained from the respective authority.
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PREPARATION OF CUSTOM DECLARATION AND SUBMISSION OF

DECLARATION
a) In accordance with the choice in the method of entry, the appropriate prescribed Custom
declaration for the goods in the number of copies as required by the Customs Authorities should
be prepared and submitted at the respective entry point
b) All particulars in the prescribed from are duly completed, particulars with the respect to
shipping marks, numbers and types or packages, description of goods, tariff classification, unit
and total value of goods. Accuracy in completing the Customs Declaration is highly essential.
This is where most importers default and have caused untold displeasure and inconvenience to
the authorities.
c) Custom declaration can be made either by the owner of goods or by a forwarding agent
licensed by Customs and duly authorized by the owner of the goods (Sec.90, Custom Act 1967 .
d) Custom declarations must be presented at the respective Custom Office for registration and
checking and may be rejected for amendment if found to be incorrect
e) To permit rapid clearance of goods, especially perishable goods, provisions have been made for
customs declaration to be accepted and duty paid before the goods arrive. This so called direct
release system is , of course dependent on :
e1) The early submission of the inward manifest; and
e2) Timely submission of properly completed Customs declaration and proper documents
to the customs (Sec.74(1) Custom Act

SUPPORTING DOCUMENTS

Bill of Lading or Consignment

Invoice
Certificate of Origin relevant to any preferential rate of duty
Bank documents such as letter of Credit, etc
Packing List / Weight List
Import license where necessary

CUSTOM EXAMINATION OF GOODS

Custom declaration that have duly passes Custom checking process are sent
by Customs to the place at which the goods are landed. There are Customs will
selectively examine the good physically in the presence of the owner or his
agent. Custom inspection determine the following :

Whether the import goods are truly and correctly described in the customs
declarations.
Whether the goods are entitled to admission for home use- import license or not
Significant information on characteristics, physical or chemical, and usage of goods
which determine proper valuation and classification.
Quantity imported.

In practice, physically inspection of goods by customs has been reduced

proportionately with the quality and accuracy of presentation of Customs
declarations and documents by importer
Custom physical inspection of the goods serve also the interest of the
importer, particularly in determining his liability in respect of custom
duties on the goods

TARIFF CLASSIFICATION AND VALUATION

Assigning proper tariff classification for the goods is the

responsibility of the Customs assessing officer. This exercise
will finalize whether the goods are dutiable or not.

Tariff Classification will normally be followed by the determining

the value of the goods on the basis of the supporting
documents and the physical inspection of the goods.

PAYMENT OF DUTIES AND CUSTOM RELEASE

Payment of custom duties follows the completion of assessment procedure.

In the case of goods cleared for home use Custom duties are liable in accordance with
the rate of duty in force.
In respect of warehouse goods (other than petroleum), the rate in force on the day on
which the removal of the goods is authorized by the proper officer of Customs.
In the case of petroleum in a licensed warehouse the rate in force on the day the
petroleum is removed from the warehouse
In the case of goods imported by post the rate in force on the day on which the duty
is assessed by the proper officer of customs : and
In respect of any other case, the rate in force on the day on which the goods are
released by the proper officer of Custom---Section 19, Custom Act 1967

Release from the Customs control means the action by the Customs to
permit goods undergoing clearance to be placed at the disposal of the
owner

CUSTOM (PROHIBITION OF IMPORT) ORDER 2008

In exercise of the powers conferred by subsection 31(1) of the

custom act 1967 the minister makes the following order :
1.

Citation and Commencement

1. This order may be cited as the Custom (Prohibition of
Imports) order 2008
2. This order comes into operation on 1 April 2008

2. First Schedule Absolute Prohibition

The importation into Malaysia of goods specified in column (2) of
the First Schedule Originating or manufactured wholly or mainly in, or
consigned from, the countries specified in column (3) of the schedule is
absolutely prohibited
3. Second Schedule Conditional prohibition except under an import
Licence
1. Subject to subparagraph (2), the importation into Malaysia of
goods, specified in column (2) & (3) of the second schedule, originating from
the countries specified in column (4) of the schedule is prohibited except
under an Import Licence which is..
Ctnues

59

(a) Granted by DGC; or

(b) Granted by proper officer of custom -- appointed by DGC to act on
his behalf at the Ministry. Department or Statuary Body as specified
in column (5) of the Schedule,
(2) a) Subparagraph (1) shall not apply to the free Zone at :Pasir Gudang, Mukim of Kapar, West Port etc (7 areas)
4. Third Schedule Conditional Prohibition for Protective Measures
(1) Subject to subparagraph (2), for the purpose of affording
temporary protection to local manufacturers, the importation into Malaysia
of goods specified in column (2) and (3) of the Third Schedule, originating
from the countries specified in column (4) of the Schedule is prohibited,
except under an Import Licence :-

(a) Granted by DGC; or

(b) Granted by proper officer of custom -- appointed by DGC to act on
his behalf at the Ministry. Department or Statuary Body as specified
in column (5) of the Schedule,
(2) a) Subparagraph (1) shall not apply to Labuan, Langkawi, Tioman
and the Free Zone at Pasir Gudang etc (7 areas)
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FIRST SCHEDULE ABSOLUTELY PROHIOBITED

1. Any article bearing the imprint or reproduction of any currency note, or coin
which are current or have at any time been issued or current in any country
2. Any emblem or device in circumstances which raise a reasonable
presumption that such emblem or device was intended or was likely to be
used in manner prejudicial to the interest of Malaysia or to promote or foster a
purpose prejudicial to or incompatible with piece, welfare or good order in
Malaysia.
3. Indecent or obscene print, painting, photograph, book, card, lithographic or
other engraving, film, video tape, laser, disc, colour slides, computer diskettes
and any other media (including unprocessed films) or any other indecent or
obscene articles
4. Cloth bearing the imprint or reproduction of any verses of the Quran
5. Daggers and flick knives
6. ETC..

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SECOND SCHEDULE WHICH NOT BE IMPORTED EXCEPT

UNDER AN IMPORT LICENCE
1 . Rice and Paddy / 10.06 / All Countries/ Ministry of Agriculture & Agro based Ind.
2. Rice flour, rice polishing, rice bran and rice vermicelli / 1102.90 / MoA
3. Sugar / 1701 / All countries / MITI
4. Magnetic tape webs for video and sound recording / 3920/ AL / MITI
5. Safety Helmet except as worn by motor-cyclists or motorcycle pillion riders
6. Rice milling machinery including part thereof
7. ETC

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THIRD SCHEDULE FOR PROTECTIVE MEASURES EXCEPT

UNDER AN IMPORT LICENCE
1.
2.
3.

1.

Liquid milk in any form including flavoured milk recombined or reconstituted

Liquid sterilised flavoured milk including flavoured milk recombined or reconstitud
Cabbage (round)
Coffee not roasted
ETC.

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FOURTH SCHEDULE EXCEPT IN THE MANNER

PROVIDED
1. Domestic animal, live or dead or any part thereof including edible offals.
2. Pest including any vertebrate or invertebrate animals (including the eggs
of such animals etc)
3. Any animal or bird, other than domistic animals
4. Live fish
5. Milk and milk products
6. Lard, other pig fat, poultry

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Thank you

65