What is MD (Misdeclaration) in Imports — And How Importers in India Use It to Save Crores in Duties

Importing processed food into India? The difference between a 30% duty and a 5% duty can be just one line on a form.

That one line is the HSN code, and tweaking it — intentionally or “mistakenly” — is what’s called #MD or Misdeclaration in customs lingo.

From lithium batteries to Chinese furniture to packaged spaghetti — misdeclaration is the most common (and riskiest) trick importers use to reduce #customduties in India.

Let’s break it down — no jargon, just the real-world ways people save crores (or land in major trouble) doing this.👇

1. What Is MD (Misdeclaration) in Customs?

Misdeclaration (or “MD” in industry slang) means:

• Declaring wrong product names

• Using wrong HSN codes

• Splitting shipments to hide actual quantity/value

• Falsifying origin or usage to get lower duties

Why is it done?

Simple — to dodge customs duties, bans, or restrictions.
Some products have 30% duty, others 5%.
Declare it as the cheaper one — and save lakhs. 🤑

Example:

• Processed Food → HSN: 1902 → Duty: 30%

• But if declared as Animal Feed → HSN: 2309 → Duty: 5%

That’s a huge saving — illegal, but common.

2. How Lithium Batteries Are “Mistakenly” Declared as Electronic Parts

Here's another common MD trick:

• Lithium-ion batteries → HSN: 8507 → 20% duty

• Electronic parts → HSN: 8548 → 10% duty

Importers change just the HSN code — no visible product change — and save 10% duty instantly.

The customs clearance agent might even help you do it — unless you get flagged.

3. China Furniture Imports: The "Seats vs Furniture" Loophole

Most furniture you see in India is imported from Foshan, China — and here’s how the game is played:

Full Furniture Set

• HSN: 9403

• Basic Duty: 25%

• IGST: 18%

• SWS: 10%

• Effective Rate: ~28%

Just "Seats"

• HSN: 9401

• Basic Duty: 10%

• IGST: 18%

• SWS: 10%

• Effective Rate: ~12%

So importers declare:

• "Seats" instead of "sofa sets"

• "Parts of furniture (bracket: seats)" — to blur the line

And the savings? Massive.

4. Braking Systems vs Brake Pads: The Spare Parts Hack

Let’s talk auto parts:

• Complete brake systems → ~18% duty

• Just brake pads (HSN 8708) → 10%

So importers break down large components into “parts” — shipping in multiple bills — and declare only the low-duty elements.

This happens across categories:

• Car parts

• Electronics

• Furniture

• Toys

• Food items

5. Red Flags That Customs Officers Look For 🚩

So how does customs catch MD?

These are some common patterns that raise eyebrows:

1. Generic Descriptions: “Parts,” “Components,” “Kits” — without clarity

2. Split Shipments: Same item broken into smaller parcels across bills

3. Mismatch: HSN code doesn’t match packing list or commercial invoice

4. Unusual Declarations: High-value products tagged with low-tax usage (like animal feed or educational kits)

And sometimes… they just know the tricks too well. 😏

6. What Happens If You're Caught?

Penalties can include:

• Duty recovery with interest

• Penal charges up to 100% of value

• Blacklisting of importer/exporter code (IEC)

• Even seizure and prosecution under Customs Act

And once flagged, your every future shipment goes through a fine-tooth comb.

7. Want to Learn or Avoid This Trap?

Whether you're:

• A beginner trying to import ethically

• A trader who unknowingly filed wrong HSN

• Or someone who knows they’ve messed up and needs course correction

We’ve got your back.

🧾 Shunyatax Global says that financial clarity starts with informed decisions.
We handle everything from #importcompliance to HSN classification, duty planning, and customs audits.
🚀 Start your journey with us today:
👉 📞 Book a Consultation : https://shop.shunyatax.in/collections/services/products/1-1-confidential-advisory
👉 🌐 Visit Our Website : https://shop.shunyatax.in/collections/services
👉 📧 Email Us : urgent@shunyatax.in

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