Custom Act in India

Custom Act in India

There are various acts enacted in India related to customs. These acts regulate international trade in a transparent manner by controlling illegal trade like drugs and narcotics. These acts prevent the dumping of goods from other countries. The three most important customs acts are listed in Figure:

Customs Act, 1962

Customs Act, 1962 is one of the basic laws that relate to the levy and collection of customs duties in India. The Act includes various provisions related to the procedures and processes of imposing customs duties on imported and exported goods. The different functions of customs officers, prohibitions on imported and exported goods, amount of duty in the price of goods etc. are detailed in the Act. The main objective of the Act is to prevent illegal imports and exports in India.

Important highlights of Customs Act, 1962 are as follows:

Chapter I – Preliminary

Short title, extent and commencement

• This Act may be called the Customs Act, 1962.
  
  
• It extends to the whole of India.
  
  
• It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

Definitions

In this Act, unless the context otherwise requires, –

• “adjudicating authority” means any authority competent to pass any order or decision under this Act, but does not include the Board, Commissioner (Appeals) or Appellate Tribunal;
  
  
  • “aircraft” has the same meaning as in the Aircraft Act, 1934 (22 of 1934);
    
    
  • “Appellate Tribunal” means the Customs, Excise and Service Tax Appellate Tribunal constituted under section 129;
    
    
• “assessment” includes provisional assessment, reassessment and any order of assessment in which the duty assessed is nil;
  
  
• “baggage” includes unaccompanied baggage but does not include motor vehicles;
  
  
• “bill of entry” means a bill of entry referred to in section 46;
  
  
• “bill of export” means a bill of export referred to in section 50;
  
  
• “Board” means the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963);
  
  
• “coastal goods” means goods, other than imported goods, transported in a vessel from one port in India to another; (7A) “Commissioner (Appeals)” means a person appointed to be a Commissioner of Customs (Appeals) under sub-section (1) of section 4;
  
  
• “Commissioner of Customs”, except for the purposes of Chapter XV, includes an Additional Commissioner of Customs;
  
  
• “conveyance” includes a vessel, an aircraft and a vehicle;
  
  
• “customs airport” means any airport appointed under clause (a) of section 7 to be a customs airport;
  
  
• “customs area” means the area of a customs station and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities;
  
  
• “customs port” means any port appointed under clause (a) of section 7 to be a customs port and includes a place appointed under clause (aa) of that section to be an inland container depot;
  
  
• “customs station” means any customs port, customs airport or land customs station;
  
  
• “dutiable goods” means any goods which are chargeable to duty and on which duty has not been paid;
  
  
• “duty” means a duty of customs leviable under this Act;
  
  
• “entry” in relation to goods means an entry made in a bill of entry, shipping bill or bill of export and includes in the case of goods imported or to be exported by post, the entry referred to in section 82 or the entry made under the regulations made undersection 84;
  
  
• “examination”, in relation to any goods, includes measurement and weighment thereof;
  
  
• “export”, with its grammatical variations and cognate expressions, means taking out of India to a place outside India;
  
  
• “export goods” means any goods which are to be taken out of India to a place outside India;
  
  
• “”, in relation to any goods at any time between their entry for exporter export and the time when they are exported, includes any owner or any person holding himself out to be the exporter;
  
  
• “foreign-going vessel or aircraft” means any vessel or aircraft for the time being engaged in the carriage of goods or passengers between any port or airport in India and any port or airport
  outside India, whether touching any intermediate port or airport in India or not, and includes –
  
  
  • any naval vessel of a foreign Government taking part in any naval exercises;
    
    
  • any vessel engaged in fishing or any other operations outside the territorial waters of India;
    
    
  • any vessel or aircraft proceeding to a place outside India for any purpose whatsoever;
    
    
  • “Fund” means the Consumer Welfare Fund established under section 12C of the Central Excises and Salt Act, 1944 (1 of 1944);
    
    
    • “goods” includes –
      
      
      • vessels, aircrafts and vehicles;
      • stores;
      • baggage;
      • currency and negotiable instruments; and
      • any other kind of movable property;
        
        
    • “import”, with its grammatical variations and cognate expressions, means bringing into India from a place outside India;
      
      
    • “import manifest” or “import report” means the manifest or report required to be delivered under section 30;
      
      
    • “imported goods” means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption;
      
      
    • “importer”, in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer;
      
      
    • “India” includes the territorial waters of India;
      
      
    • “Indian customs waters” means the waters extending into the sea up to the limit of contiguous zone of India under section 5 of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976) and includes any bay, gulf, harbour, creek or tidal river;
      
      
    • “land customs station” means any place appointed under clause (b) of section 7 to be a land customs station;
      
      
    • “market price”, in relation to any goods, means the wholesale price of the goods in the ordinary course of trade in India;
      
      
    • “person-in-charge” means, –
      
      in relation to a vessel, the master of the vessel;
      
      
      • in relation to an aircraft, the commander or pilot-in-charge of the aircraft;
        
        
      • in relation to a railway train, the conductor, guard or other person having the chief direction of the train;
        
        
      • in relation to any other conveyance, the driver or other person-in-charge of the conveyance;
        
        
    • “prescribed” means prescribed by regulations made under this Act;
      
      
    • “prohibited goods” means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with;
      
      
    • “proper officer”, in relation to any functions to be performed under this Act means the officer of customs who is assigned those functions by the Board or the Commissioner of Customs;
      
      
    • “regulations” means the regulations made by the Board under any provision of this Act;
      
      
    • “rules” means the rules made by the Central Government under any provision of this Act;
      
      
    • “shipping bill” means a shipping bill referred to in section 50;
      
      
    • “stores” means goods for use in a vessel or aircraft and includes fuel and spare parts and other articles of equipment, whether or not for immediate fitting;
      
      
    • “smuggling”, in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113;
      
      
    • “tariff value”, in relation to any goods, means the tariff value fixed in respect thereof under sub-section (2) of section 14;
      
      
    • “value”, in relation to any goods, means the value thereof determined in accordance with the provisions of sub-section (1) of section 14;
      
      
    • “vehicle” means conveyance of any kind used on land and includes a railway vehicle;
      
      
    • “warehouse” means a public warehouse appointed under section 57 or a private warehouse licensed under section 58;
      
      
    • “warehoused goods” means goods deposited in a warehouse;
      
      
    • “warehousing station” means a place declared as a warehousing station under section 9.

Chapter IV – Prohibitions on Importation and Exportation of Goods

• Power to prohibit importation or exportation of goods. –
  
  
  • If the Central Government is satisfied that it is necessary so to do for any of the purposes specified in sub-section (2), it may, by notification in the Official Gazette, prohibit either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification, the import or export of goods of any specified description.
    
    
  • The purposes referred to in sub-section (1) are the following:-
    
    
    • the maintenance of the security of India;
      
      
    • the maintenance of public order and standards of decency or morality;
      
      
    • the prevention of smuggling;
      
      
    • the prevention of shortage of goods of any description;
      
      
    • the conservation of foreign exchange and the safeguarding of balance of payments;
      
      
    • the prevention of injury to the economy of the country by the uncontrolled import or export of gold or silver;
      
      
    • the prevention of surplus of any agricultural product or the product of fisheries;
      
      
    • the maintenance of standards for the classification, grading or marketing of goods in international trade;
      
      
    • the establishment of any industry;
      
      
    • the prevention of serious injury to domestic production of goods of any description;
      
      
    • the protection of human, animal or plant life or health;
      
      
    • the protection of national treasures of artistic, historic or archaeological value;
      
      
    • the conservation of exhaustible natural resources;
      
      
    • the protection of patents, trademarks and copyrights;
      
      
    • the prevention of deceptive practices;
      
      
    • the carrying on of foreign trade in any goods by the State, or by a Corporation owned or controlled by the State to the exclusion, complete or partial, of citizens of India;
      
      
    • the fulfilment of obligations under the Charter of the United Nations for the maintenance of international peace and security;
      
      
    • the implementation of any treaty, agreement or convention with any country;
      
      
    • the compliance of imported goods with any laws which are applicable to similar goods produced or manufactured in India;
      
      
    • the prevention of dissemination of documents containing any matter which is likely to prejudicially affect friendly relations with any foreign State or is derogatory to national prestige;
      
      
    • the prevention of the contravention of any law for the time being in force; and
      
      
    • any other purpose conducive to the interests of the general public.

Chapter V – Levy of, and Exemption From, Customs Duties

Dutiable Goods

• Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India.
  
  
• The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government.

Duty on Pilfered Goods

If any imported goods are pilfered after the unloading thereof and before the proper officer has made an order for clearance for home consumption or deposit in a warehouse, the importer shall not be liable to pay the duty leviable on such goods except where such goods are restored to the importer after pilferage.

Valuation of Goods for Purposes of Assessment

• For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force where under a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where
  
  (a) the seller and the buyer have no interest in the business of each other ; or (b) one of them has no interest in the business of the other, and the price is the sole consideration for the sale or offer for sale : Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under section 46,
  
  or a shipping bill or bill of export, as the case may be, is presented under section 50; (1A) Subject to the provisions of sub-section (1), the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf.
  
  
• Notwithstanding anything contained in sub-section (1) or subsection (1A), if the Board is satisfied that it is necessary or expedient so to do it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value.
  
  
• For the purposes of this section –
  
  
  • “rate of exchange” means the rate of exchange –
    
    
    • determined by the Board, or
      
      
    • ascertained in such manner as the Board may direct, for the conversion of Indian currency into foreign currency or foreign currency into Indian currency;
      
      
    • “foreign currency” and “Indian currency” have the meanings respectively assigned to them in clause (m) and clause (q) of section 2 of the Foreign Exchange Regulation Act, 1999.

Date for Determination of Rate of Duty and Tariff Valuation of Imported Goods

• The rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force, –
  
  
  • in the case of goods entered for home consumption under section 46, on the date on which a bill of entry in respect of such goods is presented under that section;
    
    
  • in the case of goods cleared from a warehouse under section 68, on the date on which the bills of entry for home consumption in respect of such goods is prescribed under that section;
    
    
  • in the case of any other goods, on the date of payment of duty: Provided that if a bill of entry has been presented before the date of entry inwards of the vessel or the arrival of the aircraft by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards or the arrival, as the case may be.
    
    
• The provisions of this section shall not apply to baggage and goods imported by post.

Date for Determination of Rate of Duty and Tariff Valuation of Export Goods

• The rate of duty and tariff valuation, if any, applicable to any export goods, shall be the rate and valuation in force, –
  
  
  • in the case of goods entered for export under section 50, on the date on which the proper officer makes an order permitting clearance and loading of the goods for exportation under section 51;
    
    
  • in the case of any other goods, on the date of payment of duty.
    
    
• The provisions of this section shall not apply to baggage and goods exported by post.

Assessment of Duty

• After an importer has entered any imported goods under section 46 or an exporter has entered any export goods under section 50 the imported goods or the export goods, as the case may be, or such part thereof as may be necessary may, without undue delay, be examined and tested by the proper officer.
  
  
• After such examination and testing, the duty, if any, leviable on such goods shall, save as otherwise provided in section 85, be assessed.
  
  
• For the purpose of assessing duty under sub-section (2), the proper officer may require the importer, exporter or any other person to produce any contract, broker’s note, policy of insurance, catalogue or other document whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained, and to furnish any information required for such ascertainment which it is in his power to produce or furnish, and thereupon the importer, exporter or such other person shall produce such document and furnish such information.
  
  
• Notwithstanding anything contained in this section, imported goods or export goods may, prior to the examination or testing thereof, be permitted by the proper officer to be assessed to duty on the basis of the statements made in the entry relating thereto and the documents produced and the information furnished under sub-section (3);
  
  but if it is found subsequently on examination or testing of the goods or otherwise that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act, be re-assessed to duty.

Provisional Assessment of Duty

• Notwithstanding anything contained in this Act but without prejudice to the provisions contained in section 46 –
  
  
  • where the proper officer is satisfied that an importer or exporter is unable to produce any document or furnish any information necessary for the assessment of duty on the imported goods or the export goods, as the case may be; or
    
    
  • where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test for the purpose of assessment of duty thereon; or
    
    
  • where the importer or the exporter has produced all the necessary documents and furnished full information for the assessment of duty but the proper officer deems it necessary to make further enquiry for assessing the duty, the proper officer may direct that the duty leviable on such goods may, pending the production of such documents or furnishing of such information or completion of such test or enquiry, be assessed provisionally if the importer or the exporter, as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty finally assessed and the duty provisionally assessed.
    
    
• When the duty leviable on such goods is assessed finally in accordance with the provisions of this Act, then –
  
  
  • in the case of goods cleared for home consumption or exportation, the amount paid shall be adjusted against the duty finally assessed and if the amount so paid falls short of, or is in excess of the duty finally assessed, the importer or the exporter of the goods shall pay the deficiency or be entitled to a refund, as the case may be;
    
    
  • in the case of warehoused goods, the proper officer may, where the duty finally assessed is in excess of the duty provisionally assessed, require the importer to execute a bond, binding himself in a sum equal to twice the amount of the excess duty

Determination of Duty Where Goods Consist of Articles Liable to Different Rates of Duty

Except as otherwise provided in any law for the time being in force, where goods consist of a set of articles, duty shall be calculated as follows:-

• articles liable to duty with reference to quantity shall be chargeable to that duty;
  
  
• articles liable to duty with reference to value shall, if they are liable to duty at the same rate, be chargeable to duty at that rate, and if they are liable to duty at different rates, be chargeable to duty at the highest of such rates;
  
  
• articles not liable to duty shall be chargeable to duty at the rate at which articles liable to duty with reference to value are liable under clause (b): Provided that, –
  
  
  • accessories of, and spare parts or maintenance and repairing implements for, any article which satisfy the conditions specified in the rules made in this behalf shall be chargeable at the same rate of duty as that article;
    
    
  • if the importer produces evidence to the satisfaction of the proper officer regarding the value of any of the articles liable to different rates of duty, such article shall be chargeable to duty separately at the rate applicable to it.

Re-importation of Goods Produced or Manufactured in India

(1)If goods are imported into India after exportation therefrom, such goods shall be liable to duty and be subject to all the conditions and restrictions, if any, to which goods of the like kind and value are liable or subject, on the importation thereof.

Goods Derelict, Wreck, Etc.

All goods, derelict, jetsam, flotsam and wreck brought or coming into India, shall be dealt with as if they were imported into India, unless it be shown to thesatisfaction of the proper officer that they are entitled to be admitted duty-free under this Act.

Abatement of Duty on Damaged or Deteriorated Goods

• Where it is shown to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs –
  
  
  • that any imported goods had been damaged or had deteriorated at any time before or during the unloading of the goods in India; or
    
    
  • that any imported goods, other than warehoused goods, had been damaged at any time after the unloading thereof in India but before their examination under section 17, on account of any accident not due to any wilful act, negligence or default of the importer, his employee or agent; or
    
    
  • that any warehoused goods had been damaged at any time before clearance for home consumption on account of any accident not due to any wilful act, negligence or default of the owner, his employee or agent, such goods shall be chargeable to duty in accordance with the provisions of sub-section (2).
    
    
• The duty to be charged on the goods referred to in sub-section (1) shall bear the same proportion to the duty chargeable on the goods before the damage or deterioration which the value of the damaged or deteriorated goods bears to the value of the goods before the damage or deterioration.
  
  
• For the purposes of this section, the value of damaged or deteriorated goods may be ascertained by either of the following methods at the option of the owner:
  
  
  • the value of such goods may be ascertained by the proper officer, or
    
    
  • such goods may be sold by the proper officer by public auction or by tender, or with the consent of the owner in any other manner, and the gross sale proceeds shall be deemed to be the value of such goods.

Remission of Duty on Lost, Destroyed or Abandoned Goods

• Without prejudice to the provisions of section 13, where it is shown to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs that any imported goods have been lost (otherwise than as a result of pilferage) or destroyed, at any time before clearance for home consumption, the Assistant Commissioner of Customs or Deputy Commissioner of Customs shall remit the duty on such goods.
  
  
• The owner of any imported goods may, at any time before an order for clearance of goods for home consumption under section 47 or an order for permitting the deposit of goods in a warehouse under section 60 has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon.

Power to Make Rules for Denaturing or Mutilation of Goods

The Central Government may make rules for permitting at the request of the owner the denaturing or mutilation of imported goods which are ordinarily used for more than one purpose so as to render them unfit for one or more such purposes; and where any goods are so denatured or mutilated they shall be chargeable to duty at such rate as would be applicable if the goods had been imported in the denatured or mutilated form.

Power to Grant Exemption From Duty

• If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon.
  
  
• If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods, on which duty is leviable. (2A) The Central Government may, if it considers it necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1)
  
  or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification in the Official Gazette at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.,
  
  
• An exemption under sub-section (1) or sub-section (2) in respect of any goods from any part of the duty of customs leviable thereon (the duty of customs leviable thereon being hereinafter referred to as the statutory duty) may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable and any exemption granted in relation to any goods in the manner provided in this sub-section shall have effect subject to the condition that the duty of customs chargeable on such goods shall in no case exceed the statutory duty.
  
  Explanation. – “Form or method”, in relation to a rate of duty of customs, means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty is leviable.
  
  
• Every notification issued under sub-section (1) or sub-section (2A) shall, –
  
  
  • unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette;
    
    
  • also be published and offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi.
    
    
• Notwithstanding anything contained in sub-section (4), where a notification comes into force on a date later than the date of its issue, the same shall be published and offered for sale by the said Directorate of Publicity and Public Relations on a date on or before the date on which the said notification comes into force.
  
  
• Notwithstanding anything contained in this Act, no duty shall be collected if the amount of duty leviable is equal to, or less than, one hundred Rupees.