Customs Act, 1962

Customs Act, 1962

The Customs Act, 1962 is the primary legislation governing customs in India, providing the framework for regulating imports, exports, and duties imposed on goods. Below is a detailed, non-copyrighted overview of the Customs Act, 1962.

Objective and Scope

The Customs Act, 1962, consolidates laws relating to customs duties and regulates the import and export of goods into and out of India. Its main objectives include:

• Collection of revenue in the form of customs duties.
• Protection of domestic industries.
• Prevention of smuggling and ensuring compliance with international trade obligations.

Structure of the Act

The Act consists of over 160 sections divided into various chapters, covering the following key areas:

a) Definitions (Chapter I)

This chapter defines essential terms such as “goods,” “import,” “export,” “customs area,” and “conveyance.”

b) Levy of Customs Duties (Chapter V)

Sections 12 to 28 deal with the levy and collection of duties on imported and exported goods. Duties include:

• Basic Customs Duty (BCD) – Charged on all imported goods.
• Countervailing Duty (CVD) – Charged to counter subsidies given to goods in the country of origin.
• Anti-Dumping Duty – Levied on goods imported at a price less than their normal value.

c) Prohibition on Imports and Exports (Chapter IV)

Sections 11 through 13 empower the government to prohibit the import or export of goods on grounds like:

• Protection of public morals.
• Prevention of trade in arms, drugs, or wildlife.
• Protection of domestic industry or environment.

d) Customs Valuation (Chapter VI)

This chapter specifies how the value of imported goods is determined for the purpose of levying customs duties. It generally follows international agreements like the WTO Customs Valuation Agreement.

e) Assessment and Clearance of Goods (Chapters VII and VIII)

• Assessment of Duty – Customs officials assess the duties based on the declared value of goods, classification, and applicable duty rates.
• Clearance of Goods – Imported goods can be cleared for home consumption or placed in a customs warehouse until duty is paid.

f) Warehousing (Chapter IX)

Sections 57 to 73 provide for bonded warehousing, allowing importers to defer duty payments until the goods are removed from the warehouse.

g) Drawback of Customs Duty (Chapter X)

Sections 74 to 76 allow for the refund of customs duties paid on imported goods when those goods are re-exported within a certain time period.

h) Search, Seizure, and Arrest (Chapter XIII)

This chapter details the powers of customs officers to search conveyances and premises, seize goods, and arrest individuals involved in customs offenses. Smuggling and other prohibited activities can result in severe penalties, including imprisonment.

i) Adjudication and Appeals (Chapters XIV and XV)

These chapters lay down the procedures for adjudication of disputes and appeals within the customs framework. Key institutions include:

• Customs Commissioner (Appeals)
• Customs Excise and Service Tax Appellate Tribunal (CESTAT)
• High Court and Supreme Court for further appeals.

Penalties and Offenses

Offenses under the Customs Act include smuggling, under-declaration of value, and false documentation. Penalties can range from fines to imprisonment, depending on the severity of the violation. Provisions for confiscation of goods and fines are laid out in Section 111 (for improperly imported goods) and Section 113 (for improperly exported goods).

Recent Amendments

The Customs Act has been amended periodically to meet evolving trade policies and international agreements. Some recent changes include:

• Increased penalties for under-invoicing.
• Expanded provisions for anti-dumping measures.
• Simplified procedures for e-filing of customs documentation and faster clearance processes through automation.

Customs Duty Calculation

The customs duty on imported goods is calculated based on the Assessed Value (AV), which includes:

• CIF value (Cost, Insurance, and Freight),
• Basic Customs Duty (BCD),
• Other applicable duties like Countervailing Duty (CVD), and IGST (Integrated Goods and Services Tax).

Authority of Customs Officers

Customs officers are vested with substantial powers to inspect, examine, and detain goods, as well as investigate and adjudicate customs-related offenses. Officers have powers similar to police officers under the Criminal Procedure Code (CrPC).

Advance Rulings

The Customs Act allows businesses to seek Advance Rulings on the classification, value, and applicability of duties on goods they intend to import/export. This facilitates smooth trade by providing clarity on customs liabilities in advance.

Miscellaneous Provisions

The Act also deals with:

• Transit and Transshipment of goods.
• Provisions for export promotion, such as duty-free imports under certain conditions.
• Special Economic Zones (SEZs) and bonded manufacturing.