The word ‘customary’ is derived from ‘custom’
which means a habitual practice.
It refers to duty imposed on imports or exports
In 1786, a board of revenue was created with its
headquarters at calcutta.
In 1812 regulations were made for the madras
customs house and 2 customs house were
established in western india.
In order to provide uniform rates of duties for
all , the customs duties Act was passed in
Import duty on yarn was imposed in 1894 at
5% advalorem. It was raised to 7 ½ %.
The customs act was passed in 1962 and tariff
act in 1975 and came into effect in 1976.
Growth in customs revenue
Customs duty was started with 5%. After
independence it changed.
During 1970-71 revenue from customs was
524 crs and rose to 25500 crs during 92-93
which is 32.5% of tax revenue of central
Objectives of Customs Act
Safeguarding domestic trade
Protection of Indian Industry
Prevention smuggling activities
To prevent dumping of goods.
Scope of the Customs Law
The customs Act 1962 was passed by
It is primarily treated as a Revenue Act which
consists of 17 chapters and 161 sections.
The rules under the customs act are:
◦ The customs valuation rules,1988
◦ Duty drawback rules 1995
◦ Re-export of imported goods
◦ Baggage rules,1998
Customs Tariff Act 1975
The act contains 2 schedules
Schedule 1 gives classification and rate of
duties for imports
Schedule 2 give classification and rate of duty
Makes provisions for duties like additional
duty (CVD) preferential duty, anti dumping
duty protective duties etc.
Levy and Collection of cutoms
The levy of duties of customs is regulated by
the customs Act 1962 while the rates of duties
are fixed by the customs Tariff Act 1975.
The customs enforce control over the
movement of goods and persons across the
boarders of our country by restricting the
points of entry and exit at which alone the
movement of cargo and persons can take
place. Sec 12 to 28 of the customs act provide
for levy and collection of customs duty.
Taxable event for import Duty – it is the day
of crossing of customs barrier and not on the
date when goods landed in india or had
entered territorial waters.
Taxable event for export duty – export
commences when goods cross customs
barrier, but export is complete when it
crosses territorial waters.
Territorial Water of India
Territorial waters means that portion of sea
which is adjacent to the shores of a coutry.
President of india has extended upto 6
nautical miles from the base line in 1956.
Levy of duty on imports and exports – sec 12
provides for levy of duty on imports and
exports. Import duty is levied on all items.
Export duty is levied only on a few items.
Date for Determination of Rate of
For imported goods sec 15(1)
Goods imported for home-
Goods cleared from warehouse
Any other goods
For Exported goods sec(16)
Goods entered for export
In the case of other goods
Assessment of Duty
Procedure for Assessment sec(17)
Examining and testing of goods
Submission of documents
Methods of assessment of duty
Import and Export Procedure
Customs duties are levied on goods
imported into or exported from India.
Import and export of goods takes
place by sea, air, rail or road or
through baggage with passengers.
Arrival at customs port/airport only
Grant of entry inward by customs
Unloading of Reported goods only
Filing of import bills of entry
Assessment of goods
Approval of assessment
Customs clearance from view point of import
Payment of Duty
Disposal if goods are not cleared in 30 days
Initial steps to be taken by the exporter
Shipping bill to be submitted by exporter
Declaration of exporter
Export duty if payable
Entry of goods for exportation
Clearance of goods for exportation
Check in customs
Examination of goods before export
Let export order by customs authorities
Goods not to be loaded on vessel until entry
outward granted section 39 & 40
Conveyance to leave on written order
Notice of Short Supply
Following are the different classes of officers of
(a) chief commissioners of customs
(b) commissioners of customs
(c) commissioners of customs(Appeals)
(d) joint commissioners of customs
(e) Deputy commissioners of customs
(f) Assistant commissioners of customs
(g) Such other class of officers of customs as
may be appointed for the purpose of the
Section 25 of the customs Act empowers the
central government to issue notification
granting exemption from customs duty
partially or wholly on any goods.
The exemptions may be in respect of basic
duty or auxiliary duty.
General or specific exemptions may be
While general exemptions are in respect of
user of goods, specific exemptions are in
respect of various products.
The exemptions are also granted subject to
fulfillment of certain conditions.
Meaning of Drawback: “Drawback” in
relations to any goods manufactured in India
and exported means(a) Rebate of duty chargeable
(b) Rebate of duty of excise
(c) Draw back is equal to – (i) Customs duty
paid on imported inputs and (ii) Excise duty
paid on indigenous inputs
Provisions relating to Draw back:
Drawback allowable on re-export of duty-
paid goods [sec 74]
Drawback on imported material used in the
manufacture of goods which are exported
Prohibition and regulation of draw back in
certain cases [sec 76]