OBJECTIVE Import of all kinds of goods and on the export of goods on certain situations attracts customs duty. The Customs Act,1962 contains provisions which govern the levy of customs duty. In this webinar, we will be learning about the basic concepts and important definitions under the Customs Act, 1962.

1. Introduction and Important Definitions:
Customs Law
CA Divakar Vijayasarathy

2. Credits and Acknowledgments
Harish Kumar R
Thirumal V
CA Jugal Gala

3. Legends used in the Presentation
CA Customs Act, 1962
CBIC Central Board of Indirect Taxes & Customs

4. Presentation Schema
Introduction Background Overview Purpose India
Indian
Customs
Water
Territorial
Waters
Continental
Shelf
Exclusive
Economic
Zone
Goods
Dutiable
goods
Customs
area
Customs
station
Entry
Import
Imported
goods
Importer
Coastal
goods
Export
Export
goods
Exporter
Bill of Entry
Bill of
Export
Prohibited
goods
Baggage
Beneficial
owner
Certificate
of Origin
Bill of
Lading
Free
Alongside
Free on
Board
Statistics

5. Introduction
Customs duty is an indirect tax
Applicable on all goods imported and a few goods exported out of the country
It is a tax on goods and it is not a tax on the person having or owning the goods
The Customs Act, 1962 was introduced to replace the erstwhile Sea Customs Act, 1878
Central Board of Indirect Taxes and Customs (CBIC) is the nodal national agency responsible for
administering Customs

6. Background
Independent India allowed these statutes to continue in force, till 1963, when the Customs Act, 1962, was passed repealing all the
earlier enactment
The Indian Aircraft Act, 1934, covered the export/import by air transport
This was followed about 50 years later by an act known as Land Customs Act, 1924, to cover the goods coming by land routes.
An enactment known as Sea Customs Act, 1878, was brought forth for collection of revenue and control on the movement of goods.
During British Rule, the trade in this country was then mainly by sea and with England and other European countries

7. Purpose
Regulating imports and exports to attain policy objectives of the government
Restricting and conserving foreign exchange
Protecting domestic industries from competitors across the globe
Preventing smuggling
Customs duty serves the purpose of

8. Overview
- The CA extends to the whole of India
- It applies also to any offence or contravention thereunder committed outside India by any person
- The CA is grouped into 17 chapters which are as follows:
Ch. No. Chapter Heading Sections Content
I Preliminary 1 & 2 Short title and definitions
II Officers of Customs 3 to 6 Classes, appointment and powers of the customs officers
III Appointment of Customs ports, airports, etc. 7 to 10 Appointment of ports, Airports, landing stations and
customs area
IV Prohibition on importation and exportation of goods 11 Power to prohibit the import or export of goods
IVA Detection of illegally imported goods and
prevention of the disposal thereof
11A to 11G Notified goods, control over storage, sale, accounting,
transportation etc.
IVB Detection and prevention of illegal export of goods 11H to 11M Notified goods, storage, transportation etc.
IVC Exemption from Ch. IVA and Ch. IVB 11N Central Government’s power to grant exemption
V Levy and exemption of Customs duty 12 to 28BA Dutiable goods, valuation, rate of duty, assessment,
remission, exemption, interest on delayed payments
VA Indicating amount of duty in the price of goods 28C & 28D Price of goods and passing of incidence of duty
VB Advance rulings 28E to 28M Authority, application, procedure, applicability and
powers

9. Contd.
Ch. No. Chapter Heading Sections Content
VI Control over conveyances carrying
imported or export goods
29 to 43 Arrival/departure reports, Import/Export general manifest, entry
inwards, place time and restrictions on loading/unloading, water borne
goods etc.
VII Clearance of goods 44 to 51 Bill of entry, shipping bill, clearance for home consumption/warehousing
and exportation, storage of goods
VIIA Payments through electronic cash ledger 51A Payment of duty, interest, penalty
VIII Goods in transit 52 to 56 Transit and transhipment procedures
IX Warehousing 57 to
73A
Appointment & licensing of warehouse, bonding of goods, period of
warehousing, payment of rent and charges, clearance of warehoused
goods, allowance for volatile goods
X Drawback 74 to 76 Drawback allowable, Interest allowable, prohibition and regulation
XA Special Provisions relating to Special
Economic Zone
76A to
76N
Omitted in view of the introduction of a separate Act namely, Special
Economic Zones Act, 2005
XI Special provisions relating to baggage, goods
imported or exported by posts and stores
77 to 90 Declaration, rate of duty and valuation, exemption and procedures

10. Contd.
Ch. No. Chapter Heading Sections Content
XII
Coastal goods and vessels carrying coastal
goods
91 to 99 Entry, restrictions, clearance, loading and unloading and application
XIIA
Audit
99A Audit
XIII
Searches, Seizure and Arrest
100 to
110A
Powers and procedures of search, seizure and arrest
XIV
Confiscation and penalties
111 to
127
Powers and procedures for confiscation and for levy and collection of
penalties
XIVA
Settlement of cases
127A to
127N
Application for settlement, procedure, powers of settlement
commission, inspection etc.
XV
Appeals and revision
128 to
131C
Procedure and time limits for appeals and revisions
XVI
Offences and prosecutions
132 to
140A
Cognizableoffences and procedures for prosecution
XVII
Miscellaneous
141 to
161
Recovery of sums due, power to take samples, licensing of custom
house agents, liability of principal and agent, delegation of powers,
general power to make rules etc.

11. Rules under Customs Law
S.No. Particulars
1 Foreign Privileged Persons Rules, (Regulations of Customs Privileges) Rules,1957
2 Accessories (Condition) Rules, 1963
3 Notice Of Short Export Rules, 19673
4 Specified Goods (Prevention Of Illegal Export) Rules, 1969
5 Notified Goods (Prevention Of Illegal Import) Rules, 1969
6 Denaturing Of Spirit Rules, 1972
7 Customs (Publication Of Names) Rules, 1975
8 Customs Tariff (Determination Of Origin Of Goods Under Bangkok Agreement) Rules, 1976
9 Customs Tariff (Determination Of Origin Of The UAR And Yugoslavia) Rules, 1976
10 Customs Tariff (Determination Of Origin Of Other Preferential Areas) Rules, 1977
11 Customs Valuation (Determination Of Prices Of Imported Goods) Rules, 1988
12 Customs (Attachment Of Property Of Defaulters For Recovery Of Government Dues) Rules, 1995
13 Re Export Of Imported Good (Drawback Of Customs Duties) Rules, 1995
14 Customs Central Excise Duties And Service Tax Drawback (Amended) Rules, 2006
15 Customs Tariff (Determination Of Origin Of Goods Under Agreement On SAARC Preferential Trading Arrangement) Rules,1995
16
Customs Tariff (Identification Assessment And Collection Of Countervailing Duty On Subsidized Articles and For Determination of Injury) Rules,
1995
17 Customs Tariff (Identification Assessment And Collection Of Anti Dumping Duty On Dumped Article Rules, 1995
18 Customs (Import Of Goods At Concessional Rate Of Duty For Manufacture Of Excisable Goods) Rules, 1996
19 Customs Tariff (Identification And Assessment Of Safeguard Duty) Rules, 1997
20 Baggage Amendment Rules, 2006
21 Customs (Settlement Of Cases) Rules, 1999
22 Custom Rules, 2000
23 Rules, of Determination of Origin of Goods under the Agreement on SAFTA

12. Definitions
India India includes the territorial waters of India
Indian Customs Waters
Waters extending into the sea up to the limit 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
Territorial Waters
The territorial waters is the line every point of which is at a distance of 12 nautical
miles from the nearest point of the appropriate baseline
Continental Shelf
Comprises the seabed and subsoil of the submarine areas that extend beyond the limit of its
territorial waters throughout the natural prolongation of its land territory to the outer edge of
the continental margin or to a distance of 200 nautical miles from the baseline
Exclusive Economic Zone
An area beyond and adjacent to the territorial waters, and the limit of such
zone is 200 nautical miles from the baseline

13. Goods and Customs Area
Goods
It includes
Vessels,
aircrafts and
vehicles
Stores Baggage
Currency and
negotiable
instruments
Any other kind
of movable
property
Dutiable Goods Any goods which are chargeable to duty and on which duty has not been paid
Customs Area
The area of a customs station or a warehouse and includes any area in which imported goods or exported
goods are ordinarily kept before clearance by Customs Authorities
Customs Station Any customs port, customs airport, international courier terminal, foreign post office or land customs station

14. Entry and Import
Entry In relation to goods means an entry made in a bill of entry, shipping bill or bill of export
Import
With its grammatical variations and cognate expressions, means bringing into India from a
place outside India
Imported Goods 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, beneficial owner or any person holding himself out to be the
importer
Coastal goods Means goods, other than imported goods, transported in a vessel from one port in India to another

15. Prohibited Goods and Baggage
Prohibited goods
Means any goods the import or export of which is subject to any prohibition under the 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
Baggage Includes unaccompanied baggage but does not include motor vehicles
Beneficial owner
Means any person on whose behalf the goods are being imported or exported or who
exercises effective control over the goods being imported or exported
Certificate of Origin A certificate issued by the competent authority in the country of manufacture
giving the extent of the manufacture in that country
>Edible meat offal, fresh, chilled or frozen Of wild animals
>Tiger-Cat skins
>Animal fats and oils and their fractions
Examples for prohibited goods
Unaccompanied baggage The luggage that do not arrive in the same aircraft or ship as the inward
passenger

16. Export
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
Exporter
In relation to any goods at any time between their entry for export and the time when
they are exported, includes any owner, beneficial owner or any person holding himself
out to be the exporter
Bill of entry
Means a bill of entry referred to in Sec 46 (specifies that in case of import,
bill of entry shall be submitted)
A legal document filed with customs department by an importer or his customs broker
Bill of Export The legal document filed with the customs department by an exporter for allowing shipment
It arises when the goods are to be exported by land

17. Bill of Lading and Free on Board
A negotiable document given by the carriers of the cargo giving particulars of
-Port of shipment
-No. of packages covered by the consignment
-Marks and numbers on the page
-Name of the vessel in which the goods have been dispatched
-Name of the consignee of the goods
-Whether the freight has been pre-paid or is to be collected at the destination
Bill of Lading
Free Alongside
The seller delivers when the goods are placed alongside the vessel nominated
by the buyer at the named port of shipment
Free on Board The seller delivers the goods on board the vessel nominated by the buyer at the
named port of shipment or procures the goods already so delivered
Exporter delivers the goods to the importer once the goods have been shipped on
board a named vessel
Exporter delivers the goods to the importer once the goods have been placed
along side of the vessel

18. Statistics

19. Value of Import (in ₹ Crore)
230,873.00
245,199.72
297,205.89
359,107.63
501,064.54
660,408.90
840,506.31
1,012,312.00
1,374,436.00
1,363,736.00
1,683,467.00
2,345,463.00
2,669,162.00
2,715,433.91
2,737,086.57
2,490,298.08
2,577,666.00
0.00
500,000.00
1,000,000.00
1,500,000.00
2,000,000.00
2,500,000.00
3,000,000.00
Source: Ministry of Statistics and Programme implementation (MOSPI)

20. Net Custom Revenue from Import Duties (in ₹ Crore)
46,569
39,406 44,137 48,003
56,745
64,201
85,867
100,648
94,581
80,870
129,986
139,610
159,632
166,835
188,016
209,314
224,291
0
50,000
100,000
150,000
200,000
250,000
Source: Ministry of Statistics and Programme implementation (MOSPI)

21. Collection Rate (%)
Collection Rate = (Net Customs Revenue from Import Duty)/(Value of Import) x 100
20.17
16.07
14.85
13.37
11.32
9.72 10.22 9.94
6.88
5.93
7.72
5.95 5.98 6.14 6.87
8.41 8.70
0.00
5.00
10.00
15.00
20.00
25.00
Source: Ministry of Statistics and Programme implementation (MOSPI)

22. Trends in Import and Customs
0.00
6.21
21.21 20.83
39.53
31.80
27.27
20.44
35.77
-0.78
23.45
39.32
13.80
1.73 0.80
-9.02
3.51
0.00
-15.38
12.01
8.76
18.21
13.14
33.75
17.21
-6.03
-14.50
60.73
7.40
14.34
4.51
12.70 11.33
7.16
-20.00
-10.00
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
Growth in Value of Imports ( %) Growth in Revenue from Import Duty (%)
Source: Ministry of Statistics and Programme implementation (MOSPI)

23. Average Value of Customs Revenue by Sources
Category Rs in Crore %
Machinery 37,322.03 29.3%
Petroleum products 15,909.47 12.5%
Gold and Other Articles 14,995.86 11.8%
Chemicals 11,539.53 9.0%
Iron & Steel 9,599.82 7.5%
Other commodities 8,919.59 7.0%
Plastics 6,271.57 4.9%
Motor vehicles & parts 6,029.33 4.7%
Non-Ferrous Metals 4,291.46 3.4%
Instruments 3,272.91 2.6%
Rubber & articles 2,292.30 1.8%
Vegetable Oils 1,502.56 1.2%
Pulp,paper etc. 1,364.69 1.1%
Dyes,colors,Paints 1,161.31 0.9%
Aircrafts & vessels 1,067.72 0.8%
Fruits,dried & fresh 801.09 0.6%
M/M fibres & yarns 752.90 0.6%
Photographic Goods 344.59 0.3%
Baggage 127.99 0.1%
Average During 2007-08 to 2013-14

24. Customs Duty as a % of Tax Revenue
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
12.81 %
Source: World Bank
1974 - 2017

25. Global Comparison – Customs as % of Tax Revenue
0
2
4
6
8
10
12
14
16
18
20
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Australia China India Russian Federation United States
Source: World Bank

26. Thank You
DVS Advisors LLP
India-Singapore-London-Dubai-Malaysia-Africa
www.dvsca.com
Copyrights © 2019 DVS Advisors LLP
Scan the QR Code to Join our
Research Group on WhatsApp
Scan the QR Code to explore more
Research from our Website