The document provides an overview of basic concepts in the Customs Act of 1962 in India. It defines key terms like import, export, goods, customs area, and importer/exporter. It describes the processes of import and export clearance, including relevant documentation and duty payment. It also discusses definitions of India, customs waters, and transportation of goods. The main points covered are import and export duty liability, valuation methods, classification, and the objectives of collection of duties and controlling encashment of export incentives.

1. Basic concepts of Customs Act, 1962
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2. Preliminary
• Customs Act, 1962, extends to the whole of India
• Applies also to any offence or contravention committed outside
India by any person.
• Foreign supplier, foreign customs broker and other persons
including Indians violating the Act is subject to penalty
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3. Products - Goods
• As per Sec 2 (22) "goods" includes-
• (a) Vessels, aircraft and vehicles;
Levy of import duty on conveyance which is NOT used for import
and export of goods
• (b) Stores;
Duty drawback on stores supplied to Foreign going vessel /Aircraft
and Indian navy
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4. • (c) Baggage;
Monitoring of baggage and levy of import duty on baggage in
excess of General Free Allowance.
• (d) Currency and negotiable instruments;
Monitoring foreign currency in terms of FEMA
and
• (e) Any other kind of movable property;
General meaning of Goods
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5. Relevant Definitions
• Sec 2 (14) "dutiable goods" means any goods chargeable to duty
and duty is not paid.
• Sec 2 (44) "warehoused goods" means goods deposited in a
warehouse (Public, Private and Special Warehouse)
Warehoused goods under Sec. 59 are import goods until they are
cleared for Home consumption from Warehouse
• Sec 2 (7) "coastal goods" means goods, other than imported
goods, transported in a vessel from one port in India to another;
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6. • Sec 2 (33) - “Prohibited goods"
Any goods on which there is absolute prohibition on import or export
of goods
Does not include import or export of goods with conditions and
conditions is complied with.
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7. Process - Import/Export
• Sec 2(23) "import", means bringing into India from a place outside
India;
Goods cleared for Home consumption from Customs station
Customs station to Home consumption
Import of goods commences when they cross the TWI, but it
continues and it is completed when they are cleared for Home
consumption from the customs station by filing Bill of Entry for Home
consumption
Garden Silk Mills v UOI
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8. • Goods cleared for warehousing from Customs station
• Customs station to Customs Warehouse to Home Consumption
• Import of goods commences when they cross the TWI, but it
continues and is completed when cleared for home consumption
from the customs warehouse by filing Ex bond bill of entry for
home consumption
Kiran Spinning Mills Case
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9. Relevant Definitions
• Sec 2(25) "imported goods" means any goods brought into India
from a place outside India
• Does not include goods cleared for home consumption;
• Sec 2 (26) "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 Beneficial owner or any person holding
himself out to be the importer;
• Beneficial owner is any person on whose behalf the goods are
being imported or exported or who exercises effective control over
the goods being imported or exported
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10. Clearance
• Clearence for home consumption from customs station
• Bill of entry for home consumption filed by importer and goods are
cleared for home consumption on payment of import duty
• No deferment of import duty
• No execution of bond
• No payment of rent and charges for storage in warehouse
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11. • Clearance for home consumption from customs Warehouse
• Indo bond Bill of entry for warehousing filed by importer and
goods are taken to customs warehouse without payment of import
duty by executing bond (3 times import duty)
• Ex bond Bill of entry for home consumption is filed by importer
and goods are cleared for home consumption on payment of
import duty
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12. • No deferment of import duty
• No execution of bond
• No payment of rent and charges for storage in warehouse
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13. • Sec 2 (18) "export", means taking out of India to a place outside
India;
• Vessel is sunk before crossing TWI
Export of goods complete when goods cross the TWI, so when
vessel sinks before crossing TWI, goods are not said to be
exported.
• When vessel is sunk after crossing the TWI, the goods are said to
be exported.
Reaching of destination is not necessary
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14. TWI
• Read as EEZ as per supreme court judgment
ABON LYOD CHILES OFFSHORE Ltd
• For GST and Customs Act receipt of foreign currency is not
relevant for clearing most of the export incentives or benefits
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15. Relevant Definitions
• Sec 2(19) "export goods" means any goods which are to be taken
out of India to a place outside India;
• Sec 2(20) "exporter", in relation to any goods at any time between
their entry for export and the time when they are exported,
• Includes any owner or beneficial owner or any person holding
himself out to be the exporter;
• Beneficial owner is any person on whose behalf the goods are
being imported or exported or who exercises effective control over
the goods being imported or exported
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16. Place - India
• Sec 2(27) "India" includes the territorial waters of India;
• Land Area - Land mass and J & K
• Sea Area - Up to TWI ie 12 nautical miles
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17. Relevant Definitions
• Sec 2(28) "Indian customs waters " means Exclusive Economic
Zone ie up to 200 nautical miles
• Includes bay, gulf, harbour, creek, or tidal river;
• If a person has committed any offence punishable under customs
law within Indian customs waters, he may be arrested.
• Vessel be stopped in Indian customs water and goods may be
confiscated if the same is found to be used in smuggling
• Prohibited goods can also be confiscated if brought within Indian
customs waters
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18. SEZ
• For levy of export duty under sec. 12
• Part of India and thus NO export duty levied for goods taken to
SEZ
• For duty drawback under Ss 74 & 75
• SEZ is outside India and duty drawback will be allowed for goods
taken to SEZ
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19. GST & Customs duty
• Consideration is generally relevant in GST except in Sch. 1 where
supply is without consideration
• Mutuality concept not relevant if branches are registered under
same GSTIN
• Customs duty is levied even when there is no consideration
• Levied even when transaction is between branches
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20. Transportation, Control and Storage of goods
• Sec 2 (9) "conveyance" includes a vessel, an aircraft and a
vehicle;
• Sec 2(42) "vehicle" means conveyance of any kind used on land
and includes a railway vehicle;
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21. Sec 2(31) "Person-in-charge"
(a) In relation to a vessel, the master of the vessel;
• (b) in relation to an aircraft, the commander or pilot-in-charge of
the aircraft;
• (c) in relation to a railway train, the conductor, guard or other
person having the chief direction of the train;
• (d) in relation to any other conveyance, the driver or other person-
in-charge of the conveyance;
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22. • Sec 2(11) "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;
• Sec 2(13) "customs station" means any customs port, customs
airport or land customs station;
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23. • Sec 2(12) "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
• Sec 2(10) "customs airport" means any airport appointed under
clause (a) of section 7 to be a customs airport;
• International Courier Terminal/Foreign post office - Air frieght
station
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24. • Sec 2(29) "land customs station" means any place appointed
under clause (b) of section 7 to be a land customs station;
• Sec 2(43) "warehouse" means a public warehouse appointed
under section 57 or private ware house licensed under section 58;
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25. Other Concepts
• Sec 2(21) "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,
• Includes-
• (i) any naval vessel of a foreign government taking part in any
naval exercises;
• (ii) any vessel engaged in fishing or any other operations outside
the territorial waters of India; (ABON LYOD case)
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26. • (iii) any vessel or aircraft proceeding to a place outside India for
any purpose
• Duty drawback is given for stores supplied to Foreign going
vessel/Aircraft under Sec 74/75.
• For stores supplied to Indian navy which is not foreign going
vessel/Aircraft for Naval exercises, Duty drawback is given under
Sec 90
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27. Import - Main Points
• Means bringing goods into india from a place outside India
• Duty liability
1. BCD - Under CA, 1962 (Sec. 12)
2. SWS, Under FA, 2018
3. IGST & CC, Under IGST Act, 2017 (Sec. 5)
4. Other import duties are also leviable in certain situations
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28. • Objective is collection of duty for revenue
• General issue involved is under invoicing ie price declared at
customs is less than what is actually paid for evasion of duty
liability.
• Lesser customs duty is paid
• Customs document is Bill of entry [ Import by sea/ Air/ Land] to
be filed electronically
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29. • Valuation under Sec 14, AV = CIF
• Classification under 1st Sch. Preferential rate for import from most
favoured nations
• Standard rate for other countries
• Self assessment is made. Customs officer may re - assess
• Payment of duty by importer
• Clearance on transaction basis made by importer himself or by
engaging customs broker
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30. Export - Main Points
• Means taking goods out of India to a place outside India
• Export duty is BCD Under CA, 1962 (Sec. 12)
• Only BCD is leviable and that too it is exempt in most of the
cases. IGST is also leviable as per IGST Act, 2017 but however it
is zero rated under GST
• Objective is to control over encashment of Export incentives
under various Export promotion schemes under CA and FTP
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31. • General issue is over invoicing ie price declared at customs is
much more than what is actually received for the goods. This way
black money is converted into white and also Higher Export
Incentives are encashed under FTP
• Valuation aspect comes under Sec 14. AV = FOB
• Classification under 2nd Sch.
• Generally no export duty on most of the goods
• For goods having duty only one rate is prescribed
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32. • Self assessment is made. Customs officer may re-assess.
• Clearance on transaction basis. Made by exporter or customs
broker
• Customs document is Shipping bill [Export by sea/air/bill of
export (export by land) to be filed electronically
• Release order by Proper Officer, customs officer who is
authorised to do a particular function is PO for that function. (Let
export order)
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