Introduction and Important Definitions: Customs Law
- 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
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