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January 22, 2024by canonsphere0
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This blog is written by Nidhi, a 5th year law student of Institute of Law, Kurukshetra University, Kurukshetra.


The Customs Act, 1962, stands as a cornerstone of India’s trade and economic policies, shaping the nation’s interactions with the global community. This pivotal legislation governs the intricate web of customs duties, import and export procedures, and the regulation of goods crossing India’s borders. Born out of the need to modernize and consolidate the nation’s customs laws, this Act has evolved over the decades to address the complexities of international trade while safeguarding the interests of the Indian economy and its national security.

This article delves into the historical context, significance in the Indian economy, key provisions, and contemporary challenges of the Customs Act, 1962. It sheds light on the Act’s role in trade liberalization, technology-driven trade practices, and its impact on India’s economic landscape. As a dynamic and ever-evolving legislation, the Customs Act, 1962, continues to be a vital instrument in shaping India’s international trade policies, ensuring the efficient flow of goods, and balancing revenue collection with economic growth.

Legislative History:

The Customs Act, 1962, replaced the earlier Sea Customs Act, 1878, and the Land Customs Act, 1924, to consolidate and modernize the laws dealing with customs in India. Prior to the enactment of this Act, customs duties were primarily governed by laws enacted in the colonial era. The need for a comprehensive customs legislation arose due to the changing dynamics of international trade, India’s growing role in the global economy, and the desire to simplify and streamline customs procedures.

The Act was passed by the Indian Parliament on December 13, 1962, and it came into force on February 1, 1963. It has since undergone several amendments to keep pace with evolving trade practices and international agreements.

Purpose /Objectives of the Customs Act, 1962

  1. Regulation of Import and Export: The Act provides the legal framework for regulating the import and export of goods in and out of India. It outlines the procedures, documentation, and requirements for customs clearance.
  2. Collection of Customs Duties: The Act facilitates the collection of customs duties, which include basic customs duty, additional customs duty, and other related charges. These duties are essential sources of revenue for the Indian government.
  3. Preventing Illicit Trade: The Act aims to prevent the illegal import and export of goods, including contraband items, counterfeit goods, and items that may pose a threat to national security. Customs authorities are empowered to enforce these provisions rigorously.
  4. Trade Facilitation: While ensuring regulatory compliance, the Act also seeks to facilitate legitimate trade by streamlining customs procedures, reducing bureaucratic hurdles, and promoting the efficient clearance of goods.
  5. Protection of Domestic Industries: The Act contains provisions for imposing safeguards and countervailing duties to protect the interests of domestic industries when necessary. It aims to balance the promotion of domestic industries with international trade practices.
  6. Regulation of Warehousing: The Act governs the warehousing of goods, allowing for the storage of imported goods under customs control, which can help traders manage cash flow and taxation.

Key Provisions of the Customs Act, 1962:

1. Purpose of the Act The purpose of the act is to consolidate & amend  the law relating to customs in India. 
2. Sec 1 to 2 Short title, extent and  commencement and  DefinitionsThe ACT extends to whole of India including its  territorial water.  Section 2 contains definitions which are important  for the purpose of this Act. The Act defines export  to include all its grammatical variations which  would mean act taking things outside India. As per  the definition section the exporter means any  person in relation to any goods at the time of entry  for export is either holding the good or is beneficial  owner of the goods. Import is defined to include all  its grammatical variations which would mean  bringing things into India from a place outside  India. This section also defines smuggling and  states that it is an omission that makes goods liable  for confiscation as per the provisions of this Act.  This section has undergone many additions through  various amendments and has also incorporated  definitions like international courier terminal.
3. Section 3 to 6 Appointment and powers of  officers of customsThe government appoints a board for customs and  the board appoints customs officers. 
4. Section 7 to 10 Appointments at Customs  Ports, Airports, Warehousing  Stations etc.The board by notification in official gazette  appoints/demarcates places such as ports, custom  airports, international courier terminals and these 
are the only places from where export or import is  allowed as per the provisions of the Act.
5. Section 11 Powers to prohibit import and  export of goodsThe central government for the following purposes  my by notification in official gazette prohibit either  absolutely or subject to conditions the import and  export of goods as specified, the conditions for  prohibitions are as follows  1) Maintenance of security of India, public  order, decency and morality.  2) To prevent smuggling  3) To prevent shortage of goods. 4) To conserve foreign exchange.  5) To prevent injury to economy  6) To prevent agricultural products or fisheries  from surplus as well as scarcity. 7) To prevent deceptive practices etc.
6. Sections 11A to 11G Provisions for illegal  importation of notified goods  and prevention of the disposal  thereofSection 11A defines illegal import as the import of  goods in contravention oof provisions of this act or  any other law. Section 11B of this Act confers central government  with the power to notify goods, their class and  description which would be considered illegal  import. Further this chapter has provisions to deal  with already acquired illegal goods and their  disposal through legal methods.
7. Sections 11H to 11M Provisions for illegal export of  specified goodsIn a similar fashion central government has power  to specify goods that would be illegal export.
8. Section 11N Power to exemptCentral government if satisfied in public interest  can notify goods that would be exempted from the  provisions of illegal import or export.
9. Sections 12 to 28BA Chargeable section, valuation  of goods, Recovery and refund  of dutySection 12 of this Act provides that duty to be  charged would be as per rates specified in the  Customs Tariff Act, 1975. Even government of  India is not exempted from this duty.  Section 14-provides how valuation of goods would  be determined for the purpose of import or export  duty. 
Section 17 allows goods to be imported after  paying duty based on self-assessment 
10. Section 28C to 28D Price of goods and incidence  of duty passed on to the buyerSection 28C makes every person liable to pay duty  for goods at the time clearance of goods bound to  indicate in documents like invoice the amount of  duty which will form part of the price at which the  goods are sold. Moreover, section28 creates a  presumption that the goods being sold are at such a  price that the duty already paid has been transferred  to the buyer.
11. Section 100 to 110A Power to search, inspect,  examine persons and seizure  of goods, documents and  thingsSection 100 empowers proper officers who have  reason to believe that any person entering or  leaving India has goods in contravention with the  provisions of this Act to be searched, and thereafter  the goods can be confiscated. Section 104 talks about power of arrest by custom  officer who has been empowered to do so by  government of India. Offences related to prohibited goods and evasion of  more than 50lakh rupees are cognizable offences,  procedure after Cr.P.C. is to be followed.
12. Section 111 to 127 Adjudication proceedings and  confiscation of goods.Section 111 makes improperly imported goods  liable of confiscation. Section 112 imposes penalty  for import of improper goods the penalty would be  not exceeding the value of goods no 5000 rupees  ad whichever is greater would be charged.  Similarly, improperly exported goods are liable to  confiscation and penalties in the same manner.  Section 115 also states that confiscation of  conveyances carrying goods which are improper or  evading customs.
13. Sections 127A to 127N Section 127B allows importer or exporter to apply  for settlement of disputes under this Act to a 
Provisions relating to  Settlement CommissionSettlememt Commission. subject to other  provisions of this chapter the settlement is done 
15. Sections 128 to 131C Procedure and time limits for  appeals and revisionsTHIS CHAPTER PROVIDES WITH provision of  appeal to appellate tribunal, High court and  supreme court. 
16. Section 132 to 140A Offences and cognizance of  offencesThis chapter makes false declarations, false  documents, obstruction of customs officer, refusal  of x-ray, evasion of customs duty, preparation of  export/import in violation of the Act offences.  These offences are punishable with fine and  imprisonment ranging from up to 6 months to up to  3 years. This chapter further provides that the  Court shall presume that the accused had a culpable  mental state and a statement made and signed by a  person before any gazette customs officer would be  relevant.


16. Section 132 to 140A Offences and cognizance of  offencesThis chapter makes false declarations, false  documents, obstruction of customs officer, refusal  of x-ray, evasion of customs duty, preparation of  export/import in violation of the Act offences.  These offences are punishable with fine and  imprisonment ranging from up to 6 months to up to  3 years. This chapter further provides that the  Court shall presume that the accused had a culpable  mental state and a statement made and signed by a  person before any gazette customs officer would be  relevant.

Significance of the Customs Act, 1962

1. Revenue Generation: One of the primary functions of the Customs Act is the collection of customs duties. These duties contribute significantly to the government’s revenue, helping to finance public projects and services.

2. Trade Facilitation: The Act streamlines customs procedures and aims to reduce red tape, thereby facilitating legitimate trade. It is essential for international traders looking to import or export goods to and from India.

3. Protection of Domestic Industries: The Act includes provisions to safeguard domestic industries from unfair trade practices, including the imposition of safeguards and anti-dumping duties.

4. National Security: The Act plays a crucial role in safeguarding national security by preventing the illegal import and export of goods that may pose a threat. Customs authorities are responsible for enforcing these provisions and protecting the country’s interests.

5. Compliance and Fair Trade: By regulating import and export activities, the Act ensures that businesses and individuals comply with customs laws. It promotes fair trade practices and prevents evasion of customs duties.

6. Legal Framework for International Trade: The Act provides the legal framework for India’s international trade operations. It aligns with international trade agreements and ensures that India’s trade practices are in line with global standards.

7. Customs Administration: The Act establishes the structure and authority of customs administration, with customs officers having specific powers and responsibilities. This ensures the effective enforcement of customs laws.

8. Predictability and Transparency: Provisions such as advance rulings and the appeal mechanism contribute to predictability and transparency in customs-related matters. Importers and exporters can seek clarity on customs treatment and have a recourse for dispute resolution.

Challenges and Contemporary Relevance:

1. Trade Liberalization: As India has increasingly engaged in trade liberalization and signed international trade agreements, the Customs Act has had to adapt to align with these agreements and facilitate smoother trade flows.

2. Technology and E-commerce: With the rise of e-commerce and digital trade, the Act must address new challenges related to customs procedures, valuation of goods, and cross-border e-commerce regulations.

3. Smuggling and Illicit Trade: Despite efforts to prevent smuggling and illicit trade, these activities persist, necessitating continued vigilance and enforcement by customs authorities.

4. Trade Facilitation: The Act must continually work to simplify and streamline customs procedures, reducing administrative burdens and promoting the ease of doing business.

5. Harmonization with Global Standards: India’s customs practices need to align with international customs standards and best practices to ensure the smooth flow of goods and minimize trade disruptions.

6. Economic Impact: Customs duties and trade regulations significantly impact the cost of imported goods and the competitiveness of Indian industries. The Act needs to balance revenue collection with economic growth.


1. Complexity and Ambiguity: The Customs Act is often criticized for its complexity and legal intricacies, making it challenging for businesses and individuals to navigate. The use of technical language and legal terms can lead to ambiguity, creating difficulties in interpretation and compliance.

2. Procedural Bottlenecks: Critics argue that the procedural requirements outlined in the Act may lead to delays and bureaucratic hurdles in the customs clearance process. Cumbersome procedures can hinder the efficient movement of goods and contribute to logistical challenges for businesses.

3. Lack of Clarity in Classification and Valuation: Determining the correct classification and valuation of goods is crucial for customs duties, and some criticize the act for not providing sufficient clarity or guidance in these areas. Ambiguities may lead to disputes between customs authorities and importers/exporters.

4. Enforcement Challenges: The Act may face criticism regarding enforcement challenges. Smuggling and customs evasion continue to be issues, and some insist that the Act should be more robust in addressing these illicit activities.

5. Inflexibility in Adapting to Changing Trade Dynamics: The global trade landscape is dynamic, with frequent changes in trade practices and agreements. The Customs Act should be more adaptable to evolving trade dynamics and should be periodically reviewed and updated to align with international standards.

6. Need for Modernization: Some critics suggest that the Act could benefit from modernization, especially in terms of incorporating digital technologies for customs processes. A more streamlined and technologically advanced system could enhance efficiency and reduce administrative burdens.

7. Trade Facilitation Concerns: There may be concerns that certain provisions of the Act could impede trade facilitation efforts. Striking a balance between regulatory control and the facilitation of legitimate trade to ensure that the customs process is not overly burdensome is vital.


The Customs Act, 1962, is a pivotal legislation in India that plays a critical role in regulating international trade and customs procedures. Its multifaceted objectives encompass revenue collection, trade facilitation, protection of domestic industries, and national security. Over the years, it has evolved to meet the challenges of a changing global trade landscape and continues to be a fundamental legal framework in the Indian economy.

The Act not only supports the government’s revenue collection efforts but also ensures that trade is conducted in a transparent, lawful, and equitable manner. It empowers customs authorities to take preventive measures against illegal trade activities and provides importers and exporters with mechanisms to seek clarity and resolve disputes. In an era of globalization and increasing international trade, the Customs Act, 1962, remains a cornerstone in shaping India’s trade policies and practices.

As the global trade landscape continues to evolve, the Customs Act will likely undergo further changes and amendments to meet new challenges and opportunities. By staying adaptable and responsive to the dynamics of international trade, the Customs Act will remain a vital instrument for the Indian government to manage its trade operations and support economic growth.

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