This blog is written by Nidhi, a 5th year law student of Institute of Law, Kurukshetra University, Kurukshetra.
Introduction
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
- 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.
- 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.
- 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.
- 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.
- 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.
- 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:
| S.NO | IMPORTANT PROVISIONS | SUMMARY |
| 1. | Purpose of the Act | The purpose of the act is to consolidate & amend the law relating to customs in India. |
| CHAPTER I | ||
| 2. | Sec 1 to 2 Short title, extent and commencement and Definitions | The 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. |
| CHAPTER II | ||
| 3. | Section 3 to 6 Appointment and powers of officers of customs | The government appoints a board for customs and the board appoints customs officers. |
| CHAPTER III | ||
| 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. | ||
| CHAPTER IV | ||
| 5. | Section 11 Powers to prohibit import and export of goods | The 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. |
| CHAPTER IVA | ||
| 6. | Sections 11A to 11G Provisions for illegal importation of notified goods and prevention of the disposal thereof | Section 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. |
| CHAPTER IVB | ||
| 7. | Sections 11H to 11M Provisions for illegal export of specified goods | In a similar fashion central government has power to specify goods that would be illegal export. |
| CHAPTER IVC | ||
| 8. | Section 11N Power to exempt | Central government if satisfied in public interest can notify goods that would be exempted from the provisions of illegal import or export. |
| CHAPTER V | ||
| 9. | Sections 12 to 28BA Chargeable section, valuation of goods, Recovery and refund of duty | Section 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 | ||
| CHAPTER VA | ||
| 10. | Section 28C to 28D Price of goods and incidence of duty passed on to the buyer | Section 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. |
| CHAPTER XIII | ||
| 11. | Section 100 to 110A Power to search, inspect, examine persons and seizure of goods, documents and things | Section 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. |
| CHAPTER XIV | ||
| 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. |
| CHAPTER XIVA | ||
| 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 Commission | Settlememt Commission. subject to other provisions of this chapter the settlement is done | |
| CHAPTER XV | ||
| 15. | Sections 128 to 131C Procedure and time limits for appeals and revisions | THIS CHAPTER PROVIDES WITH provision of appeal to appellate tribunal, High court and supreme court. |
| CHAPTER XVI | ||
| 16. | Section 132 to 140A Offences and cognizance of offences | This 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. |
PENAL PROVISIONS
| CHAPTER XVI | ||
| 16. | Section 132 to 140A Offences and cognizance of offences | This 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.
Criticism:
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.
Conclusion:
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.
