A brief overview of Customs Act and Customs provisions applicable to Central Excise. Prepared by Debjyoti Bhattacharyya

1. CUSTOMS ACT 1962
1878 Sea Customs Act was the earlier one.
1962 Customs Act replaced it.
17 chapters marked I to XVII
Sections 1 to 161

2. Chapter - I Preliminary
• Section 01
• Title– Customs Act 1962
• Extent: Whole of India
• Section 2
• Definitions: 50 definitions with numbers 1 to 45
– Important definitions:
– “import”, with its grammatical variations and cognate
expressions, means bringing into India from a place outside
India;
– “export”, with its grammatical variations and cognate
expressions, means taking out of India to a place outside India;

3. Section 2 contd
• goods” includes -
• (a) vessels, aircrafts and vehicles; (b) stores;
(c) baggage;(d) currency and negotiable instruments;
and (e) any other kind of movable property;
• prohibited goods” means any goods the import or
export of which is subject to any prohibition under this
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;
• “smuggling”, in relation to any goods, means any act
or omission which will render such goods liable to
confiscation under section 111 or section 113;

4. • “customs airport” means any airport appointed
under clause (a) of section 7 to be a customs
airport;
• (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;
• (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;
Section 2 contd

5. Chapter - II Officers of Customs
• Officers of Customs—CC AC and others as
may be appointed.
• Officers can exercise powers given by act
• Senior can exercise junior’s power
• Govt has power to authorise other Cen/state
govt officers to exercise Customs officers’
powers.

6. Chapter - III Appointment of Customs Ports, Airports,
Warehousing Stations etc. (sec 7 to 10)
• Board can notify above places and also land ,
rail and river routes, LCSs , ICDs, CFSs for
Customs purposes

7. Chapter - IV Prohibitions on importation and
exportation of goods (sec 11)
• security,
• morality,
• Law & order,
• antismuggling,
• forex consrvn
• Protection of life,
patent, trademarks,
industry
• Fulfiling international
obligation
• Prevention of
contravention of law
• Conserve resource
etc
Board can prohibit specific goods for reason of

8. Chapter - IVA /IVB Detection of illegally
imported /Exported goods and prevention of
the disposal thereof
• govt can notify
smuggling prone goods
to strictly monitor their
import.
• people handling them
need to intimate place
of storage, maintain
accounts properly and
sell against proper
vouchers.
• Notified goods
imported for personal
use are not affected by
these sections.
• Also certain classof
goods may be
exempted from this if
govt thinks fit (Chapter
IVC)
Sec 11A—11G and
11H-11M and 11N

9. Chapter - V Levy of, and Exemption from, Customs
Duties
• SECTION 12. Dutiable goods. –
(1) Except as otherwise provided
in this Act, or any other law for
the time being in force, duties of
customs shall be levied at such
rates as may be specified under
the Customs Tariff Act, 1975 (51
of 1975)], or any other law for the
time being in force, on goods
imported into, or exported from,
India.
• Charging sec. Most imp
• SECTION 14. Valuation of goods
• Transaction value, the price
actually paid or payable for the
goods when sold for export to
India for delivery at the time and
place of importation, or as the
case may be, for export from
India for delivery at the time and
place of exportation, where the
buyer and seller of the goods are
not related and price is the sole
consideration for the sale subject
to such other conditions as may
be specified in the rules made in
this behalf :
We shall treat them in greater detail
in our session on Valuation.
End session 1

10. • Sec 17: Assessment
• Imp/exp self assessment
• Assessing officer may call
for documents, test, verify
• If self assmt found wrong—
AO can Reassess after
following Natural justice
and pass speaking order.
• If no re assessment , AO
may audit such transactions
afterwards.
• Sec18 Prov. Assmt
• Importer unable to assess and
requests for assessment by AO
or
• AO feels test necessary
• Or AO deems necessary to
make further inquiry in case
all documents produced or not
produced
• PA is ordered with security to
cover prov and final assmt
Chapter - V Levy of, and Exemption from, Customs
Duties
Sec 18(2): When PA is finalised, for Home consumption
clearance-difference is paid or refunded. For Wh goods,
importer executes bond covering twice the difference

11. Sec 18 contd
• 18(3,4)
• Interest to be paid by
either party if amount not
settled within month of
finalisation.
• 18(5)
• Refund amount goes to
Welfare fund if difference
passed on,/goods for
personal use, /diff. relates
to DBK,
• Sec 25
• By notification (absolutely
of subject to conditions to
be flfilled) from whole of
part of duty leviable as
per tariff.
• By spl order , casewise
• NO duty if liability upto Rs
100.
• Clarification can be
inserted within one yr of
notificn.
Power to exempt
Chapter - V Levy of, and Exemption from, Customs
Duties

12. Refund
• Of export duty if paid
(sec 26)
• If goods returned to
exporter except re sale.
• If goods re imported
within one yr
• Application within six
months of clearance
order.
• Of import duty (SEC
26A)
• Defective goods not
worked upon, identified
by AC as imported one
and exported or title
relinquished or
destroyed or declared
of NCV within 30days of
clearance
Chapter - V Levy of, and Exemption from, Customs
Duties

13. • Application to be made
within 6 month of
relevant date
• No refund for perishable
goods beyond shelf life.
• Sec 27
• Refund claim(duty or
interest): to AC within 1 yr
of payment
• Refund amount goes to
Welfare fund if difference
passed on,/goods for
personal use, /DBK is
permissible for the case
• 28D: incidence presumed
to be passed on unless
proved OW
Refund(contd)
Sec 27A
Interest payable on refund
delayed beyond 3 months
Chapter - V Levy of, and Exemption from, Customs Duties

14. SECTION 28. Recovery of duties not levied or short-levied or
erroneously refunded
• Non/short levy/erroneous
refund (not for any
offence)
• Demand notice within a
year of relevant date(duty
and interest).
• If dues paid before
demand and informed-- no
notice if appropriate
officer finds it alright. If
found short again , notice
for difference to be
issued..
• Non/short levy/erroneous
refund for fraud,collusion,wilful
misstatement/suppression-
• Demand within 5 yrs with
interest (28AA) and penalty
demand.
• If everything is paid(with 25% of
duty demanded as penalty),
matter concludes after the
officer checks and finds all
satisfactory. OW demand for the
differential.
• Interest payable even if not
expressly demanded.
Chapter - V Levy of, and Exemption from, Customs Duties

15. Chapter VI—conveyance carrying impex goods
• Section 29: no incoming
craft or vessel to land
anywhere except customs
port/airport
• Proviso—excepting
accident or other
unavoidables , in which
case nearest
Customs/police auth to
be informed and no
goods shifted WO their
permission.
• Section 30
• Incoming
vessel/craft/vehicle
carrying import goods to
submit detailed import
manifest within 12 hrs of
arrival or beforehand.
• Disobedience 50000 Rs
penalty for person in
charge.
• Amendment allowed if
cause is found genuine
and unavoidable

16. • Unloading of import
goods not permitted
without
• Entry inward
• Approved places
• Customs Supervision
• Working days except
prior notice and payment
of fees.
• Loading export goods
not permitted without
• Entry outward
• Being passed by
Customs Officer
• Export manifest
Chapter VI—conveyance carrying impex goods
(sec 31 to 42)
Officers empowered to
board vessel and ask for
documentsNO conveyance to leave WO
written order

17. Chapter VII Clearance of IMPEX goods
• Sec 46:
• Bill of Entry to be
submitted (for WH or
Home consumpn)
electronically after IGM
or within 30 days prior
to arrival of vessel
• Electronic submission
can be waived by
Commissioner in
suitable cases.
• Sec 47
• Proper officer satisfied
about no malafide and
full payment of duty—
order for clearance for
home consumption.
• Interest chargeable(10
to 36% as fixed) if not
paid within 5 days of
return of BE for
payment.

18. • Sec 48: If goods not cleared within 30
days of unloading or such time as allowed
by proper officer, or relinquished,
custodian can sell them off under
permission of proper officer with
intimation to importer.
Chapter VII Clearance of IMPEX
goods
End session 2

19. • Transit goods
• Goods mentioned as transit goods in Import manifest donot
attract duty(S 52)
• Transhipment goods
• To another country after touching Indian soil- bill of transit to
be filed (prescribed form)
• To another country under an international treaty—A
Transhipment declaration and no duty (prescribed form) No
duty
• To another Indian Customs Destination: Allowed WO duty
against Bill of Transhipment.
• Transitted or transhipped to another Indian destination:
formalities and duty liability at destination.
Chapter VIII (S 52-56)Transit/transshipment

20. Chapter IX: WAREHOUSING
(Sections 57-73)
• Public warehouses or
private WHs can be
appointed/licensed for
deposit of dutiable goods
at any Customs stn
• For WH of goods assessed
U/S 17/18, bond for
double the @ assessed for
observance of all
conditions, payment of
dues and rents and
penalties.
• WH period
• Capital goods for 100%EOU-5yrs
(extendible as deemed fit by
Commr)
• Other goods for 100% EOU-3 yrs
and all others1 yr. (extension not
exceeding 6 mnths by Commr or
any other period)
• WH license cancellation:clear
or relocate to another WH within
7 days or such time as deemed fit
by proper officer.

21. • Manufacturing can be
done in WH
• If exported, no import
duty. If cleared in DTA,
import duty of portion of
WH goods included in
product.(S65)
• WH goods can be cleared
for Home consumption
on presentation of a HC
B/E and payment of all
duties and WH rents
• WH goods can be
exported on presentation
of proper SB on payment
of all dues like Export
duty applicable, penalties
rent etc.
Chapter IX: WAREHOUSING
(Sections 57-73)
Illegitimate clearance,
clearance as sample,
overstay at WH forthwith
payment of all dues and
penalties on demand.

22. Chapter X-Drawback(S 74-76)
• S-74
• Re-export within 2 yrs of duty
paid import thru
• Normal
channel/port/baggage
• Goods identifiable as such
duty paid imports
– 98% of import duty payable as
DBK
– (Time extendible by proper
officer)
• S-75
• On export of goods
manufactured out of
imported material with a
value addition.
• Tobe given on imported
material part
• Unnecessarily large value
addition not allowed.
• If sale proceeds not
received within stipulated
period, dbk is to be
reversed or adjusted.S-76
If market price is less than DBk or DBk is
less than 50 Rs—no DBk.

23. Chapter XIII Search Seizure arrest(100 to 110A)
• If proper officer has reason
to believe that a person
landing from or boarding in
a foreign origin or foreign
bound vessel/craft/vehicle
or any person in a Customs
area has secreted about his
person, any goods liable to
confiscation or any
documents relating thereto,
he may search that person
(S-100)
• 102-to take person to be
searched to gazetted officer of
Customs or a magistrate if so
desired.
• 104: power to arrest
– general or special order of the
Commissioner of Customs
– reason to believe that any person
in India or within the Indian
customs waters has committed an
offence punishable under any of
section 132 133 135 ,135A or 136.
– Arrested person to be taken to a
magistrate.
– Customs officer has powers of a
police officer WRt release on bail
or OW as under CrPC.

24. • SECTION 107. Power to examine
persons. – Any officer of customs
empowered in this behalf by general
or special order of the Commissioner
of Customs may, during the course of
any enquiry in connection with the
smuggling of any goods, -
•
• (a) require any person to produce or
deliver any document or thing
relevant to the enquiry;
• (b) examine any person acquainted
with the facts and circumstances of
the case.
• SECTION 108. Power to summon
persons to give evidence and
produce documents.
• SECTION 105. Power to search
premises.
– Also been made applicable to Central
excise with suitable modification
• SECTION 106. Power to stop and
search conveyances.
• SECTION 106A. Power to inspect. –
Any proper officer authorised in this
behalf by the Commissioner of
Customs may, for the purpose of
ascertaining whether or not the
requirements of this Act have been
complied with, at any reasonable
time, enter any place and inspect the
goods kept or stored therein
Chapter XIII Search Seizure arrest(100 to 110A)
Back to end

25. • SECTION 110. Seizure of goods,
documents and things.
• If the proper officer has reason to
believe that any goods are liable
to confiscation under this Act, he
may seize such goods:
• where it is not practicable to
seize any such goods—
Supurdnamah
• Also been made applicable to
Central excise with suitable
modification
• Perishable goods seizure (as
notified by Govt)
• Can be disposed of during
seizure
• During seizure:
– Inventory,
– photographs,
– Sample drawal.
– Witnesses.
– No notice U/S 124 within 6
months of seizure= seizure to be
lifted (Time extendible by
Commissioner upto 6 months..
Chapter XIII Search Seizure arrest(100 to 110A)
110A Provisional release of seized goods before
adjudication on permission by adjudicating
authority with conditions, bonds etc as fixed by
adjudicating auth.
Back to end

26. Chapter XIV-confiscation and penalty
(S 111-127) highlights
• (dutiable or prohibited
goods) Unauthorised
– Import/exports,
– Routes,
– landing place,
– Clearance from WH/Cus
area
– Concealment
– Contrary to baggage rules
– Undervalued/less duty
paid by wrong
notification/classification.
– Etc.
Import:S 111 Confiscation and Section 112 Penalty-
Export S113 Confiscation, section 114 Penalty

27. • S 114A
• Penalty for short levy/non
levy in fraud collusion
suppression wilful
misstatement-Equal to
duty and interest.
• If duty_interest+penalty
voluntarily paid within 30
days of determination-
25% of duty and/or
interest
• No penalty U/s 112,114 if
114A clause invoked.
• 114AA: False /misleading
document submission—
upto 5 times value of
goods.
Chapter XIV-confiscation and penalty (S 111-
127) highlights
End session 3

28. • S 115: Conveyance confiscation
1. Altered for concealment
2. Thrown goods overboard
3. Asked to stop but disobeyed.
4. Conveyance entering India has
substantial goods missiong
5. Conveyance from which WHd
goods or drawback export goods
unauthorisedly unloaded.
6. Conveyance used for smuggling
goods.
Also been made applicable to
Central excise with suitable
modification excepting points 1
and 4
• SECTION 117. Penalties for
contravention, etc., not expressly
mentioned.
• SECTION 118. Confiscation of
packages and their contents.
– 118(a) import situation Also been
made applicable to Central excise
with suitable modification
– 118(b)-export situation.
• SECTION 119. Confiscation of goods
used for concealing
• SECTION 120. Confiscation of
smuggled goods notwithstanding
any change in form, etc. smuggled
goods
• SECTION 121. Confiscation of sale-
proceeds of smuggled goods.
Chapter XIV-confiscation and penalty (S 111-
127) highlights
Also been
made
applicable
to Central
excise
with
suitable
modificati
on
Back to end

29. • SECTION
122. Adjudication of
confiscations and
penalties
• SECTION 124. Issue of
show cause notice before
confiscation of goods, etc
– Notice in writing with the
prior approval of the
officer of Customs not
below the rank of an
Assistant Commissioner
– Natural justice principals
observed
• SECTION 125. Option to
pay fine in lieu of
confiscation.
• SECTION 126. On
confiscation, property to
vest in Central
Government.
• SECTION 127. Award of
confiscation or penalty
by customs officers not
to interfere with other
punishments.
Chapter XIV-confiscation and penalty (S 111-
127) highlights
Also been
made
applicabl
e to
Central
excise
with
suitable
modificat
ion
Back to end

30. CHAPTER XIV – A Settlement of cases
• Application before
adjudication
• Admits offence
• Pays additional duty
and interest.
• On receipt The
commission asks
applicant by a notice
why its application
should be entertained
• On hearing explanation
commission admits or rejects
application.
• If admitted , adjudicating
authority asked for records and
report.
• On receipt if necessary
Commr(investigation at
Settlement Comm asked to
further investigate
• Then hearing of both sides and
settlement. Settlement amount
cannot be less than
duty+interest together. (Party’s
benefit is Benefit is probable
reduced penalty)

31. CHAPTER XV Appeals and Revision
• SECTION 128. Appeals to
Commissioner (Appeals)
• SECTION 128A. Procedure in
appeal to C(Appeal)(against
this: RA to Central Govt
U/S129DD)
• SECTION 129. Appellate
Tribunal(judicial member,
Technical member and a
high court judge or other
member as president.
• SECTION 129D. Powers
of Committee of Chief
Commissioners of
Customs or
Commissioner of
Customs to pass certain
orders (commissioner’s
adjudn reviewd and if
necessary appeal to
CESTAT ordered.
• Appeal against CESTAT
order lies with High
court(S 130)130E (RA)High court of its own or
being appealed for and finding fit may
certify a case to be fit for appealing to
the Supreme Court These are Civil
appeals under Code of Civil procedure

32. CHAPTER XVI Offences and prosecutions
• SECTION 132. False
declaration, false documents,
etc
• SECTION 133. Obstruction of
officer of customs
• ECTION 134. Refusal to be X-
rayed.
• SECTION 135. Evasion of duty
or prohibitions
• SECTION 135A. Preparation
for illegalexport
• SECTION 136. Offences by
officers of customs for acts
resulting in fraudulent export
or duty evasion.
• SECTION 137. Cognizance of
offences. – (1) No court shall
take cognizance of any offence
under section 132, section
133, section 134 or section
135 or section 135A, except
with the previous sanction of
the Commissioner of Customs.
138C micro films, facsimile copies of
documents and computer print outs
admissible as documents and as evidence.

33. Recovery
• 142.Recovery of sums due to Government. (1) 3[
Where any sum pay- able by any person] under this
Act is not paid,-
(a) amount deductible from other payables by
Customs
• (b) recovery by detaining and selling any goods
belonging to such person which are under the control
of Department
© if above fails, Certificate specifying @ due to be
sent to District Collector where the person’s property
exists for recovery
• (2) Same method applies in case of dues arising out
of bonds or other instrument executed under this Act
or
(b), (c)
Also been
made
applicabl
e to
Central
excise
with
suitable
modificat
ion
CHAPTER XVII Misc
Back to end

34. CHAPTER XVII Misc
• 150. Procedure for sale of goods and application of saleproceeds.
• (1) Godds not confiscated but sold (overstay in WH or perishable
goods seized) –to be sold after intimation to owner.
(2) The proceeds of any such sale shall be applied-
(a) to meet sale expenses
• (b) freight and other charges
• (c) payment of duty if any
• (d) Custodian dues
• (e) any other govt dues from owner
• Balance will be paid to owner of goods.
Also been
made
applicabl
e to
Central
excise
with
suitable
modificat
ion
Back to end

35. Customs provisions applicable to
Central Excise
• Section 12 in the Central Excise Act, 1944
• The Central Government may, by notification in the Official Gazette,
declare that any of the provisions of the 1[Customs Act, 1962 (52 of
1962)] relating to
• levy of and exemption
• drawback
• warehousing,
• offences and penalties,
• confiscation, and
• procedure relating to offences and appeals
• with such modifications and alterations as it may consider necessary or
desirable to adapt them to the circumstances, be applicable in regard to
like matters in respect of the duties imposed by section 3.

36. Customs provisions applicable to
Central Excise
Sub-section (1) of Section 105 See slide 24
Section 110 See slide 25
Section 115 [excluding clauses (a) and
(e) of sub-section (1)]
See slide 28
(clause (a) of Section 118, Sections 119,
120, 121
(See slide 28
Section 124 See slide 29
Clause (b) clause (c) of sub-section (1) of
Section 142
see slide 33
Section 150 see slide 34
End session 4