CUSTOMS ACT 1962

What Is India : “India” includes the territorial waters of India. Territorial water of India also includes any bay,
gulf, harbour or tidal river. The outer boundary of territorial water is international boundary of India beyond
which high sea lies.

Area Of India Limit/extension of the area

1) Territorial waters 12 nautical miles from the base line.

(1 nautical mile = 1.852 kilometre)
2) Contiguous zone Area beyond territorial waters but
upto 24nautical miles from baseline.

3) Continental shelf
Seabed and subsoil of the
submarines areas beyond the
territorial waters upto 200 nautical
miles from the baseline.
4) Exclusive Economic Area beyond territorial waters upto
zone 200 nautical miles from the baselin
(i.e. sea/waters and airspace over the
continental shelf of India)

(1) INDIAN CUSTOMS WATERS: “Indian Customs Waters” means, the water extending into the sea up to the
limit of contiguous zone of India under the maritime zones act and includes any bay, gulf, harbour, creek, or tidal
river. Though ‘India’ extends to only 12 nautical miles, Indian Customs Waters extends to 24 nautical miles.

(2) CUSTOMS LAW EXTENDED TO MARITIME ZONES:The Central Government has extended the customs
act, 1962 and the Customs Tariff Act, 1975 to-
(a) Notified “designated areas” in the continental shelf and exclusive economic zone of India; and
(b) Whole of the continental shelf and exclusive economic zone of India for the limited purpose of-
(*) Prospecting for extraction or production of mineral oils (including petroleum and natural gas) in the
continental shelf of India or the exclusive economic zone of India, and
(*) Supply of any ‘goods’ defined in the customs act in connection with any activities referred in (i).
Therefore, the aforesaid areas form part of “India” for the levy of customs duty.

(4) 12 NAUTICAL MILES FROM BASE LINES: This determines taxable events. Thus, in case of importation,
import of goods will commence when they cross territorial waters and exportation is completed when the
goods cross the territorial waters.
(5) 24 NAUTICAL MILES FROM BASE LINE i.e. THE INDIAN CUSTOMS WATERS: The significance is as
follows-
(a) Any person who has landed from/about to board/is on board any vessel within Indian customs waters and who
has secreted about his person, any goods liable to confiscation or any documents relating thereto may be
searched.
(b) Any vessel within Indian customs waters, which has been, is being, or is about to be, used in the smuggling of
goods or in carriage of any smuggled goods, may be stopped.

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 (c) Any goods which are brought within the Indian Customs waters for the purpose of being imported from a place
outside India, contrary to any prohibition imposed by or under this act or any other law for the time being in
force, shall be liable to confiscation.

(6) 200 NAUTICAL MILES FROM BASE LINES i.e. INDIAN EXCLUSIVE ECONOMIC ZONE: Economic
exploitation in the sea and the seabed can be done by India up to 200 nautical miles from the base line.

Coastal Goods:- “Coastal goods” means goods, other than imported goods, transported in a vessel from one port in
INDIA to another.

In case the goods are loaded from Bombay port to be cleared at Madras Port, then, such goods are known as coastal
goods.

However in case the goods are imported from London Port to be cleared at Kolkata port and, in between, the vessel
touches the Bombay port, then such goods shall retain the characteristics of imported goods and will not become
coastal goods.

Similarly, if such imported goods are transhipped by another vessel from Bombay Port to Kolkata port, then, they will
not be called ‘coastal goods’ since they remain as imported goods.

However, if the goods are cleared from customs area at Bombay port (by filling BOE) and then they are shipped to
Kolkata port, then they cease to be imported goods and are coastal goods.

Conveyance: - “Conveyance” includes a vessel, an aircraft and a vehicle.

Customs Area: - “Customs Area” means-

(1)The area of customs station and

(2)Includes any area in which imported goods are ordinarily kept before clearance by the Customs Authorities.

Customs Port: - “Customs Port” means- Any point appointed by Commissioner to be a customs port and

Custom Station: - “Custom station” means any custom port, custom airport or land customs station.

Dutiable Goods: -“Dutiable goods” meansany goods which are chargeable to duty and on which duty has not been
paid

Entry:- “Entry” in relation to goods means an entry made in,-

(1)A bill of entry in case of imported goods;

(2)A shipping bill or bill of export in case of export goods; and

(3)The label affixed or declaration accompanying the parcel under the section 82 and 84, in case the goods are
imported or to be exported by post.

Goods: -“Goods, include

a) Vessels, aircrafts and vehicles;

b) Stores

c) Baggage

d) Currency and negotiable instruments; and

f) Any other kind of movable property.

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Import: - “Imported goods,” means-

(1)Any goods brought to India from a place outside of India

(2)But does not include goods, which have been cleared for home consumption. In that case of goods warehoused, the
goods retain their character of imported goods till they are cleared for home consumption. Thus, the goods that have
been cleared for homeconsumption do not remain imported goods.

Person-in-charge: - “Person-in-charge” means

IN RELATION TO PERSON-IN-CHARGE

Vessel The master of the vessel

Aircraft The commander or pilot-in-charge of the aircraft.

Railway train The conductor, guard or other person having chief direction of
the train

Any other conveyance The driver or any other person-in-charge of the conveyance.

Stores:- “Stores” means

(1)Goods for use in a vessel or aircraft and

(2)Includes fuel and spare parts and the other articles of equipment, whether or not for immediate use.

Warehouse: - “Warehouse” means a public warehouse appointed under section 57 or a private warehouse appointed
under section 58;

Taxable event under customs and date of determination of rate of duty and tariff valuation in case of imported goods
as well as export goods

TAXABLE EVENT: The taxable event in customs is importation of goods into India or exportation of gods from
India.

(1)In case of Importation: Import of goods will commence when they cross the territorial waters of India but is
completed when it becomes part of the mass of the goods within the country. Taxable event is reached when the goods
reach the customs barrier and the bill of entry from home consumption is filled

(2)In case of exportation:Exportation commences when the shipping bill in respect of such goods is filed but the
taxable event is completed when the goods cross the territorial waters of India.

Since “designated areas” in continental shelf and exclusive economic zone in India are part of “India’, hence, import
into ‘India’ and export from ‘India’ are to be understood accordingly

Types of goods Relevant Date

In case of Imported
Goods

(a)Goods entered for The date of presentation of BOE or entry

home consumption inwards, whichever is later

(b)Goods cleared from a The date of presentation of the Ex-bond

ware house BOE of entry for home consumption under
that section
© For any other goods On the date of payment of duty.

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 In case of Export goods

(a)Goods entered for

export On the date on which the proper officer
makes an order permitting clearance and
loading of the goods for exportation

(b) For any other goods On the date of payment of duty.

Calculation of Assessable Value :

Cost of transportation, insurance, and loading unloading and handling charges

According to Rule 10(2), the value of the imported goods shall be the value of such goods, for delivery at the time
and place of importation and shall include,‐

(a) COST OF TRANSPORTATION: Actual cost of transport of the imported goods to the place of importation. ¾ In
case cost of transportation is not ascertainable: shall be 20% of the FOB value of the goods.
(b) Air freight cannot exceed 20% of FOB value of the goods: in case of importation of goods by air, even if the
actual cost of transport is ascertainable, the same shall not exceed 20% of FOB value of the goods.
(c) Cost of Transportation from port of entry to (ICD) inland container depot /(CFS) container freight station not
includible.
(d) Ship demurrage charges on charted vessels, lighterage or barge charges – Includible

(b) INSURANCE CHARGES: Cost of insurance charges actually incurred shall be added. However, in case the cost of
insurance is not ascertainable such cost shall be 1.125% of the FOB value of the goods.

(c) LOADING UNLOADING AND HANDLING CHARGES associated with the delivery of the imported goods at the place
of importation in port: They are always deemed equal to 1% of [FOB value of the goods + Cost of transport + Cost of
insurance] i.e. 1% of the CIF value of the goods irrespective of the actual expenditure incurred.

WHERE FOB VALUE AND COSTS OF INSURANCE & TRANSPORT, NOT ASCERTAINABLE: Rule 10(2) provides that
FOB value of goods and costs of insurance and transport are not ascertainable, then, the costs of transport and
insurance shall be computed as follows ‐

(i). Cost of transport shall be [20% of (FOB Value + Cost of Insurance)] or CIF Valuej x 20 / 120.

(ii). Cost of insurance shall be [1.125% of (FOB Value + Transport Cost)] or CIF Value x 1.125 / 101.125.

FOB Price (Free on Board) XXX

Add: Charges for costs and services XXX

Transaction Value XXX

Add: The following adjustments [(a) to (c)]

(a) Actual Cost of transport (in case of air it cannot exceed 20% of FOB value of goods) XXX

If unascertainable ‐ 20% of the FOB value of goods.

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(b) Actual Cost of insurance XXX

If unascertainable ‐ 1.125% of the FOB value of goods.

CIF value (FOB value + cost of transport + cost of insurance) XXX

(c) Landing charges i.e. (Loading, unloading and handling charges associated with the delivery XXX of the
importe4goods in port) i.e. @ 1% of CIF value

Assessable Value for the Purpose of calculating duties of custom XXX

Special Custom Duty (CVD ) : IGST: IGST (Integrated Goods and Services Tax) is a component under GST
law, which is levied on goods being imported into India from other country. It has been subsumed various
customs duties including Countervailing Duty (CVD) and Special Additional Duty of Customs (SAD).

Protective DutySec 6 :

As per the section 6 & 7 of the Custom Tariff Act, 1975, protective duty are levied by Central Government on the
recommendation of the Tariff Commission of INDIA to ensure protection to domestic industries established in India,
from bulk imports. Protective duty is imposed by the Central Government by introducing a bill a getting it passed in
the parliament. It is deemed to have been specified in the first schedule as the duty leviable in respect of such goods.

Countervailing duty on subsidized articles Sec 9

The provision to levy countervailing duty on subsidized article is governed by the provisions of section 9 of the
Custom Tariff Act, 1975.

(1) Imposition : The Central Government has the power to levy this duty on any imported article when any country
gives subsidy, directly or indirectly, upon the manufacture or production, the transportation or exportation of the
such article into India. Such countervailing duty cannot exceed the amount of such subsidy. This duty is also
known as anti-subsidy duty.-
(2) No Imposition: The countervailing duty cannot be imposed unless it is determined that—
(a) The subsidy relates to use of domestic goods over imported goods in the export article; or
(b) The subsidy has been conferred on a limited number of persons engaged in manufacturing, producing or
exporting the article.
However no countervailing dutyshall be imposed if such subsidy related to-
(c) Research activities conducted by or behalf of the persons engaged in the manufacture, production or export.
(d) Assistance to promote adaption of existing facilities to new environmental requirements

(3) Retrospective levy: The Central Government can retrospectively levy anti-subsidy duty if massive imports in a
relatively short period have caused injury to the domestic industries. Such duty can be imposed retrospectively
from a date prior from the date of imposition of provisional countervailing duty but not beyond ninety days from
the date of such notification of provision duty.

“ANTI DUMPING DUTY” Sec 9A :

Dumping is said to be a case when an exporter or a producer exports products to an importingcountry at a price less
than the price which is prevailing in its indigenous markets for the like product. Section 9A of the Custom Tariff Act,
1975 provides for the levy of anti-dumping duty.
(1) Imposition: The Central Government has the power to levy anti-dumping duty on dumped articles. However, the
amount of anti-dumping duty cannot exceed the margin of dumping.
Margin of dumping, in relation to an article, means the difference between its exports price and its actual price.
Therefore, margin of dumping = Normal value of the article – Export price of the articles.

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MARGIN OF DUMPING TO BE DETERMINED AS PER RECORDS MAINTAINED BY EXPORT/PRODUCER:
The margin of dumping in relation to an article, exported by an exporter or a producer, under inquiry under this
section, shall be determined on the basis of records concerning normal value and export price maintained, and
information provided, by such exporter or producer. However, where an exporter or producer fails to provide such
records or information, the margin of dumping for such exporter or producer shall be determined on the basis of facts
available.

 CVD is not payable on antidumping duty. Education cess and Secondary higher education cess is not payable
on anti-dumping duty.

 Dumping duty is decided by Designated Authority after enquiry and imposed by Central Government
by notification. Provisional antidumping duty can be imposed. Appeal against antidumping duty can be made
to CESTAT.

THE FLOW PATTERN OF IMPORT

(i) The person‐in‐charge of the vessel or aircraft or any other person notified by Central Government calls on the
port and files the arrival report with the Customs Authorities.
(ii) The Customs Authorities check the documents, grant entry inwards to the vessel, assign an Import General
Manifest (IGM) number to the manifest, and permit the master of the vessel to land and unload the cargo.
(iii) The vessel discharges the cargo into the custody of the Port Trust Authorities, or any other authority appointed
in the particular port to receive the cargo.
(iv) The importer of the goods delivers the negotiable bill of lading received from the shipper of the goods to the
master or the steamer agent of the vessel and obtains the delivery order.
(v) The importer makes self assessment and thereafter, presents a bill of entry in prescribed form electronically
for clearance of the goods for home‐consumption or warehousing.
(vi) In case bill of entry for home consumption is presented and proper self assessment made by importer, the
Proper Officer shall make an order of clearance of goods for home consumption only after he is satisfied that
such goods are not prohibited goods and import duty has been paid.
(vii) In case bill of entry for warehousing is presented, the importer has to execute double duty bond and on such
execution an order for deposit of goods in warehouse shall be made by Proper Officer.
(viii) On showing the customs clearances to Port Trust Authorities or any other Custodian of the cargo, the importer
takes delivery of the cargo for home consumption or for deposit in the warehouse.
(ix) For removal of goods from warehouse, the importer files the 'ex‐bond bill of entry' for clearance of
warehoused goods. Under this bill of entry, duty will be assessed again in terms of Section 15(1)(b) of
Customs Act, 1962.
(x) After payment of customs duty so re‐determined and other charges payable to the warehouse keeper including
rent and interest, the goods are removed for home consumption.

IMPORT MANIFEST OR IMPORT REPORT : Import manifest/report: "import manifest" or "import

report" means the manifest or report as required to be submitted.
(2) Persons required to be furnish the manifest/report [Section 30(1)]: The persons in charge of conveyance
has to present import manifest (in case of vessel or aircraft) or import report (in case of vehicle) in prescribed
form. The Central Government can specify other persons who can furnish import manifest in case of vessel or
aircraft.
(3) Time limit for presentation of import manifest of import report: The import manifest or import report has
to be delivered within the following time limits,‐

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 (a) In case of Vessel or Aircraft: Electronically prior to the arrival of the vessel or aircraft at customs station.
(b) In case of Vehicle: Within twelve hours after its arrival in the customs station. Electronic filing not
feasible: The Commissioner of Customs may; in cases where it is not feasible to deliver import manifest by

(4) Penalty for non filing the import manifest/report within time limit ‐ Not exceeding Rs. 50,000.
presenting electronically, allow the same to be delivered in any other manners.

ENTRY INWARDS
Imported goods not to be unloaded from vessel until entry inwards granted
(a) The master of a vessel shall not permit the unloading of any imported goods until an order has been given
by the proper officer granting entry inwards to such vessel.
(b) No order for entry inwards shall be given until an import manifest has been delivered or the proper officer
is satisfied that there was sufficient cause for not delivering it.
(c) The provisions of this section shall not apply to the unloading of baggage accompanying a passenger or a
member of the crew, mail bags, animals, perishable goods and hazardous goods.

Date of Entry inward: The date of entry inward is the date recorded in the Customs register and not the date
of actual entry of the vessel

BOAT NOTE: In case the vessel arriving at the port does not get a berth, then, the import cargo is taken from
the ship to the shore and the export cargo is taken from the shore to the ship, in boats.

No imported goods shall be water‐borne for being landed from any vessel and no export goods which are not
accompanied by a shipping bill, shall be water borne for being shipped unless the goods are accompanied by a
boat‐note in prescribed form.

Exemption from Boat Note: The Board may give general permission, and the proper officer may in any
particular case give special permission, for any goods or any class of goods to be water‐borne without being
accompanied by a boat‐note.

CONVEYANCES CARRYING IMPORTED GOODS :

 Imported goods not to be unloaded unless mentioned in import manifest or import report for being unloaded at
that customs station.
 Unloading and loading of goods at approved places only.
 Goods not to be unloaded or loaded on any conveyance except under supervision of customs officer.
 Restrictions on unloading and loading of goods on any Sunday or holidays or any other day after the working
hours, except:
(i) after giving the prescribed notice and
(ii) after paying the prescribed fees, if any.
(iii) However, no fees shall be levied for the unloading and loading of baggage accompanying a passenger
or a member of the crew, and mail bags.

 The proper officer may, at any time, board any conveyance carrying imported goods or export goods.
 The proper officer may require production of documents and ask questions.

CUSTODY AND REMOVAL OF IMPORTED GOODS :

(1) Restrictions on custody and removal of imported goods: All the imported goods that are unloaded in the
customs area shall remain in the custody of such person as may be approved by the Commissioner of Customs until
they are cleared for home consumption or are warehoused or are transshipped.
(2) Duties of Custodian of cargo:
(a) shall keep a record of such goods and send a copy thereof to the proper officer;

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(b) shall not permit such goods to be removed from the customs area or otherwise dealt with except under and in
accordance with the permission in writing of the proper officer.
(3) Custodian liable to pay duty on pilfered goods: If any imported goods are pilfered after unloading thereof in the
customs area, while in custody of the person as referred above, that person will be liable to pay duty on such goods at
the rate prevalent on the date of delivery of import manifest or import report to the proper officer for the arrival of the
conveyance in which the said goods were carried.

Airport Authority of India v. Deepak Industries Ltd. 2013: The goods of importer were misplaced or stolen when
they were warehoused in custody Airports Authority of India. It was held that In case of neglect of duty, whether
statutory or otherwise, shelter of the period of limitation in making claim would not be granted to the State or state
agency.

FILING OF BILL OF ENTRY :

(1) Entry of goods on importation [Section 46]: The importer of any goods,‐
(a) other than goods intended for transit or transhipment,
(b) shall make entry thereof by presenting electronically to proper officer a bill of entry in prescribed form for,‐
(i) home consumption; or
(ii) warehousing.

(2) Electronic filing not feasible ‐ Filing may be in other manner.

(3) If the importer makes and subscribes to a declaration before the proper officer, to the effect that he is unable for

production of such information, permit him, previous to the entry thereof ‐

want of full information to furnish all the particulars of the goods required above, the proper officer may, pending the

(a) to examine the goods in the presence of an officer of customs, or

(b) to deposit the goods in a public warehouse appointed u/s 57 without warehousing the same.

(4) Bill of entry to include all goods mentioned in bill of lading.

(5) A bill of entry may be presented at any time after the delivery of the import manifest or import report as the case
may be.
(6) Declaration as to truth of the contents & Submission of Invoice.
(7) Bill of entry to be filed even if goods exempt.

(1) Order permitting clearance of goods for home consumption: Where the proper officer is satisfied that ‐
CLEARANCE OF GOODS FOR HOME CONSUMPTION

(a) any goods entered for home consumption are not prohibited goods; and
(b) the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of
the same
The proper officer may make an order permitting clearance of the goods for home consumption.

(2) Payment of Duty Electronically: The Central Government may, by notification in the Official Gazette, specify
the class or classes of importers who shall pay such duty electronically. Following classes of importers are notified
who shall pay duty electronically, namely,‐
(a) Importers registered under Accredited Clients Programme.
(b) Importers paying custom duty of Rs. 1,00,000 or more per bill of entry.

3. Interest @15% on delayed payment of duty: Where –

The importer fails to pay the import duty within 2 days, excluding holidays.
From the date on which the bill of entry is returned to him for payment of duty.

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 FLOW PATTERN OF EXPORT

(1) Presentation of Shipping Bill by the exporter and assessment of goods to duty
(a) Any exporter who wants to export goods has to present Shipping Bill electronically i.e. an application for export of
goods.
(b) The exporter makes self assessment and determines the export duty. The said export duty, export cess is paid by
him.
(c) The shipping bill is deemed to be filed and self assessment of duty completed when, after entry of the electronic
declaration (shipping bill) in the Indian Customs Electronic Data Interchange System (ICEDIS), a number is generated
by the ICEDIS for the said declaration.
(d) The checklist together with supporting export documents and challan shall be presented to proper officer of
customs for making an order permitting clearance, for loading of goods for exportation, after examination of export
goods if, so required.
(e) After making aforesaid order, the proper officer shall generate original (customs copy), exporter's copy, exchange
control copy and the export promotion copy of shipping bills.
(f) The original (customs copy) of the shipping bill and the checklist shall be retained by the proper officer. The export
copy, exchange control copy and the export promotion copy of shipping bill shall after suitable endorsements be
handed over to the authorised person.
(g) The export goods along with assessed shipping bill is presented to officers of customs. Permission of loading of
goods i.e. 'Let Ship' order is given by preventive officer, if he is satisfied that all the customs checks have been
completed.

(2) Loading of Goods:

(a) The assessed Shipping Bill is presented to the master/agent/mate of the vessel, who shall permit loading of goods.
(b) If the vessel is anchored in mid sea, the goods have to be taken to the ship by boats/lighters, and the boat note
procedure would be followed.
(c) On receipt of the cargo on board the ship, the master/mate/agent of the ship issues a receipt of the quantity and
particulars of the cargo loaded on the ship which is endorsed by Customs Officer.

(3) Notice of Short‐Export Rules, 1963: If any goods mentioned in a shipping bill or bill of export and cleared for

such goods were intended to be exported, ‐

exportation are not exported the exporter shall, within 7 days, from the date of departure of the conveyance by which

(4) Export goods not to be loaded on vessel until entry‐outwards granted: The master of a vessel shall not permit
the loading of any export goods, other than baggage and mail bags, until an order has been given by the proper officer
granting entry‐outwards to such vessel.

(5) Export goods not to be loaded unless duly passed by proper officer : The person‐in‐charge of a conveyance
shall not permit the loading at a customs station‐
(a) Export goods, other than baggage and mail bags, unless a shipping bill or bill of export or a bill of transhipment
duly passed by the proper officer has been handed over to him by exporter;
(b) Baggage and mail bags, unless their export has been duly permitted by the proper officer.
Baggage Rule 2016 :-

2.Definitions : –

(1) In these rules, unless the context otherwise requires, -

(i) “Annexure” means Annexure appended to these rules;

(ii) “Family” includes all persons who are residing in the same house and form part of the same domestic
establishment;

(iii) “Infant” means a child not more than two years of age;
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(iv) “Resident” means a person holding a valid passport issued under the Passports Act, 1967 (15 of 1967)
and normally residing in India;

(v) “Tourist” means a person not normally resident in India, who enters India for a stay of not more than six
months in the course of any twelve months period for legitimate non-immigrant purposes;

(vi) “Personal Effects” means things required for satisfying daily necessities but does not include jewellery.

3. Passengers arriving from countries other than Nepal, Bhutan or Myanmar :-

(1) Used personal effects, excluding jewellery, required for satisfying daily necessities of life; and
(2) Articles, other than those mentioned in annexure I, carried on the person or in the accompanied
baggage of the passenger upto a value mentioned ---

LAPTOP EXEMPT: One laptop computer imported by a passenger (other than a member of the crew) of
18 years or above as a part of the baggage has been exempted from the whole of the customs duty leviable
thereon.

An Indian resident or a foreigner residing in India or a tourist of Indian origin, not being an infant,
arriving from any country other than Nepal, Bhutan or Myanmar, shall be allowed clearance free of duty
articles in his bona fide baggage,

That is to say, used personal effects, travel souvenirs and articles other than those mentioned in Annexure I,
upto the value of fifty thousand rupees if these are carried on the person or in the accompanied baggage of
the passenger

Provided that a tourist of foreign origin, not being an infant, shall be allowed clearance free of duty articles
in his bona fide baggage, that is to say, used personal effects, travel souvenirs and articles other than those
mentioned in Annexure I, upto the value of fifteen thousand rupees if these are carried on the person or in
the accompanied baggage of the passenger

Provided further that where the passenger is an infant, only used personal effects shall be allowed duty
free.

Explanation. - The free allowance of a passenger under this rule shall not be allowed to be pooled with the
free allowance of any other passenger.

4. Passengers arriving from Nepal, Bhutan or Myanmar : –

An Indian resident or a foreigner residing in India or a tourist, not being an infant, arriving from Nepal,
Bhutan or Myanmar, shall be allowed clearance free of duty articles in his bona fide baggage, that is to say,
used personal effects, travel souvenirs and articles other than those mentioned in Annexure I upto the value
of fifteen thousand rupees if these are carried on the person or in the accompanied baggage of the
passenger:

Provided that where the passenger is an infant, only used personal effects shall be allowed duty free:

Provided further that where the passenger, is arriving by land, only used personal effects shall be allowed
duty free.

Explanation. - The free allowance of a passenger under this rule shall not be allowed to be pooled with the
free allowance of any other passenger.

5. Jewellery.- A passenger residing abroad for more than one year, on return to India, shall be allowed
clearance free of duty in his bona fide baggage of jewellery upto a weight of twenty grams with a value cap
of fifty thousand rupees if brought by a gentleman passenger fourty grams with a value cap of one lakh
rupees if brought by a lady passenger.

6. Transfer of residence-

(1) A person, who is engaged in a profession abroad, or is transferring his residence to India, shall on
return be allowed clearance free of duty in addition to what he is allowed under rule 3 or, as the case may be,
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under rule 4, articles in his bonafide baggage to the extent mentioned in column (2) of the Appendix below,
subject to the conditions, if any, mentioned in the corresponding entry in column (3) of the said Appendix

Duration of stay abroad Articles allowed free of Conditions Relaxation

duty

From three months Used personal and Indian passenger

upto six months household articles, other
than those mentioned in
Annexure I or Annexure II
but including articles
mentioned in Annexure III
upto an aggregate value of
sixty thousand rupees.
From six months upto Used personal and Indian passenger
one year household articles, other
than those mentioned in
Annexure I or Annexure II
but including articles
mentioned in Annexure
III, upto an aggregate
value of one lakh rupees.
Minimum stay of one Used personal and The Indian passenger
year during the household articles, other should not have
preceding two years. than those mentioned in availed this concession
Annexure I but including in the preceding three
articles mentioned in years
Annexure II or Annexure
III, upto an aggregate
value of two Lakh Rupees
Minimum stay of two Used personal and house (i) Minimum stay of (a) For condition
years or more. household articles, other two years abroad,
than those mentioned in at immediately (i), shortfall of upto two
Annexure I but including preceding the months in stay abroad
those mentioned in date of his arrival can be condoned by
Annexure II or Annexure on transfer of Deputy Commissioner
III, upto a value limit of residence; of Customs or Assistant
five lakh rupees. (ii) Total stay in India Commissioner of
on short visit Customs if the early
during the two return is on account of
preceding years –
should not exceed (i) terminal leave or
six months; and vacation being availed
off by the passenger; or
(iii) Passenger has not (ii) any other special
availed this concession circumstances for
in the preceding three reasons to be recorded
years. in writing.

(b) For condition

(ii), the Principal
Commissioner or
Commissioner of
Customs may condone
short visits in excess of
six months in special
circumstances for
reasons to be recorded

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 in writing.
(C ) for condition III
No relaxation

7. Currency. - The import and export of currency under these rules shall be governed in accordance with the
provisions of the Foreign Exchange Management (Export and Import of Currency) Regulations, 2000, and
the notifications issued thereunder.

8. Provisions regarding unaccompanied baggage : –

(1) These rules shall apply to unaccompanied baggage except where they have been specifically excluded:
Provided that the said unaccompanied baggage had been in the possession, abroad, of the passenger and is
dispatched within one month of his arrival in India or within such further period as the Deputy
Commissioner of Customs or Assistant Commissioner of Customs may allow:

Provided further that the said unaccompanied baggage may land in India upto two months before the arrival
of the passenger or within such period, not exceeding one year, as the Deputy Commissioner of Customs or
Assistant Commissioner of Customs may allow, for reasons to be recorded, if he is satisfied that the
passenger was prevented from arriving in India within the period of two months due to circumstances
beyond his control, such as sudden illness of the passenger or a member of his family, or natural calamities
or disturbed conditions or disruption of the transport or travel arrangements in the country or countries
concerned or any other reasons, which necessitated a change in the travel schedule of the passenger.

9. Application of these rules to members of the crew. –

(1)These rules shall also apply to the members of the crew engaged in a foreign going conveyance for
importation of their baggage at the time of final pay off on termination of their engagement.

(2) Notwithstanding anything contained in sub-rule (1), a member of crew of a vessel or an aircraft other
than those referred to in sub-rule(1), shall be allowed to bring articles like chocolates, cheese, cosmetics and
other petty gift items for their personal or family use which shall not exceed the value of one thousand and
five hundred rupees.

ANNEXURE–I (See rule 3, 4 and 6)

1. Fire arms.
2. Cartridges of fire arms exceeding 50.
3. Cigarettes exceeding 100 sticks or cigars exceeding 25 or tobacco exceeding 125 gms.
4. Alcoholic liquor or wines in excess of two litres.
5. Gold or silver in any form other than ornaments.
6. Flat Panel (Liquid Crystal Display/Light-Emitting Diode/ Plasma) television.

ANNEXURE II (See rule 6)

1. Colour Television.
2. Video Home Theatre System.
3. Dish Washer.
4. Domestic Refrigerators of capacity up to 300 litres or its equivalent.
5. Deep Freezer.
6. Video camera or the combination of any such Video camera with one or more of the following goods,
namely:-
(a) television receiver;
(b) sound recording or reproducing apparatus;

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 (c) video reproducing apparatus.
7. Cinematographic films of 35mm and above.
8. Gold or Silver, in any form, other than ornaments.

ANNEXURE III (See rule 6)

1. Video Cassette Recorder or Video Cassette Player or Video Television Receiver or Video Cassette Disk
Player.
2. Digital Video Disc player.
3. Music System.
4. Air-Conditioner.
5. Microwave Oven.
6. Word Processing Machine.
7. Fax Machine.
8. Portable Photocopying Machine.
9. Washing Machine.
10. Electrical or Liquefied Petroleum Gas Cooking Range
11. Personal Computer (Desktop Computer)
12. Laptop Computer (Note book Computer)
13. Domestic Refrigerators of capacity up to 300 litres or its equivalent

Illustration –Computation of customs duty: Mr. X, an Indian resident and a doctor by profession who was engaged in
his profession in Germany for 3 months, brought with him on 20/04/2014 the following items on his return to
India-

(a) Used personal effects like clothes etc. of RS 50, 000 (b) A video cassette recorder of RS 25, 000
(c) Jewellery of RS 15, 000 (d) Used house hold articles of RS 20, 000
(e) His professional equipment’s like stethoscope and (f) A laptop computer worth RS 1, 20, 000
other surgical instruments worth RS 30, 000;

Determine the duty payable by him. Duty rate 36.05 %

1) IMPORT & EXPORT THROUGH COURIER

A) Import
i) Permitted by air from specified air ports & land custom Station. by land
ii) Maxm. Wt. allowed is 70 Kg. / Package
iii) Goods covered by any other Acts are not permitted
iv) Animals & its parts, Plants, Perishables, Stones, Gold, Silver, Chemicals, Publications containing incorrect
Indian boundaries are not allowed
v) Life savings drugs are allowed
vi) Courier must be Registered with commissioner of customs
vii) Free gifts & samples up to Rs. 10,000 per consignment allowed
viii) Gem / Jewellery up to Rs. 25 lakhs per consignment allowed.
ix) Courier bags are kept separately & dealt with as per directions of commissioner of customs
x) He has to submit specified declaration & ‘Courier Bill of Entry’ in prescribed form
xi) Goods must be cleared by courier within 30 days of import otherwise they are disposed of by customs
authorities.

B) Export
i) Permitted from specified air ports & land customs station
ii) Courier must file a statement before departure of any flight in prescribed form along with “Courier Shipping
Bill”
iii) Free gifts Rs. 25,000 & samples Rs. 50,000 can be exported
iv) Export by EOU / SEZ / EHTP / STP units through authorized courier is permitted
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v) Export of Gem / JwelleryRs. 25 lakhs per consignment is allowed
vi) Goods must be exported within 7 days from customs area otherwise they are disposed of by customs
authorities.

Other Provision of Custom

1) WAREHOUSING
a) Imported goods can be kept without payment of duty
b) Pay customs duty & take goods out of warehouse
c) Available to – Traders & Direct Importers
d) Opened at warehousing Stn. Approved by customs
e) Public & private warehouses
f) Bond is required from importer for movement of goods from customer’s port to warehousing Stn.
g) Period of warehousing–1 year & further 6 months by permission of commissioner & with permission of chief
Commissioner & unlimited period
h) Capital goods by E.O.U. – 5 Yrs. Warehousing & Other goods by E.O.U. - 3 Yrs. Warehousing
i) Warehouse is under physical control of customs officer & clearance can be only with his permission
j) If goods are damaged during warehousing no duty is payable
k) Goods can be cleared from warehouse only after paying custom duty
l) Importer must pay rent & other charges if not paid warehouse keeper can sell goods after giving notice to
importer& with permission of customs officer
m) Owner of warehoused goods can relinquish title of goods any time before home clearance. He has to pay rent
& other charges. He does not have to pay duty
n) With permission of customs officer warehoused goods can be dealt in any of the following wary :
- Mfg. & other operation for export or for home consumption
- Inspect goods
- Separate damaged / deteriorated goods
- Sort goods
- Change containers
- Show goods for sale
- Take sample of goods.

2) CUSTOMS HOUSE AGENT (C.H.A.)

a) Appointed by company to complete customs formalities and obtain clearance from port
b) He must have license
c) C.H.A. is responsible for all Acts. Of his employee
d) To become customs house agent prescribed examination must be passed
e) Employee of customs house agent is given I. card
f) License fee is Rs. 5,000
g) License cannot be transferred
h) Customs house agent must obtain authorization from cos. For which he is working .
i) Customs house agent has to execute bond in prescribed form
j) If rules & regulations are not followed (Frameed by customs ) his license is cancelled or suspended.

3) EXPORT ORIENTED UNDERTAKINGS ( E.O.U. )

 EOU can import inputs and capital goods without payment of customs duty.

 They can procure indigenous inputs and capital goods without payment of excise duty.

 Their final product should be normally exported, but they are allowed to sale part of their production within
India, which is termed as ‘DTA’ sales i.e. sale in Domestic Tariff Area.

 EOU units have to follow provisions of

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- Customers Act.
- Excise Act
- Income Tax Act.
- Foreign Exchange Management Act.

 EOU can be set up at various places in India declared as ‘warehousing stations’. There are over 300 such
places.

 Only project having an investment of not less than 100 lakhs and above in building and plant and machinery
shall be considered for establishment under EOU scheme.

 One crore investment criteria does not apply to units engaged in service sector, Software Technology
Park(S.T.P.), Electronics Hardware Technology Park (E.H.T.P.), I.T. sector handicrafts etc.

 The EOU unit may be engaged in manufacture of goods, including repair, re-engineering, and rendering of
services. However, trading units are not permitted.

 In case of EOU units, the whole factory is treated as a bonded warehouses. The bonding period is three years
for raw materials, consumable and spares. However, for capital goods, the bonding period is 5 years. Bonding
period of three years means inputs / consumable should be consumed for manufacture of export product within
three years. If not, application for extension should be made. This period can be reduced by commissioner if
goods are likely to deteriorate.

 The warehousing period can be up to five years in case of capital goods intended for use in EOU unit.

 Goods manufactured in EOU should e normally exported. However, since export market is often fluctuating
and uncertain, these units are allowed to sell part of their products in DTA (Domestic Tariff Area ) i.e. within
Indian, in terms of Foreign Trade Policy.

As per proviso to section 3(1) of Central Excise Act. in case of sale by EOU units, duty payable in case of DTA
sale shall be equal to aggregate duties of customs which would be payable under Customs Act, if the goods are
imported in to India.

4) SPECIAL ECONOMIC ZONES (S.E.Z.)

 China has made spectacular economic progress in recent years. Exports from China are growing at phenomenal
speed. It was found that one major reason for growth in exports was due to ‘Special Economic Zones’
development by China. These are huge areas of thousands of hectares, where raw materials and capital goods can
be imported without any duty and final product is exported. Excellent infrastructure is provided in these SEZs.

 India has also decided to introduce concept of SEZ in India. SEZ are like a separate island within country.
These are treated as if they are outside India for customs purposes. Goods can be brought in SEZ without
payment of customs duty or excise duty. Supplies to SEZ from other parts of India are treated as ‘ exports’ and
are entitled to all export benefits. On the other hand, supplies from SEZ unit to any person outside SEZ is treated
as ‘import’ by that person ad normal customs duty is payable.
 SEZ have full freedom of operations within SEZ and all facilities of import and export are provided within the
zone itself.

 SEZ are grown engines that can boost manufacturing, augment exports and generate employment. private
sector has been associated with the development of SEZs.

 SEZ and SEZ units will be exempt from all taxes like customs duty, excise duty, Central sales Tax, State Vat,
Incomes tax etc. Supplies to SEZ from DTA (Domestic Tariff Area ) will be ‘export’ by DTA. Supplies from
SEZ to unit in DTA will be ‘export’ by SEZ and ‘ Import’ by DTA unit.

 Goods manufactured in SEZ are ‘ excluded excisable goods’ and no excise duty is payable on them

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5) DUTY DRAWBACK

 Manufacturers or processors can avail ‘ duty drawback’ Here, the excise duty and customs duty paid on inputs
and service tax paid on input services is given back to the exporter of finished product by way of ‘ duty
drawback’
 Drawback, in relation to any goods manufactured in India and exported, means the rebate of duty or tax, as the
case may be, chargeable on any imported materials or excisable materials used or taxable services used as input
services in manufacture of such goods.

 Drawback – When not eligible

(i) If sale proceeds of export goods are not received within time stipulated by RBI [This provision does not apply
to goods supplied from DTA unit to SEZ unit.]
(ii) If no customs / excise duty is paid on the inputs or service tax is not paid on input services
(iii) Goods manufactured by EOU or a unit in Special Economic Zone (as they obtain inputs without payment of
duty )
(iv) In case of negative value addition – i.e. selling price of exported goods is less than value of imported goods
i.e. foreign exchange spent on import of raw material is more than FOB value of exports.
(v) Jute batching oil used in manufacture of jute yarn, twist, twine etc.
(vi) Packing materials used in manufacture of jute yarn, jute fabrics and jute manufacture.
(vii) Exports to Nepal / Bhutan. However, exports to Nepal are eligible if payment is received under hard
currency i.e. dollars, euro, Yen British pounds etc.
(xvii) If drawback is less than Rs. 50

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