The Customs Act: An overview

The Customs Act was passed in 1962 with the objectives of modifying and consolidating the laws. The provisions of this act came into operations with effect from 1st February 1963 by the notification to that effect published in the Gazette of the government of India.

What does Custom Act 1962 Define?

The custom act 1962 provides law that regulates the imports and exports of goods within the territory of the whole India. Additionally, it also provides for the levy of export import taxed on the goods so exported or imported so as to preserve indigenous goods and businesses.

What is customs duty?

The custom duty is a kind of tax that is levied on the value of goods when they are carried across international boundaries of the countries. The objective behind imposing custom duty is to protect domestic goods and manufacture industries, and to control the flow of commodities. Additionally, the government also receives income by the collection of the custom duty on export or import of goods.

Types of Customs Duty

The given table illustrates the major types of customs duty

Duty Categories	Applicability
Customs Basic Duty	Applied to all imports, excluding those that are exempt.
The Integrated Goods and Services Tax (IGST)	This tax is assessed at the rate that is applicable on the supply of an equivalent good in India under the terms of the IGST Act of 2017, and it is imposed to offset the effects of the GST in India.
Good and Service Tax Compensation Cess	In accordance with the rules of the GST (Compensation to States) Cess Act, 2017, this tax is imposed on the supply of similar goods in India in order to offset the impact of the GST Compensation Cess.
Protective, countervailing, safeguard, antidumping and special additional customs duties (SAD)	After the establishment of GST, only items that were subject to central excise duty or VAT were now subject to countervailing duty (CVD) and special additional customs duty (SAD).
The Social Welfare Surcharge	SWS, which is imposed at 10% on imports of products with the exception of certain goods that are excluded from SWS, is intended to fund and provide for social security, health care, and education.

The Objective of Imposing Customs Duty

The import and export of products in India are subject to customs duty for the reasons listed below.

• To limit imports in order to preserve foreign currency.

• To stop the smuggling of goods and other activities.

• To avoid the dumping of products.

• To protect domestic commerce.

• To safeguard resource revenue.

• To safeguard Indian businesses from unfair competition.

• To safeguard product imports and exports in order to fulfill the government's policy goals.

• To control exports.

Types of Exemption under Custom Act, 1962

Major exemptions are −

• By specific order and on a case-by-case basis

• Common exceptions

• Added exclusions

• Through notification

Exemption from Custom Duty

It includes −

• Exemptions may be granted by the central government through notification. Under "project imports," capital goods and spare parts are eligible for a reduced or no customs charge.

• The Central Government is permitted to issue notifications giving partial or complete exemption from customs duty on any commodities under Section 25 of the Customs Act.

• Exemptions could be general or tailored. Individual exemptions pertain to specific products, whereas general exemptions pertain to the use of commodities.

• Additionally, the exclusions are provided if specific requirements are met.

• Auxiliary or principal duty may be excluded from certain requirements.

Customs Law Rules and Regulations

The Central Government has the authority to issue rules that are compliant with the Act's provisions and to carry out the Act's primary objectives, according to Section 156 and Section 157 of the Customs Act of 1962.

• The method of calculating the regulations of duty drawback on exports is outlined in the Customs and Central Excise Duties Drawback Rules of 1995.

• For valuing imported products in order to determine the amount of duty to be paid, see the Customs Valuation Rules of 1988.

• Customs Regulations from 1996: This allows for the manufacturing of excisable items to be imported at a reduced rate of duty. The process that must be followed while bringing products into India with the intention of exporting them, is also outlined.

• Procedures for project imports under the 1986 Project Import Regulations.

• Regulations for Customs House Agents' Licensing from 1984.

Punishment for Violations of Custom Law

Violation of the provisions of the Customs Act 1962 is regarded as offence and as per the provisions of section 104 of the custom Act, the offender is liable to be arrest by the custom officials by the authority of the commissioner. He shall be produced before the magistrate. However the offence under the custom act is non-cognizable and bailable and therefore he shall be granted bail.

Major Amendment to Custom Act 1962

To make the laws compatible with modern requirement of the global world, several amendments have been made to it from time to time. Some of the major amendment are −

• The Customs (Amendment) Act of 1969,

• The Customs Tariff Act of 1975,

• The Customs and Central Excise (Amendment) Act of 1991,

• The Customs, Central Excises & Salt and Central Board of Revenue (Amendment) Act of 1978.

• The Customs (Amendment and Validation) Act in 2011.

The amending Act granted the Customs Act's officers the authority to assess fees, and they are now qualified to carry out the Act's duties.

Conclusion

The custom act 1962 has been enacted by the parliament to provide unified law that controls all the affairs pertaining to the import export of goods, imposition of custom duties, exemptions granted upon the specified goods imported from country given special status by the government of India and collection of the custom duty by the agency.

Frequently Asked Questions

Q1. What does the Indian Customs Act define as custom duty?

Ans: The goods which are exported from and imported into India are subject to imposition of tax imposed as per the provisions of the custom act. the tax so imposed is called as customs duties. The Customs Tariff Act 1975, specifies the rates at which duties of customs may be assessed on commodities imported into or exported from India.

Q2. Which provision of the Customs Act, 1975 is known as charging section?

Ans: The section 12 of the Customs Tariff Act of 1975 specify the rates at which custom duties may be assessed on commodities imported into or exported from India, the provision of section 12 of the Customs Act, is known as the "charging section."

Q3. Under the "project imports” What type of exceptions are allowed by the Customs Act, 1962.

Ans: The custom act 1962 provides various exemptions on the import and export of goods in India. Under "project imports," capital goods and spare parts are eligible for a reduced or no customs duty. The said exemptions may be granted by the central government through notification in the official gazette.