CUSTOMS LAW & PROCEDURES - NOTES
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1. Customs Act, 1962 – Important Sections
The Customs Act, 1962 governs the levy, collection, and administration of customs duties in
India.
Key Sections:
Section 46 – Filing of Bill of Entry for Import
Section 47 – Clearance of goods for home consumption
Section 50 – Filing of Shipping Bill for Export
Section 51 – Clearance of goods for export
Section 146 – Licensing of Custom House Agents (CHAs)
Section 147 – Liability of CHAs for their employees' actions
Section 12 – Levy of Customs Duties on imported/exported goods
Section 17 – Assessment of Duty by Customs Authorities
Section 23 – Remission of duty on lost/destroyed goods
Section 24 – Power to prohibit import/export of certain goods
Section 25 – Power of Government to grant exemptions
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2. Customs Procedures
The customs clearance process involves several formalities:
2.1 Customs Import Procedure
1. Arrival of Goods – Import General Manifest (IGM) is filed by the shipping company.
2. Filing of Bill of Entry (BoE) – Required for clearance of goods.
3. Assessment & Duty Payment – Calculation of customs duty based on HS Code and CIF
value.
4. Customs Examination – Physical verification of goods for valuation and compliance.
5. Clearance of Goods – After duty payment and examination, Out of Charge (OOC) is
given.
2.2 Customs Export Procedure
1. Filing of Shipping Bill (SB) – Required for export clearance.
2. Customs Assessment – Verification of documents and valuation.
3. Let Export Order (LEO) – Given by the customs officer after clearance.
4. Loading of Goods – Goods are moved to the port/airport for shipment.
5. Bill of Lading/Airway Bill Issued – Acts as proof of shipment.
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3. Customs House Agent (CHA)
CHAs play a crucial role in customs clearance for importers and exporters.
3.1 Responsibilities of a CHA
Documentation Handling – Preparing and filing Bills of Entry & Shipping Bills.
Customs Clearance – Ensuring compliance with customs laws.
Liaison with Customs Officials – Representing importers/exporters.
Advisory Services – Assisting clients in tax and duty-related matters.
Ensuring Legal Compliance – Avoiding penalties and ensuring smooth clearance.
3.2 CHA Licensing Process (Section 146)
License is required to operate as a CHA.
CHAs must pass examinations and fulfill experience requirements.
Renewal of CHA license every 10 years, subject to compliance.
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4. Customs Licensing Regulations (CHALR, 2004)
Eligibility Criteria for CHA License
Indian citizenship
Graduation (preferably in law, business, or logistics)
At least 3 years of experience in customs clearance
Passing the CHA examination
CHA Examination (Regulation 8 & 19)
Written test and oral interview
Covers customs procedures, laws, and documentation
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5. Import & Export Documentation
Proper documentation is essential for smooth customs clearance.
5.1 Key Documents for Export
1. Commercial Invoice – Contains product details, pricing, and terms.
2. Packing List – Lists items in the shipment.
3. Bill of Lading (B/L) – Contract between the exporter and shipping company.
4. Certificate of Origin (COO) – Proves country of manufacture.
5. Letter of Credit (LC) – Ensures payment security.
5.2 Key Documents for Import
1. Bill of Entry (BoE) – Required for customs clearance.
2. Import General Manifest (IGM) – Filed by the shipping line.
3. Insurance Certificate – Covers loss/damage during transit.
4. Pre-Shipment Inspection Certificate – Ensures goods meet quality standards.
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6. Customs Duty & Taxation
6.1 Types of Customs Duties
1. Basic Customs Duty (BCD) – Levied on imported goods.
2. Integrated Goods & Services Tax (IGST) – Levied on inter-state imports.
3. Social Welfare Surcharge – Applied on customs duty.
4. Anti-Dumping Duty – Applied on goods imported at unfairly low prices.
6.2 Customs Valuation Rules
Goods are valued based on CIF Price (Cost + Insurance + Freight).
Customs duty is calculated based on this declared value.
Any misdeclaration may result in penalties.
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7. Customs Clearance at Ports & Airports
7.1 Major Indian Ports
Chennai Port
Mumbai Port
Jawaharlal Nehru Port (JNPT)
Kandla Port
Visakhapatnam Port
7.2 Role of Container Freight Stations (CFS) & Inland Container Depots (ICD)
Acts as an extension of ports for customs clearance.
Reduces congestion at main ports.
Goods can be cleared at CFS/ICD before being moved inland.
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8. Penalties & Violations in Customs Law
Failure to comply with customs rules can lead to serious consequences.
8.1 Common Violations
Misdeclaration of Goods – Incorrectly declaring product details to evade duty.
Under-Invoicing – Declaring a lower value to pay less duty.
Smuggling – Importing/exporting prohibited goods.
8.2 Consequences
Heavy penalties & fines.
Suspension or revocation of CHA license.
Criminal prosecution in severe cases.
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9. Export-Import Procedures via Airlines
Air cargo clearance involves Airway Bills (AWB) instead of Bills of Lading (B/L).
9.1 Air Export Process
1. Booking & Documentation – AWB, Shipping Bill, Invoice, etc.
2. Customs Clearance – Physical examination and LEO approval.
3. Airline Handling & Dispatch – Cargo loaded onto the aircraft.
9.2 Air Import Process
1. Arrival & Manifest Filing – Import General Manifest (IGM) by airline.
2. Customs Clearance – Submission of Bill of Entry and duty payment.
3. Cargo Release – After duty clearance, cargo is delivered.
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10. Customs Trade Facilitation
The Indian government has introduced Trade Facilitation Measures to speed up customs
processes.
10.1 Key Reforms
ICEGATE System – Online filing of customs documents.
Risk Management System (RMS) – Reduces physical examination of goods.
E-Sanchit Portal – Digital document submission for customs clearance.
Authorized Economic Operator (AEO) Program – Recognized traders get faster clearance.
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11. Multimodal Transport & Freight Forwarding
Multimodal Transport Operators (MTOs) handle multiple modes (sea, air, rail, road).
Freight Forwarders assist in logistics & documentation.
CHAs & MTOs work together for seamless cargo movement.
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12. Free Trade Zones (FTZ) & Special Economic Zones (SEZ)
FTZs allow duty-free imports for re-export.
SEZs offer tax benefits to exporters.
Goods in FTZs & SEZs follow different customs clearance rules.
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13. Customs Compliance & Best Practices
Always maintain accurate documentation.
Follow updated customs tariffs & notifications.
Use licensed CHAs for customs clearance.
Ensure duty payments are made correctly.
Use digital platforms for faster processing.
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Final Summary
Understanding customs laws & procedures is crucial for smooth trade operations.
Customs House Agents (CHAs) play a key role in clearance.
Correct documentation & compliance prevent legal issues.
Government initiatives like ICEGATE & AEO facilitate easier trade.
