Customs Law

RECOVERY OF DUES AND REFUND OF CUSTOM DUTY AND INTEREST UNDER CUSTOMS ACT, 1962

Chandni Joshi June 24, 2021 Customs Law, Publications Customs Act, Customs Law

RECOVERY OF DUES AND REFUND OF CUSTOM DUTY AND INTEREST UNDER CUSTOMS ACT, 1962

INTRODUCTION

Customs duty is determined in terms of section 15 or section 16 of the Customs Act, 1962 in respect of imported or export goods. If the duty paid / levied is found to be less than due, the importer or exporter is required to pay the short levied / non levied or short paid / non paid amount of duty. In this regard, the Customs Act, 1962 empowers officers to issue a demand cum Show Cause Notice for recovery of the amount of duty short levied/ non levied from the importer/exporter. The Show Cause Notice is then adjudicated by the appropriate authority.

Section 28 of the Customs Act, 1962 provides for the recovery of arrears and section 142 of the Act empowers the department to take coercive actions.

On import or export of goods, at times, it is found that duty has been paid in excess of what was actually leviable on the goods. Such excess payment may be due to lack of information on the part of importer/exporter or non-submission of documents required for claim of lower value or rate of duty. Sometimes, such excess payment of duty may be due to shortage/short landing, pilferage of goods or even incorrect assessment of duty by Customs. In such cases, refund of excess amount of duty paid can be claimed by the importer or exporter. If any excess interest has been paid by the importer/exporter on the amount of duty paid in excess, its refund can also be claimed. Section 26 of the Customs Act, 1962 prescribes provision for refund of export duty, Section 26A of the Customs Act, 1962 deals with refund of import duty in certain cases and Section 27 of the Customs Act, 1962 prescribes claim for refund of duty in case of excess payment duty on importation.

This article would throw light on the recovery of arrears and refund of custom duty and interest under the Customs Act of 1962. Customs Law and Procedures - Bhatt & Joshi Associates

LEGAL PROVISIONS FOR RECOVERY OF ARREARS

The main statutory provisions dealing with recovery of arrears in Customs are as follows:-

(i) Section 28 of the Customs Act, 1962 provides for recovery of any duty which has not been levied or has been short levied or erroneously refunded or if any interest payable has not been paid, part paid or erroneously refunded by way of issue of demand and pursuing with the importer/exporter.

(ii) In case recovery is not effected under section 28, section 142 of the Customs Act, 1962 further empowers department to take coercive actions such as deducting any amount payable to the defaulter, restraining any movable or immovable property or referring the case to district collector for recovery of the dues as if it were an arrear of land revenue.

(iii) The process of recovery of arrears starts with confirmation of demand against the defaulter importer/exporter and includes a number of appellate forums wherein importer/exporter as well department can go for appeal.

PROCEDURE FOR RECOVERY OF ARREARS OF CUSTOMS

Section 28 of the Customs Act, 1962 provides for recovery of any duty which has not been levied or has been short levied or erroneously refunded or if any interest payable has not been paid, part paid or erroneously refunded provided a notice demanding such duties/interests is issued within the time limit specified in that Section. Where the short levy is by reason of collusion or any willful misstatements or suppression of facts by the Importer the period for issuing the demand notice is five years from the relevant date specified in Section 28.
When the short levy is discovered or pointed out by Audit, a notice is served on the importer or the persons chargeable with duty to show cause as to why the amount due should not be recovered from him. Normally a period of 15 days is given to show cause why he should not pay the amount The basis and the working of the short levy is required to be clearly stated in the Show Cause Notice. Copies of relied upon documents are also furnished to the notice, to enable him to represent his case. All such notices are required to be sent by Registered Post or given to the Agent under receipt/acknowledgement after being entered in the less charge demand register maintained in the respective sections of the Custom House.
It is important that the demand should be served on the importer within the time limit under section 28 of the Customs Act as otherwise the demand shall become time barred and legally not recoverable. In the case of IAD or CRA objections, demands are issued immediately on receipt of the objection wherever it appears that there may be a short levy of duty as indicated in the objection.
Demands issued for short levy of duty as a result of audit objection, arising out of assessment etc. are to be finalised within 6 months from the date of issue of the demands and cases which could not be finalised should be reviewed for examining the reasons for delay and adopting suitable remedial measures.
Upon receipt of the reply from the Notice the matter is examined in detail and the Notice is offered an opportunity of Personal Hearing to explain his case before the adjudicating authority. After the Personal Hearing the adjudicating authority shall examine the material placed before him and shall come to the conclusion after taking into consideration the provisions of Law concerning the issue Generally, the issues involved are misdeclaration of the description of the goods resulting in wrong classification and levy of lesser duty, misdeclaration of value, quantity and weight having a bearing on duty, calculation error resulting in short levy of duty, non inclusion of certain components of value in the assessable value etc.
The adjudicating authority is required to take an independent decision as an quasi-judicial authority and pass appropriate orders either determining the amount of short levy in terms of section 28 (2) of Customs Act or dropping the proceedings where it is found that there–is no short levy in either case an appealable order is to be issued by the adjudicating authority. The duties, fines and penalties imposed, if any, are required to be paid immediately, unless the party files an appeal and obtains a stay from the competent authority.
As regards breach of condition of the notification after availing of the exemption thereunder, it has been held by the Apex Court that the obligation under a notification is a continuing one and the Customs authorities are well within their power to recover the duty whenever it comes to their notice that the importer has failed to fulfil the conditions. In such cases the demand can be issued irrespective of the time factor and the amount can be recovered in terms of the provisions of the Customs Act.
The confirmed demands are enforced and recoveries effected in accordance with the provisions under Section 142 of Customs Act, 1962. Where it is not possible to recover the amount by adjusting against any money which the department owes to such persons, or by detaining and selling any goods belonging to such persons which are under the control of the Department, action is initiated to recover the Government dues through the District Collector as if it were an arrears of land revenue. Powers are also vested with Customs for attaching/detaining and selling any movable or immovable property belonging to/or under control of such person, and these can also be resorted to.

REFUND OF CUSTOMS

The refund of any duty and interest, can be claimed either by a person who has paid the duty in pursuance to an order of assessment or a person who has borne the duty. Any person claiming refund of any duty or interest, has to make an application in duplicate in the form as prescribed in the Customs Refund Application(Form) Regulations, 1995, to the jurisdictional Deputy/Assistant Commissioner of Customs. Such application is to be made before the expiry of six months from the date of payment of duty and interest. However, in case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, application for refund can be made before the expiry of one year from the date of payment of duty and interest. The application for refund is required to be filed with documentary or other evidence including documents relating to assessment, sales invoice and other like documents to support the claim that the duty and interest was paid in excess, incidence of duty or interest has not been passed on by him to any other person, and the refund has not been obtained already. Where on scrutiny, the application is found to be complete in all respects, the Customs issues an acknowledgement in the prescribed Form as per the Customs Refund Application(Form) Regulations, 1995. However, in case the application is found to be incomplete, the Customs has to return the application to the applicant, pointing out the deficiency. The applicant has to re-submit the application after making good the deficiency, for scrutiny by Customs again for admissibility of the refund claim.

PROCESSING OF REFUND CLAIM

The application of refund found to be complete in all respects by Customs, is processed to see if the whole or any part of the duty and interest paid by the applicant is refundable. In case, the whole or any part of the duty and interest is found to be refundable, an order for refund is passed. However, in view of the provisions of unjust enrichment enshrined in the Customs Act, the amount found refundable has to be transferred to the Consumer Welfare Fund. Only in following situations, the amount of duty and interest found refundable, instead of being credited to the Consumer Welfare Fund, is to be paid to the applicant:

if the importer has not passed on the incidence of such duty and interest to any other person;
if imports were made by an individual for his personal use;
if the buyer who has borne the duty and interest, has not passed on the incidence of such duty and interest to any other person;
if amount found refundable relates to export duty paid on goods which has returned to exporter as specified in section 26;
if amount relates to drawback of duty payable under section 74 and 75;
if the duty or interest was borne by a class of applicants which has been notified for such purpose in the Official Gazette by the Central Government.

INTEREST ON DELAYED REFUND

The Customs has to finalize refund claims immediately after receipt of the refund application in proper form along-with all the documents. In case, any duty ordered to be refunded to an applicant is not refunded within 3 months from the date of receipt of application for refund, the appliant shall be paid to that applicant interest at such rate, [not below five per cent] and not exceeding thirty per cent per annum as is for the time being fixed. The interest is to be paid for the period from the date immediately after the expiry of 3 months from the date of receipt of such application till the date of refund of such duty. For the purpose of payment of interest, the application is deemed to have been received on the date on which a complete application, as acknowledged by the proper officer of Customs, has been made. Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal or any Court against an order of the Assistant Commissioner/Deputy Commissioner of Customs, the order passed by the Commissioner (Appeals), Appellate Tribunal or by the Court, as the case may be is deemed to be an order for the purpose of payment of interest on delayed refund. The interest on delayed refund is payable only in respect of delayed refunds of Customs duty and no interest is payable in respect of deposits such as deposits for project imports, security for provisional release of goods etc.

INDIAN JUDGMENTS ON REFUND UNDER CUSTOMS ACT, 1962

The Hon’ble Supreme Court in the case of Priya Blue Industries Ltd v. Commissioner of Customs (Prev.), held that “Once an Order of Assessment is passed the duty would be payable as per that order. Unless that order of assessment has been reviewed under Section 28 and/or modified in an Appeal that Order stands. So long as the Order of Assessment stands the duty would be payable as per that Order of Assessment. A refund claim is not an Appeal proceeding. The Officer considering a refund claim cannot sit in Appeal over an assessment made by a competent Officer. The Officer considering the refund claim cannot also review an assessment order”

In the case of Vimal Alloys Pvt. Ltd v. Commissioner of Customs, held that the amount paid by the importer could not be said to be duty. At best it was a deposit converted into duty. In that view, refunds filed beyond the prescribed period could not be said to be time-barred.

In the Case of Southern Petrochem. Indus. Corpn. Ltd. v. Collector of Customs, held that “ It is now well settled that the refund claim cannot be enlarged before the Appellate Forum after the expiry of statutory period under Section 27 of the Customs Act. Therefore, we have to reject the claim of the appellants for refund of additional duty and CV duty as available under Notification No. 132/88-C.E. as being a fresh claim, which is inadmissible in law, as having been made beyond the prescribed time limit under Section 27 of the Act

The Hon’ble Tribunal larger bench in the case of DCM Shriram Consolidated Ltd. v. Commissioner of Customs, held that “though refund claim was filed on 22-4-1997 the assessment was finalized on 16-2-2001 only and the refund, if any, has become due to them only from that date. Thus, interest, if any, will be payable from 3 months after 16-2-2001 and not from 22-4-1997 as at that time no refund was due to the Applicants.

PROCEDURE OF CUSTOMS UNDER CUSTOMS ACT, 1962

Chandni Joshi June 23, 2021 Customs Law, Publications, Uncategorized Customs Act, Customs Law

PROCEDURE OF CUSTOMS UNDER CUSTOMS ACT, 1962

INTRODUCTION:

Customs is an authority or tax collection wing appointed by the Government in every country for controlling and for collecting of tax on the flow of goods into and out of a country. ‘Customs Duty’ refers to the tax imposed on the goods when they are transported across the international borders. Custom Duty is an indirect tax, imposed under the Customs Act formulated in 1962. Following are the types of customs duty in India,

Basic Customs Duty (BCD)
Countervailing Duty (CVD)
Additional Customs Duty or Special CVD
Protective Duty,
Anti-dumping Duty

The power to enact the law is provided under the Constitution of India under the Article 265, which states that ―no tax shall be levied or collected except by authority of law. Entry No. 83 of List I to Schedule VII of the Constitution empowers the Union Government to legislate and collect duties on import and exports.

The primary objective behind levying customs duty is to safeguard each nation’s economy, jobs, environment, residents, etc., by regulating the movement of goods in and out of any country. It is also to minimise the smuggling of demerit goods such as cigarettes and alcoholic beverages across borders since these items are usually highly taxed and their tax rates may also vary significantly across borders. The Quantum of Customs duty in India depends upon the provisions of Customs Act, 1962 and Customs Tariff Act, 1975 and related Customs Rules, Notifications, Circulars, case Laws and Annual Union Finance Acts. The Customs Act, 1962 is the principal act which governs entry or exit of different categories of vessels, aircrafts, goods, passengers etc., into or outside the country. The Act extends to the whole of India.

All goods imported into India have to pass through the procedure of customs for proper examination, appraisal, assessment and evaluation. This helps the custom authorities to charge the proper tax and also check the goods against the illegal import. Import and export of goods into and outside a country should undergo a customs clearance process. The importer and exporter of the goods should submit valid documents to clear this process. In this article, we look at some of the major steps and processes in clearing customs in India. Goods are imported in India or exported from India through sea, air or land. Goods can come through post parcels or as baggage with passengers. Procedures naturally vary depending on mode of import or export. Procedures discussed in this are applicable for imports by sea, air or land.

PROCEDURES FOR IMPORT:

Bill of entry:

Goods imported into the country attract Customs duty and are also required to confirm relevant and corresponding legal requirements. Thus, unless the imported goods are not meant for Customs clearance at the port/airport of arrival such as those intended for transit by the same vessel/aircraft or transshipment to another Customs station or to any place outside India, detailed Customs clearance formalities have to be followed by the importers. In contrast, in terms of Section 52 to 56 of the Customs Act, 1962, the goods mentioned in the IGMor Import Report for transit to any place outside India or meant for transshipment to another Customs station in India are allowed transit without payment of duty. In case of goods meant for transshipment to another Customs station, simple transshipment procedure has to be followed by the carrier and the concerned agencies at the first port/ airport of landing and the Customs clearance formalities have to be complied with by the importer after arrival of the goods at the other Customs station where goods are intended to be delivered to the importer. There could also be cases of transshipment of the goods after unloading to a port outside India. For this purpose, a simple procedure is prescribed and no duty is required to be paid.

Self-assessment of imported and export goods:

Section 17 of the Customs Act, 1962 provides that an importer entering any imported goods under section 46 or an exporter entering any export goods under section 50 shall self-assess the duty. Thus, under self-assessment, it is the importer or exporter who will ensure that he declares the correct classification, applicable rate of duty, value, benefit of exemption notifications claimed, if any, etc. in respect of the imported / export goods while presenting Bill of Entry or Shipping Bill. In cases, where the importer or exporter is not able to determine the duty liability or make self assessment for any reason, except in cases where examination is requested by the importer under proviso to Section 46(1), a request shall be made to the proper officer for provisional assessment of duty under Section 18 (1)(a) of the Customs Act, 1962. In such a situation an option is available to the proper officer to resort to provisional assessment of duty by asking the importer / exporter to furnish security as deemed fit for payment of the deficiency, if any, between the duty as may be finally assessed or reassessed, as the case may be, and the duty provisionally assessed.

Examination of Goods:

All imported goods are required to be examined for verification of correctness of description given in the bill of entry. However, a part of the consignment is selected on a random selection basis and is examined. In case the importer does not have complete information with him at the time of import, he may request for examination of the goods before assessing the duty liability or, if the Customs Appraiser/Assistant Commissioner feels the goods are required to be examined before assessment, the goods are examined prior to assessment. The importer has to request for a first check examination at the time of filing the bill of entry or at data entry stage. The reason for seeking First Appraisement is also required to be given. On the original copy of the bill of entry, the Customs Appraiser records the examination order and returns the bill of entry to the importer/CHA with the direction for examination, who is to take it to the import shed for examination of the goods in the shed. Shed Appraiser/Dock examiner examines the goods as per examination order and records his findings.

After assessment by the appraising group or for cases where examination is carried out before assessment, a bill of entry needs to be presented for registration for examination of imported goods in the import shed. The proper officer of customs examines the goods along with requisite documents. The shipments, found in order are given clearance order by the proper officer of customs in the Import Shed.

Execution of Bonds:

Wherever necessary, for availing duty free assessment or concessional assessment under different schemes and notifications, execution of end use bonds with Bank Guarantee or other surety is required to be furnished. These have to be executed in prescribed forms before the assessing Appraiser.

Payment of duty:

The duty can be paid in the designated banks or through TR-6 challans. Different Custom Houses have authorised different banks for payment of duty. It is necessary to check the name of the bank and the branch before depositing the duty. Bank endorses the payment particulars in challan which is submitted to the Customs.

Amendment of Bill of Entry:

Bonafide mistakes noticed after submission of documents, may be rectified by way of amendment to the Bill of Entry with the approval of Deputy/Assistant Commissioner. The request for amendment may be submitted with the supporting documents.

Prior Entry for Bill of Entry:

For faster clearance of the goods, provision has been made in section 46 of the Act, to allow filing of bills of entry prior to arrival of goods. This bill of entry is valid if a vessel/aircraft carrying the goods arrives within 30 days from the date of presentation of the bill of entry. The importer is to file 5 copies of the bill of entry and the fifth copy is called Advance Noting copy. The importer has to declare that the vessel/aircraft is due within 30 days and they have to present the bill of entry for final noting as soon as the IGM is filed. Advance noting is available to all imports except for into the bond bill of entry and also during the special period.

Bill of Entry for bond/warehousing:

A separate form of Bill of Entry is used for clearance of goods for warehousing. All documents, as are required to be filed with a Bill of Entry for home consumption are also required with the Bill of Entry for Warehousing which is assessed in the same manner and duty payable is determined. However, since duty is not required to be paid at the time of warehousing, the purpose of assessing the duty at this stage is only to secure the duty by way of execution of Bond. The duty is paid at the time of ex-bond clearance of goods for which an Ex-Bond Bill of Entry is filed. In terms of Section 15 of the Customs Act, 1962, the rate of duty applicable to imported goods cleared from a warehouse is the rate in- force on the date of filing of the Ex-Bond Bill of Entry.

PROCEDURE FOR EXPORTS:

Shipping bill:

For clearance of export goods, the exporter has to obtain an Importer- Export Code (IEC) number from the DGFT prior to filing of Shipping Bill. Under the EDI System, IEC number is received online by the Customs System from the DGFT. The exporter is also required to register authorized foreign exchange dealer code (through which export proceeds are expected to be realized) and open a current account in the designated bank for credit of Drawback incentive, if any. All the exporters intending to export under the export promotion scheme need to get their licenses etc. registered at the Customs Station. For such registration, original documents are required.

Waiver of GR form:

Generally the processing of Shipping Bills requires the production of a GR form that is used to monitor the foreign exchange remittance in respect of the export goods. However, there are few exceptions when the GR form is not required. These exceptions include export of goods valued not more than US $25,000/- and export of gifts valued upto Rs.5 lakhs.

Arrival of goods to the dock:

The goods brought for the purpose of examination and subsequent ‘let export’ are allowed entry to the Dock on the strength of the checklist and other declarations filed by the exporter in the Service Center. The Port authorities have to endorse the quantity of goods actually received on the reverse of the Checklist.

Customs examination of export goods:

After the receipt of the goods in the dock, the exporter/CHA may contact the Customs Officer designated for the purpose present the check list with the endorsement of Port Authority and other declarations as aforesaid along with all original documents such as, Invoice and Packing list, AR-4, etc. Customs Officer may verify the quantity of the goods actually received and enter into the system and thereafter mark the Electronic Shipping Bill and also hand over all original documents to the Dock Appraiser of the Dock who many assign a Customs Officer for the examination and intimate the officers’ name and the packages to be examined, if any, on the check list and return it to the exporter or his agent. The Customs Officer may inspect/examine the shipment along with the Dock Appraiser. The Customs Officer enters the examination report in the system. He then marks the Electronic Bill along with all original documents and checklist to the Dock Appraiser. If the Dock Appraiser is satisfied that the particulars entered in the system conform to the description given in the original documents and as seen in the physical examination, he may proceed to allow “let export” for the shipment and inform the exporter or his agent.

Drawl of samples:

Where the Appraiser Dock (export) orders for samples to be drawn and tested, the Customs Officer may proceed to draw two samples from the consignment and enter the particulars thereof along with details of the testing agency. There is no separate register for recording dates of samples drawn. Three copies of the test memo are prepared by the Customs Officer and are signed by the Customs Officer and Appraising Officer on behalf of Customs and the exporter or his agent.

Stuffing / loading of goods in containers:

In case of container cargo the stuffing of containers at Dock is done under Preventive supervision. Further, loading of both containerized and bulk cargo is to be done under Preventive supervision. The Customs Preventive Officer supervising the loading of container and general cargo into the vessel may give “Shipped on Board” endorsement on the Exporters copy of the Shipping Bill.

Amendments:

Any correction/amendment in the check list generated after filing of declaration can be made at the Service Centre provided the documents have not yet been submitted in the EDI system and the Shipping Bill number has not been generated. Where corrections are required to be made after the generation of the Shipping Bill number or after the goods have been brought into the Export Dock, the amendments will be carried out in the following manner:

(i) If the goods have not yet been allowed to “Let Export” the amendments may be permitted by the Assistant / Deputy Commissioner (Exports).

(ii) Where the “Let Export” order has already been given, amendments may be permitted only by the Additional/Joint Commissioner in charge of Export.

Drawback claim:

After actual export of the goods, the Drawback claim is processed through the EDI system by the officers of the Drawback Branch on a first come first served basis. There is no need for filing separate drawback claims. The status of the shipping bills and sanction of DBK claim can be ascertained from the query counter set up at the service center. If any query has been raised or deficiency noticed, the same is shown on the terminal. A print out of the query/deficiency may be obtained by the authorized person of the exporter from the service center. The exporters are required to reply to such queries through the service center. The claim will come in the queue of the EDI system only after reply to queries/deficiencies are entered by the Service Center.

Export General Manifest(EGM):

All the shipping lines/agents need to furnish the Export General Manifests, Shipping Bill wise, to the Customs electronically within 7 days from the date of sailing of the vessel. Apart from lodging the EGM electronically the shipping lines need to continue to file manual EGMs along with the exporter copy of the shipping bills as per the present practice in the export department. The manual EGMs need to be entered in the register at the Export Department and the Shipping lines may obtain acknowledgements indicating the date and time at which the EGMs were received by the Export Department. The above is the general procedure for export under EDI Systems. However special procedures exist for specified schemes, details of which may be obtained from the Public Notice/Standing Orders issued by the respective Commissionerates.

Facility 24×7 Customs Clearance:

In order to faster Customs clearance of imported and export goods to reduce dwell time and lower the transaction cost, CBE & C, vide Circular No. 19/2014-Customs, dated 31.12.2014 has made facility of 24×7 Customs Clearance for specified imports, namely, goods under ‘facilitated “Bills of Entry and specified exports, namely factory stuffed containers and goods exported under free shipping Bills have made available in 18 sea ports. Similarly, facility of 24×7 Customs clearance for specified imports, namely, goods covered by facilities Bills of Entry and all exports viz. goods covered by all shipping Bills has been extended at 17 air cargo complexes.

Sealing of Export Goods: electronic sealing facility:

Board has laid down a simplified procedure for stuffing and sealing of export goods by introducing self-sealing subject to certain conditions.

CONCLUSION:

In line with Government’s policy “Ease of Doing Business “ the Central Board of Excise and Customs has taken-up the various measures to facilitate trade and commerce to bring hassle free working environment as well as reduction of transaction costs of goods and services to make them competitive in the domestic and international market. The various initiatives taken by the Board are welcome steps and this will reduce the prices of Goods and services in the GST regime. The initiatives for “ease of doing of business certainly will boost the economic growth of the country in the coming days.

Everything you need to know while travelling with gold.

Chandni Joshi June 11, 2021 Consumer Protection, Customs Law, Import & Export, Legal Awareness, Publications baggage Rules 2016, Customs Law, Import

Everything you need to know while travelling with gold.

CUSTOM GUIDELINES

Every passenger entering India has to pass through Customs check. The passenger has to declare the contents of his baggage in the prescribed Indian Customs Declaration Form At airports the passenger has the option of seeking clearance through the Green Channel or through the Red Channel subject to the nature of goods being carried.

GREEN AND RED CHANNELS

For the purpose of Customs clearance of arriving passengers, a two channel system has been adopted:-

Green Channel for passengers not having any dutiable goods.
Red Channel for passengers having dutiable goods. However, Green channel passengers must deposit the Customs portion of the disembarkation card to the Customs official at the exit gate before leaving the terminal.

Passengers walking through the Green Channel with dutiable/prohibited goods are liable to prosecution/ penalty and confiscation of goods.

Baggage rules 2016

The question is whether the Baggage Rules, 2016 have any application to the gold bangles worn by the Applicants also arises for consideration?

Rule 3:Passenger arriving from countries other than Nepal, Bhutan or Myanmar

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 and 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 and 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 pool with the free allowance of any other passenger.”

Rule 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, or forty grams with a value cap of one lakh rupees if brought by a lady passenger.

ANNEXURE–I

(See rule 3, 4 and 6)

Fire arms.

Cartridges of fire arms exceeding 50.

Cigarettes exceeding 100 sticks or cigars exceeding 25 or tobacco exceeding 125 gms.

Alcoholic liquor or wines in excess of two litres.

Gold or silver in any form other than ornaments.

Flat Panel (Liquid Crystal Display/Light-Emitting Diode/ Plasma) television.”

PROVISIONS UNDER WHICH PASSENGERS MADE LIABLE.

Section 111. Confiscation of improperly imported goods, etc.—

The following goods brought from a place outside India shall be liable to confiscation:—

any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport appointed under clause (a) of section 7 for the unloading of such goods.

any goods imported by land or inland water through any route other than a route specified in a notification issued under clause (c) of section 7 for the import of such goods.

any dutiable or prohibited goods brought into any bay, gulf, creek or tidal river for the purpose of being landed at a place other than a customs port.

any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force.

any dutiable or prohibited goods found concealed in any manner in any conveyance.

any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import report which are not so mentioned.

any dutiable or prohibited goods which are unloaded from a conveyance in contravention of the provisions of section 32, other than goods inadvertently unloaded but included in the record kept under sub-section (2) of section 45.

any dutiable or prohibited goods unloaded or attempted to be unloaded in contravention of the provisions of section 33 or section 34.

any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof.

any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission.

any dutiable or prohibited goods imported by land in respect of which the order permitting clearance of the goods required to be produced under section 109 is not produced or which do not correspond in any material particular with the specification contained therein.

any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77.

any goods which do not correspond in respect of value or in any other particular] with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54.

any dutiable or prohibited goods transisted with or without transhipment or attempted to be so transited in contravention of the provisions of Chapter VIII.

any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer

any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened.”

Section 77 Declaration by owner of baggage.—The owner of any baggage shall, for the purpose of clearing it, make a declaration of its contents to the proper officer.”

Section 112 Penalty for improper importation of goods, etc. —Any person—

who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or

who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable.

in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty ,not exceeding the value of the goods or five thousand rupees, whichever is the greater.

in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater;

in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater.

in the case of goods falling both under clauses (i) and (iii), to a penalty 220 not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest.

in the case of goods falling both under clauses (ii) and (iii), to a penalty 221 not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees,whichever is the highest.

NOW QUESTION ARISES WHETHER THERE IS NEED FOR ABSOLUTE CONFISCATION OR NOT?

The issue of absolute confiscation of goods and option of redemption thereof has been subjected to judicial interpretation in the past with rulings of the High Court and Tribunal on the same.

In case of : Commissioner Of Customs … vs Uma Shankar Verma Calcutta High Court:

Para 10

“…..

has held that if the goods are prohibited then the option is with the Customs Authority to confiscate without giving any option to pay fine in lieu thereof but when the goods are not prohibited then the Customs Authority has no other option but to allow grant of an option to the party to pay a fine in lieu of confiscation.

….”

In the case of :Kuber Casting Private Limited v. Commissioner of Commissioner of Customs, Amritsar-( Tribunal-Chandigarh):

Para 5

“….

As the goods impugned are not restricted goods, therefore, they can be released on payment of redemption fine and penalty, the Tribunal held that the redemption fine and penalty imposed on the appellant highly excessive and the goods cannot be held for confiscation on the charge of misdeclaration of Description.

….”

CONFISCATION OF GOLD NOT DECLARED

Central board of indirect tax and customs, vide their Letter No. 495/5/92-CUS-VI dated 10.5.93 have instructed that in case of non-declaration of gold even in respect of passengers otherwise eligible to bring gold should be absolutely confiscated.

In Shri Kamlesh Kumar In re 1993(67) ELT 1000, The Government of India in revision, it was held that such an option cannot be claimed as a right. This is because the condition regarding payment of duty in forign exchange is not satisfied (as goods were not declared) and hence these become ‘prohibited goods’. However, if a passenger is otherwise eligible to import gold, the option to pay redemption fine may be given considering all aspects.

CONFISCATION EVEN IF DECLARATION MADE

In R Karuppan v. R Namachivayam 1998 ElT 214

Hon’ble Madras High Court (Divisional Bench) , it was held that goods can be confiscated and penalty imposed even if the passenger had voluntarily declared the goods in his baggage.

GENERAL DEFENSE AVAILABLE

Section 2(3):

“Section 2(3):includes unaccompanied baggage but does not include motor vehicles.”

Section 2(39):

“Section 2(39): “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.

Section (33):

“Section (33):“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.

[While prohibited and restricted items may sound the same, there is an actual difference – prohibited items must never be sent in the post, while restricted items may be sent in the post, but restrictions will apply.]”

Section 125. Option to pay fine in lieu of confiscation

Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods an option to pay in lieu of confiscation such fine as the said officer thinks fit:

Provided that, without prejudice to the provisions of the proviso to subsection (2) of Section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable therein.

Where any fine in lieu of confiscation of goods is imposed under subsection (1), the owner of such goods or the person referred to in Sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods.”

In Collector of Customs, Bombay vs M/s Elephanata Oil and Industries Ltd.

“Hon’ble Supreme Court held that from the perusal of Section 112 and 125 of Customs Act 1962 it is apparent that both operate in different fields, namely, one requires imposition of penalty and other provides for confiscation of improperly imported goods section 111 provides that goods brought from the place outside India are liable to confiscation, discretion is given to the authority to impose penalty . Further Section 125 empowers confiscation of such goods and thereafter , confiscated goods vest in the Central Government. The Section further empowers the authority to give an option to the owner or the person from which goods are seized to pay a fine lieu of such confiscation for return of goods and the fine is also limited up to the market price of the goods. Therefore, levy of fine in lieu of confiscation is in addition to levy of penalty impossible under Section 112.”

CONCLUSION

in our respectful opinion the body of the passenger is not ‘baggage’, gold ornament worn by passengers need not be declared “Section 2(3): “baggage” includes unaccompanied baggage but does not include motor vehicles.” In vigneswaran Sethuraman v. Union Of India WP(C).No. 6281 of 2014 (I) Hon’ble High Court Of Kerala At Ernakulam stated that

that the body of a passenger is not ‘baggage’ Hence, gold ornaments worn by passengers need not to be declared. Baggage rules do not prohibit a foreign tourist entering into india from wearing a gold chain or other gold jewellery.. In Kartar Singh V. State of Punjab The Hon’ble Supreme Court of India has stated and held that. “It is the basic principle of legal jurisprudence that an enactment is void for vagueness if its prohibitions are not clearly defined. Vague laws offend several important values. It is insisted or emphasised that laws should give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly. Vague laws may trap the innocent by not providing fair warning. Such a law impermissibly delegates basic policy matters to policemen and also judges for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application. More so uncertain and undefined words deployed inevitably lead citizens to “steer far wider of the unlawful zone….than if the boundaries of the forbidden areas were clearly marked.”.

The Customs Act, 1962 or the Baggage Rules, 2016 do not stipulate that a foreign tourist or Indian Resident entering India cannot wear gold ornaments on his body. The Customs Act, 1962 and the Baggage Rules, 2016 do not provide sufficient warning to foreign tourists or Indian residents entering India that wearing a gold chain is prohibited. The Act and the Rules do not even remotely indicate that a foreign tourist or indian resident entering India cannot wear a gold chain on his person. In other words, foreign tourists entering India are in a boundless sea of uncertainty as to whether it is prohibited or not. As the Customs Act, 1962 and the rules framed thereunder contemplate confiscation and levy of penalty as also prosecution, the State has a duty to specify with a degree of certainty as to what is prohibited and what is not, without leaving it to the foreign tourist to guess what is prohibited and what is not.

Travelling-with-Gold-Customs-Bhatt-Joshi-Associates-High-Court-Advocates-High-Court-Lawyers.jpg

Everything you need to know while travelling with gold & customs

deeppatelj December 8, 2020 Customs Law, Legal Awareness Customs Law, Gold, Travelling

Travelling with gold? Here’s what you should know!

CUSTOM GUIDELINES

GREEN AND RED CHANNELS

For the purpose of Customs clearance of arriving passengers, a two channel system has been adopted:-

Green Channel for passengers not having any dutiable goods.
Red Channel for passengers having dutiable goods.However, Green channel passengers must deposit the Customs portion of the disembarkation card to the Customs official at the exit gate before leaving the terminal.

Passengers walking through the Green Channel with dutiable/prohibited goods are liable to prosecution/ penalty and confiscation of goods.

Baggage rules 2016

The question is whether the Baggage Rules, 2016 have any application to the gold bangles worn by the Applicants also arises for consideration?

Rule 3:Passenger arriving from countries other than Nepal, Bhutan or Myanmar

used personal effects and 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 and 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 pool with the free allowance of any other passenger.”

Rule 5 Jewellery:

ANNEXURE–I

(See rule 3, 4 and 6)

Fire arms.

Cartridges of fire arms exceeding 50.

Cigarettes exceeding 100 sticks or cigars exceeding 25 or tobacco exceeding 125 gms.

Alcoholic liquor or wines in excess of two litres.

Gold or silver in any form other than ornaments.

Flat Panel (Liquid Crystal Display/Light-Emitting Diode/ Plasma) television.”

PROVISIONS UNDER WHICH PASSENGERS MADE LIABLE.

Section 111. Confiscation of improperly imported goods, etc.—

The following goods brought from a place outside India shall be liable to confiscation:—

any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport appointed under clause (a) of section 7 for the unloading of such goods.

any goods imported by land or inland water through any route other than a route specified in a notification issued under clause (c) of section 7 for the import of such goods.

any dutiable or prohibited goods brought into any bay, gulf, creek or tidal river for the purpose of being landed at a place other than a customs port.

any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force.

any dutiable or prohibited goods found concealed in any manner in any conveyance.

any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import report which are not so mentioned.

any dutiable or prohibited goods which are unloaded from a conveyance in contravention of the provisions of section 32, other than goods inadvertently unloaded but included in the record kept under sub-section (2) of section 45.

any dutiable or prohibited goods unloaded or attempted to be unloaded in contravention of the provisions of section 33 or section 34.

any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof.

any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission.

any dutiable or prohibited goods imported by land in respect of which the order permitting clearance of the goods required to be produced under section 109 is not produced or which do not correspond in any material particular with the specification contained therein.

any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77.

any goods which do not correspond in respect of value or in any other particular] with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54.

any dutiable or prohibited goods transisted with or without transhipment or attempted to be so transited in contravention of the provisions of Chapter VIII.

any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer

any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened.”

Section 77 Declaration by owner of baggage.—The owner of any baggage shall, for the purpose of clearing it, make a declaration of its contents to the proper officer.”

Section 112 Penalty for improper importation of goods, etc. —Any person—

who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or

who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable.

in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty ,not exceeding the value of the goods or five thousand rupees, whichever is the greater.

in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater;

in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater.

in the case of goods falling both under clauses (i) and (iii), to a penalty 220 not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest.

in the case of goods falling both under clauses (ii) and (iii), to a penalty 221 not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees,whichever is the highest.

NOW QUESTION ARISES WHETHER THERE IS NEED FOR ABSOLUTE CONFISCATION OR NOT? The issue of absolute confiscation of goods and option of redemption thereof has been subjected to judicial interpretation in the past with rulings of the High Court and Tribunal on the same.

In case of : Commissioner Of Customs … vs Uma Shankar Verma Calcutta High Court:

Para 10

“…..

….”

In the case of :Kuber Casting Private Limited v. Commissioner of Commissioner of Customs, Amritsar-( Tribunal-Chandigarh):

Para 5

“….

….”

CONFISCATION OF GOLD NOT DECLARED

CONFISCATION EVEN IF DECLARATION MADE

In R Karuppan v. R Namachivayam 1998 ElT 214

Hon’ble Madras High Court (Divisional Bench) , it was held that goods can be confiscated and penalty imposed even if the passenger had voluntarily declared the goods in his baggage.

GENERAL DEFENSE AVAILABLE

Section 2(3):

“Section 2(3):includes unaccompanied baggage but does not include motor vehicles.”

Section 2(39):

“Section 2(39): “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.

Section (33):

Section 125. Option to pay fine in lieu of confiscation

Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods an option to pay in lieu of confiscation such fine as the said officer thinks fit:

Where any fine in lieu of confiscation of goods is imposed under subsection (1), the owner of such goods or the person referred to in Sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods.”

In Collector of Customs, Bombay vs M/s Elephanata Oil and Industries Ltd.

CONCLUSION

in our respectful opinion the body of the passenger is not ‘baggage’, gold ornament worn by passengers need not be declared?

“Section 2(3): “baggage” includes unaccompanied baggage but does not include motor vehicles.”

In vigneswaran Sethuraman v. Union Of India WP(C).No. 6281 of 2014 (I) Hon’ble High Court Of Kerala At Ernakulam stated that:

Para 15

“…

…”

In Kartar Singh V. State of Punjab The Hon’ble Supreme Court of India has stated and held that:

Para 130.

“…

It is the basic principle of legal jurisprudence that an enactment is void for vagueness if its prohibitions are not clearly defined. Vague laws offend several important values. It is insisted or emphasised that laws should give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly. Vague laws may trap the innocent by not providing fair warning. Such a law impermissibly delegates basic policy matters to policemen and also judges for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application. More so uncertain and undefined words deployed inevitably lead citizens to “steer far wider of the unlawful zone….than if the boundaries of the forbidden areas were clearly marked.” (emphasis supplied).

…”

In Uma Balasaraswathi v. cc-1988 106 (CEGAT)

It has been held that if ornaments are worn by ladies and are not concealed anywhere, there cannot be any ‘mis-declaration’.

In Shaik Jamal Basha v. Government of India

It was held that since gold is otherwise eligible for import, it is mandatory to give option to pay fine Absolute confiscation cannot be ordered even if gold was found to be concealed.

[Same view in shaik shahabuddin v. CC2001 (137) ELT 127 (CEGAT)]