CUSTOMS ACT 1962 by Udi Prakash


The Customs Act was enacted in 1962 with an objective to consolidate and modify the legal principles relating to customs. The ability to establish the law is given under the Constitution of India under Article 265, which expresses that ―no charge will be imposed or gathered aside from by power of law. The Act came into force on the first day of February 1963 when the government issued notification in the Gazette of India. The Central government extended the applicability of the Act to the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 from January 15, 1987.

The Customs Act, 1962 is the essential resolution that oversees passage or exit of various classifications of vessels, airplanes, products, travelers and so on., into or outside the nation. The Act stretches out to the entire of India. Customs Act, 1962 and Customs Tariff Act, 1975 are the two appendages of Customs Law in India that must be perused with rules and guidelines. The standard creation power is assigned to the Central Government while the guideline making power designated to the Central Board of Excise and Customs (CBEC).



The terms “Prohibited Goods” have been defined in sub-section 33 of Section 2 of the Customs Act as meaning “any goods the import or export of which is subject to any prohibition under the Customs Act or any other law for the time being in force”

The term “dutiable goods” according to section 2 (14) means any goods which are chargeable to duty and on which duty has not been paid;

The term “foreign-going vessel or aircraft” according to section 2(21)  means any vessel or aircraft for the time being engaged in the carriage of goods or passengers between any port or airport in India and any port or airport outside India, whether touching any intermediate port or airport in India or not, and includes—

(i) any naval vessel of a foreign Government taking part in any naval exercises;

(ii) any vessel engaged in fishing or any other operations outside the territorial waters of India;

(iii) any vessel or aircraft proceeding to a place outside India for any purpose whatsoever;


Under the Customs Act, 1962, Section 12 is the charging section and Section 28 set out mechanism for the collection of duties. Section 28 is the only provision in the Act which provides for demand and collection of duty in cases where it has not been levied or has been short-levied or erroneously refunded. It also provides for payment of interest which has been paid or part paid or erroneously refunded. Thus Section 28 covers all types of cases. This section also takes care of the Principal of Natural Justice and provides for issue of Notice to the person concerned and Hearing. In essence, Section 28 incorporates the principles of Audi Alteram Partem and also prescribes for limitation, which is very important and fundamental aspects of the rule of law, without which proceedings will be vitiated.

The duty of Customs as well as Excise and Service Tax are self-assessed in terms of Section 17(1) of the Act, therefore, there is possibility that duty inadvertently or advertently  has been paid at lower side than the duty actually payable, then in such situation aid of Section 28 of the Customs Act is taken.

The section 28 speaks of three kinds of situations firstly non-levy, secondly short levy and thirdly erroneous refund. The law is well settled that a Show Cause Notice under section 28 of the Act can be only issued subsequent to clearance of the goods under 47 of the Act. In following situation usually demands of Customs duties are issued under the vires of Section 28.


Customs Act, 1962 prohibits import of goods that infringe intellectual property. Section 11 of the Act empowers the Central Government, for the purposes specified in subsection 11(2), to prohibit import or export of goods of any description by issuing a notification. Section 11(2)(n) read with Section 11(1) of the Act empowers the Central Government to prohibit import or export of goods for the protection of patents, trademarks and copyrights. Section 11(2)(u) covers prohibition for the prevention of the contravention of any law for the time being in force. Section 111 and 113 of the Act empowers the Customs to confiscate improperly imported and exported goods respectively.

There have been attempts in the past by the Central Government to issue notifications under Section 11 of the Act and prohibit import of goods that infringe intellectual property. The Central Government issued a notification in 1960 prohibiting export – through sea and land – of goods that attract Section 78 and 117 of the Trade Marks Act, 1968. Another notification was issued in 1964 which prohibited goods bearing false trade mark, false trade description and goods passing off a trademark.


Whenever confiscation of any goods is authorized 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 or, where such owner is not known, the person from whose possession or custody such goods have been seized, 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 sub-section (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 thereon. Where any fine in lieu of confiscation of goods is imposed under sub-section (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.

The Customs Act, 1962 was amended by substituting certain provisions by enacting Customs (Amendment) Act of 1969, Customs Tariff Act of 1975, Customs and Central Excise (Amendment) Act of 1991, Customs, Central Excises & Salt and Central Board of Revenue (Amendment) Act of 1978 etc. In 2011 the Central Government enacted The Customs (Amendment and Validation) Act to further make modification in the Customs Act, 1962. The amending Act conferred power of assessment to the officers under the Customs Act and they shall be considered as proper officers for discharging functions under the Act.

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