Common Misconceptions about Customs

Customs impacts the Import & Export of Goods from one country to another. Custom Duty is leviable on Import & Export of Goods as per the Customs Tariff Act. The Import & Export of Goods are governed by the Foreign Trade (Development & Regulations) Act. As a common man, every person is having some misconceptions about the Custom Duty that on every Export & Import of Goods, the Custom Duty is leviable or vice-a-versa. In lieu of this fact, we are listing some of the Common Misconceptions about Customs as below:


1. Custom Duty on Import of Goods is levied on when the Import of Goods is Completed. It is very important to understand that when the Import of Goods are treated to be completed. In case of Garden Silk Mills Ltd v UOI 1999 (113) ELT 358 (SC) the Apex Court observed that the import of goods would commence when they cross territorial water of India and would be completed when it become part of the mass of the goods within the country.


2. Goods brought into the country with or without consideration can still suffer import duty subject to exemption notifications, if any.


3. Just because goods are supplied by any relative does not mean there is no customs duty.


4. Exemption to integrated tax does not mean that custom duty is exempt and vice versa.


5. Mode of transportation is not relevant - Air, Water, Road or Courier mode would be considered as Imports.


6. Importation or Exportation even by Government / Charitable Institution would also attract levy - Specific exemptions may have been provided.


7. Goods brought into India as part of baggage also can be subjected to duty when beyond the limit as per Baggage rules.


8. Gifts / free samples / goods brought into India for repair or use and re-export are also liable to tax unless specifically exempt.


9. K.R. Ahmed Shah v Additional Collector of Customs, Madras and Others, 1981 (8) ELT 153 (Mad) held that the words ‘Import’ and ‘Export’ cannot be construed to mean to ‘bringin’ or ‘takeout’ of India the goods because it would make even the air borne goods passing through India liable to confiscation and other penalties as provided under the Customs Act, 1962. Such an interpretation would lead to chaos and confusion rendering the goods, intended to be taken to other countries, liable to Customs Laws of this country. Therefore, unless the goods are brought into the country for the purpose of use, enjoyment, consumption, sale or distribution so that they are incorporated and mixed up with the mass of the property of the country, they cannot be said to have been imported. Importation can be said only to have taken place when they have crossed the customs barriers.


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