The Customs Act, 1962

What it does

The Act is the charging and enforcement statute for customs. It provides for the levy of duty on goods imported into or exported from India, for the valuation and classification of those goods, and for the procedure at the border: the bill of entry for imports, the shipping bill for exports, assessment, examination and clearance. The rates of duty are not in the Act. They are in the Customs Tariff Act, 1975 and in notifications, which is why a customs dispute is usually about a tariff entry or an exemption notification as much as about the Act.

The Act also gives officers wide powers. They may search premises and persons, seize goods and documents, summon persons to give evidence, and arrest in specified cases. Goods that are imported or exported contrary to the Act or to a prohibition under any other law are liable to confiscation, and the person concerned may be penalised. Certain acts, such as smuggling, are offences with prosecution and punishment.

Who it binds

Importers and exporters, customs brokers, carriers, warehouse keepers and anyone who deals with goods that cross the border or are held under customs control. It also binds the department itself, in that its officers act within the powers and time limits the Act sets. Goods brought in by a traveller are within it, subject to the baggage rules. The tax on imports under the goods and services tax is levied alongside customs duty, under the Integrated Goods and Services Tax Act, 2017 read with the Customs Tariff Act, 1975.

What has changed, and when

• The Act came into force on 1 February 1963 and replaced the Sea Customs Act, 1878 and the Land Customs Act, 1924.
• Assessment moved over the years from the officer's assessment to self-assessment by the importer, with the officer's role confined to verification and, where needed, reassessment.
• The Finance Act, 2025 amended section 18, adding sub-section (1B), from 29 March 2025. A provisional assessment must now be finalised within two years, extendable by one year on sufficient cause shown. Every file already pending on 29 March 2025 has its two years counted from that date, so the date for old files is 29 March 2027. The Customs (Finalisation of Provisional Assessment) Regulations, 2025 carry the procedure.

What turns on it in practice

Valuation, classification and the claim of an exemption are where most customs disputes begin. The importer declares the value and the tariff heading, the department may reject either, and the dispute then turns on the evidence, on the valuation rules and on the notification relied upon. A provisional assessment, which lets goods clear while the question is open, is useful to the importer but leaves a file hanging. The two year limit in section 18 means that a pending file now has an end date, and importers with old provisional assessments have to treat 29 March 2027 as the date by which the department must finalise them.

Where a duty is demanded after clearance, the questions are the time within which the notice could be issued, the ground alleged and the amount. A notice that alleges collusion or wilful misstatement carries a longer period than one that does not, so the pleaded ground often decides the case. Confiscation and penalty are decided separately, and an order can be set aside on the ground that the notice did not give the noticee the charge on which the order proceeded.

Appeals go to the Commissioner (Appeals), then to the Customs, Excise and Service Tax Appellate Tribunal, and from the Tribunal to the High Court on a substantial question of law or to the Supreme Court in specified cases. This forms part of the taxation and fiscal work of this practice, in advisory work on indirect tax and in litigation before departmental and appellate forums.