CHAPTER 7

Importation, Exportation and

Transportation of Goods
Question 1
‘Queen Marry’, a vessel containing the goods imported by XML Ltd. entered the Indian
Territorial waters on 26.05.2013. The Import Manifest was submitted on 24.05.2013. The
vessel arrived at the customs port on 29.05.2013 but the entry inwards was given to the vessel
on 04.06.2013. An ‘Into Bond Bill of Entry’ was presented by XML Ltd. on 06.06.2013 and
thus, the goods were classified, valued and stored in the bonded warehouse. On 03.07.2013
safeguard duty @ 8% was imposed on such goods. XML Ltd. presented the ‘Bill of Entry for
Ex-Bond Clearance’ in respect of such goods on 01.07.2013 and cleared the goods from the
bonded warehouse on 05.07.2013.
Discuss whether XML Ltd. is liable to pay safeguard duty on the goods imported by it. Will
your answer be different if the ‘Bill of Entry for Ex-Bond Clearance’ is presented by XML Ltd.
on 04.07.2013? Give reasons in support of your opinion.
Answer
As per section 15(1)(b) of the Customs Act 1962, the relevant date for determination of rate of
duty and tariff valuation in case of warehoused goods is the date when a bill of entry for home
consumption (bill of entry for ex-bond clearance) in respect of such goods has been presented
under section 68 of the Customs Act, 1962. Therefore, in view of section 15(1)(b) the taxable
event gets completed when the bill of entry for home consumption in case of warehoused
goods is filed.
Thus, in the given problem, the taxable event gets completed on 01.07.2013, the date on
which the bill of entry for ex-bond clearance is submitted and not on 05.07.2013 when the
goods are removed from the warehouse. The safeguard duty is imposed on 03.07.2013 and
the bill of entry for ex-bond clearance is submitted on 01.07.2013, thus, no safeguard duty can
be imposed in such a case, as at the time when taxable event got completed there was no
levy of safeguard duty.
However, if the bill of entry for ex-bond clearance is filed on 04.07.2013, the date after the levy
of safeguard duty, such duty will be levied on the goods.

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 Importation, Exportation and Transportation of Goods 7.2

Question 2
Write a brief note on self assessment in customs under the Customs Act, 1962.
Answer
(i) The provisions relating to Self-assessment of duty are contained in the section 17 of the
Customs Act, 1962.
(ii) The importer or the exporter has to self-assess the duty leviable on goods imported or
exported.
(iii) The proper officer may verify the self-assessment of such goods by examining/testing the
goods, if necessary. He may also ask the importer or the exporter to furnish any
document or information for ascertaining the duty.
(iv) After verification, if it is found that the self-assessment has not been done correctly, the
proper officer may re-assess the duty leviable on such goods.
(v) If the order of the reassessment is contrary to the self-assessment, the proper officer
should pass a speaking order on the re-assessment within 15 days from the date of
reassessment.
(vi) Where re-assessment has not been done or a speaking order has not been passed on
re-assessment, the proper officer may audit the assessment of duty of the
imported/export goods at his office or at the premises of the importer/exporter.
Question 3
Mr. Krishna Bhansali, has imported some garments from Paris on 02.04.2013. He is unable to
make self-assessment under section 17(1) of Customs Act and hence has made a request in
writing to the proper officer for provisional assessment. Can he apply for provisional
assessment? Discuss.
Answer
Yes, Mr. Krishna Bhansali can apply for provisional assessment under section 18 of the
Customs Act, 1962. As per section 18(1), provisional assessment can be resorted to in the
following circumstances:
(a) where the importer or exporter is unable to make self-assessment under sub-section (1)
of section 17 and makes a request in writing to the proper officer for assessment; or
(b) where the proper officer deems it necessary to subject any imported goods or export
goods to any chemical or other test; or
(c) where the importer or exporter has produced all the necessary documents and furnished full
information but the proper officer deems it necessary to make further enquiry; or
(d) where necessary documents have not been produced or information has not been
furnished and the proper officer deems it necessary to make further enquiry.

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 7.3 Customs and Foreign Trade Policy

In all the above circumstances, the proper officer may order for provisional assessment
of duty if the importer/exporter, furnishes such security as the proper officer deems fit for
the payment of the deficiency, if any, between the final re-assessed duty and the
provisionally assessed duty.

Question 4
State briefly the provisions of the Customs Act, 1962 relating to payment of interest in case of
provisional assessment.
Answer
Payment of interest in case of provisional assessment:-Section 18 of the Customs Act,
1962 provides for provisional assessment. Payment of interest in case of provisional
assessment is dealt in sub-sections (3) to (5) of section 18. Section 18(3) of the Customs Act
provides as under:
Brief Heading Relevant details
Amount on which interest is to be paid by The importer or exporter shall be liable to pay
the importer or exporter interest, on any amount payable to the
Central Government, consequent to the final
assessment order or re-assessment order
under section 18(2).
Rate of Interest The interest shall be payable at the rate
prescribed under section 28AB of the
Customs Act, 1962. Presently, the rate of
interest has been fixed @ 18% p.a.
Period of Interest The interest shall be payable from the first
day of the month in which the duty is
provisionally assessed till the date of
payment thereof.
Similarly, section 18(4) of the Customs Act, 1962 provides as under:
Brief Heading Relevant details
Amount on which interest is to Subject to the provisions of Section 18(5) [i.e. subject to
be paid by Central Government principle of unjust enrichment] if any refundable amount
is not refunded to the importer/exporter within three
months from the date of final assessment of duty or re-
assessment of duty.
Rate of Interest The interest shall be payable at the rate prescribed
under section 27A of the Customs Act, 1962.
Presently, the rate of interest has been fixed @ 6%
p.a.

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 Importation, Exportation and Transportation of Goods 7.4

Period of Interest The interest shall be payable from the first day
immediately succeeding the period of three months from
the date of assessment of duty finally or re-assessment
of duty till the date of refund of such amount.
Question 5
What is meant by ‘boat notes’?
Answer
In case the vessel arriving at the port does not get a berth, then, the import cargo is taken
from the ship to the shore and the export cargo is taken from the shore to the ship in boats.
Section 35 of the Customs Act, 1962 stipulates that no imported goods shall be water borne
for being loaded in any vessel, and no export goods which are not accompanied by a shipping
bill, shall be water borne for being shipped unless the goods are accompanied by a ‘boat
note’ in the prescribed form.
Question 6
M/s Pipli Imports Ltd. imported certain goods, which were unloaded in the customs area on
01.10.2013. When order for clearance was passed by proper officer on 05.10.2013, it was
found that there was some pilferage of such goods. As the imported goods were in the
custody of Port Trust, the Department demanded duty from the custodian under Section 45(3)
of the Customs Act, 1962, on such pilferage. The Port Trust denied such demand contending
that it was not an approved custodian falling under Section 45 and possession of goods by it
was by virtue of powers conferred under the Major Port Trust Act, 1963. Hence, it is not liable
for customs duty on pilfered goods.
The importer has also asked the custodian to make good the loss of goods. Examine, whether the
demands made by the Department and importer are justified in law, referring to decided case law.
Answer
The facts of the case are similar to the case of Board of Trustees v. UOI (2009) 241 ELT 513
(Bom HC DB), wherein the High Court held that considering the language of section 45(3), the
liability to pay duty is of the person, in whose custody the goods remain as an approved
person under section 45 of the Act. Therefore, section 45(3) applies only to the private
custodians who are required to be approved by Commissioner of Customs under section
45(1). Accordingly, the major ports and airports covered under Major Port Trust Act, 1963
who do not require any approval under section 45(1), are not covered by section 45(3).
Section 45(3) of the Customs Act, 1962 holds the custodian responsible only in respect of the
customs duty in respect of pilfered goods. It does not extend to the value of goods lost.
However, the Port Trust, as bailee of the goods, is liable for value of the goods to the importer.

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 7.5 Customs and Foreign Trade Policy

Question 7
Mr. Suhaan imported a consignment of goods which was unloaded on 31.10.2013. He filed the bill
of entry on 15.12.2013. The Deputy Commissioner of Customs imposed a penalty of ` 15,000 on
Mr. Suhaan as there was a delay of 15 days in filing the bill of entry. The Deputy Commissioner
contended that section 46 and 48 of the Customs Act, 1962 read together provide that bill of entry
ought to be filed within 30 days from the date of unloading of the goods. Examine the issue in the
light of relevant statutory provisions and decided case laws, if any.
Answer
Section 46 of the Customs Act, 1962 containing the provisions relating to entry of goods on
importation does not prescribe any statutory time limit for filing a bill of entry by an importer upon
arrival of goods. However, under section 48 of the Customs Act, 1962, if imported goods are not
cleared for home consumption/ warehoused/transshipped within 30 days from the date of
unloading thereof the same at the customs station, the same can be disposed off by the custodian.
However, it has been held by the High Court in case of CCus v. Shreeji Overseas (India) Pvt.
Ltd. 2013 (289) E.L.T. 401 (Guj.) that the time-limit prescribed under section 48 for clearance
of the goods within 30 days cannot be read into section 46 and it cannot be inferred that
section 46 prescribes any time-limit prescribed for filing of bill of entry.
Therefore, penalty cannot be imposed on Mr. Suhaan as he has not committed any offence by
filing bill of entry after 45 days of unloading the goods. However, the custodian after giving notice to
Mr. Suhaan and with the approval of the proper officer can sell the goods imported by Mr. Suhaan.
Question 8
Discuss the provisions regarding transit of goods and transhipment of goods without payment
of duty under the Customs Act.
Answer
Transit of goods: Section 53 provides that any goods imported in a conveyance and
mentioned in the import manifest or the import report, as the case may be, as for transit in
the same conveyance to any place outside India or any customs station, may be allowed to
be so transited without payment of duty. However, the goods should not have been
prohibited under section 11 of the Customs Act.
Transhipment of goods: This refers to transfer of goods from one conveyance to
another. It may be from one port to any other major port or airport in India.
Section 54 provides that:
(1) where any goods imported into a customs station are intended for transhipment, the
person-in-charge of conveyance will have to present a bill of transhipment to the proper
officer in the prescribed form;

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 Importation, Exportation and Transportation of Goods 7.6

(2) where any goods imported into a customs station are mentioned in the import manifest or
import report, as for transhipment to any place outside India, such goods will be allowed
to be so transhipped without payment of duty. However, the goods should not have been
prohibited under section 11 of the Customs Act.
(3) where any goods imported into a customs station are mentioned in the import manifest or
import report for transhipment to any major port (as defined in the Indian Ports Act, 1908)
or to customs airport or customs port (as notified by the Board) or to any other customs
station and the proper officer is satisfied about the bona-fide intention for transhipment of
the goods to such customs station, the proper officer may allow the goods to be
transhipped, without payment of duty.
Question 9
State the difference between transit and transhipment of goods under the provisions of the
Customs Act.
Answer
Differences between transit and transhipment has been summarized in the table hereunder:-
Transit Transhipment
(i) Section 53 of the Customs Act, 1962 (i) Section 54 of the Customs Act, 1962
provides for transit of goods. provides for transhipment of goods.
(ii) In case of transit of goods, goods are (ii) In case of transhipment of goods,
allowed to remain on the same the conveyance changes i.e., the
conveyance. goods are unloaded from one
conveyance and loaded in another
conveyance.
(iii) In case of transit of goods, there is (iii) In transhipment of goods, continuity
continuity of records. in the records is not maintained as
the goods are transferred to another
conveyance.

Question 10
What is the crucial/relevant date for determination of rate of duty under the Customs Act in the
case of clearance of baggage?
Answer
As per section 78 of the Customs Act, 1962, the relevant date for determination of rate of duty
in case of clearance of baggage is the date on which a declaration is made in respect of such
baggage under section 77.

Question 11
Explain in brief the duty exemption to baggage under section 79(1) of the Customs Act, 1962.

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 7.7 Customs and Foreign Trade Policy

Answer
Section 79(1) of the Customs Act, 1961 exempts the bona fide baggage of the passengers.
Following baggage is passed free of duty-
(i) articles in the baggage of a passenger/crew for the minimum period prescribed by the
Baggage Rules, 1998. These Rules, as on date, do not prescribe any minimum period for
use of articles by the passenger/crew. However, totally unused articles may not be held
as bona fide baggage.
(ii) articles for use by passenger or his family or bona fide gifts or souvenirs provided that
the value of each such article and the total value of all such articles does not exceed the
limits prescribed in the aforesaid Baggage rules.

Question 12
After visiting USA, Mrs. & Mr. X brought to India a lap-top computer valued at ` 80,000,
personal effects valued at ` 90,000 and a personal computer for ` 52,000. What is the
customs duty payable?
Answer
(1) As per Baggage Rules, 1998 in respect of a passenger of and above 10 years of age
returning from a Country other than Nepal, Bhutan, Myanmar or China after a stay of
more than three days
(i) Personal effects are allowed duty free clearance without any value limit.
(ii) Besides (i) above, articles upto a value of ` 35,000 carried as accompanied
baggage are allowed duty free clearance [General free allowance].
Hence, duty shall be payable on ` 52,000 – ` 35,000 = ` 17,000.
(2) One Laptop computer brought as baggage by a passenger of or above 18 years of age
(other than member of crew) is fully exempt from customs duty [Notification No. 11/2004
Cus dated 08.01.2004]
(3) Effective rate of duty for baggage =36.05%[ 35% + 2% primary education cess &
1% secondary & higher education cess]
Therefore, duty payable = ` 5,950 + ` 179
Total customs duty = ` 6,129
Question 13
State the procedure for clearance of goods imported by post.
Answer
The procedure for clearance of imported goods by post is described hereunder:
(i) Post parcels are allowed to pass from port/airport to Foreign Parcel Department of
Government Post Offices without payment of customs duty. The Postmaster hands over
to Principal Appraiser of Customs the memo which shows total number of parcels from

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 Importation, Exportation and Transportation of Goods 7.8

each country of origin, parcel bills or senders declaration, customs declaration and
despatch notes, and other information that may be required.
(ii) The mail bags are opened and scrutinised by Postmaster under supervision of Principal
Postal Appraiser of Customs. Packets which are suspected of containing dutiable goods
are separated and presented to Customs Appraiser with letter mail bill and assessment
memos.
(iii) The Customs Appraiser marks the parcels which are required to be detained as (a)
necessary particulars are not available or (b) mis-declaration or under-valuation is suspected
or (c) goods are prohibited for import. Other parcels are assessed without opening, on the
basis of details given in parcel bill or dispatch notes. The duty is assessed and is entered on
parcel bill. These are then audited and returned to Postmaster. Postmaster will hand over
parcel to addressee only after collecting the customs duty.
(iv) Parcels selected by Appraiser for examination are opened and examined. If required,
details are called from addressee. After inspection, the parcels are sealed with a
distinctive seal. If mis-declaration or under-valuation is noted or goods are prohibited
goods for imports these will be detained and reported to Customs Commissioner. After
assessment, these will be handed over to Post Master, who will further hand over to
addressee on receipt of payment of customs duty.
Question 14
Differentiate between Inland Container Depots (ICD) and Container Freight Stations (CFS).
Answer
Inland Container Depot (ICD) Container Freight Station(CFS)
(i) ICD is a customs station like a port (i) CFS is only a custom area located in the
or air cargo unit for the purpose of jurisdiction of a Commissioner of
unloading of imported goods and Customs exercising control over a
loading of export goods or any specified custom port, airport, land
class of such goods. customs station/ICD. It is an extension
of a customs station set up with the main
objective of decongesting the ports.
(ii) ICD can have an independent (ii) CFS by itself cannot have an independent
existence as it is a ‘self contained existence; it has to be linked to a customs
customs station’. station within the jurisdiction of the
Commissioner of Customs.
(iii) Customs manifests, bills of entry, (iii) In CFS, only a part of the customs
shipping bills and other process - mainly the examination of
declarations are filed in an ICD. goods - is normally carried out and goods
Further, assessment and all the are stuffed into containers and de-stuffed
activities related to clearance of therefrom. Aggregation/segregation of
goods for home use, warehousing, cargo also takes place at CFS.
temporary admissions, re-export,

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 7.9 Customs and Foreign Trade Policy

temporary storage for onward

transit and outright export,
transhipment, etc. take place in an
ICD.

Exercise
1. What are the circumstances under which assessment is done provisionally under section 18?
2. State the provisions of transhipment of goods without payment of duty under section 54
of the Customs Act, 1962.
3. Explain the procedure prescribed in Customs Act, 1962 in case of goods not cleared,
warehoused or transhipped within 30 days after unloading.
4. Write short notes on:
(a) Export general manifest
(b) Boat note (or restriction on goods being water borne)
5. Discuss briefly:
(a) Temporary detention of baggage
(b) Relevant date for rate of duty and tariff valuation in respect of goods imported and
exported by post
6. What is the permissible time limit with respect to the following- :
(i) for filing a bill of entry
(ii) for paying the assessed duty
(iii) for delivery of import manifest/report and export manifest/report
7. State in brief the provisions of the Customs Act, 1962 relating to filing of “Import
Manifest/ Report”.
8. Write a brief note on the declaration made by the owner of baggage.
9. State and summarise the provisions and procedure in the Customs Act, 1962 governing
preparation and filing of a bill of entry.
10. Briefly explain the provisions of Section 89 of the Customs Act, 1962 with regard to
supply of ship stores.
11. Explain the obligation cast on person-in-charge on arrival of vessels or aircrafts in India
under section 29 of the Customs Act, 1962.
12. Under what situations the amount of duty and interest refundable under section 18 of the
Customs Act, 1962 shall be paid to the importer/exporter instead of being credited to the
Consumer Welfare Fund?

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