Supplement to the 5th Edition of G card Exam Guide-

2018

GST Changes in Customs Laws & Procedures

Introduction of GST
Central Government has w. e. f. 1.7.2017, introduced Central Goods and Services Tax (CGST)
under the Central Goods and Service Tax Act, 2017 and Integrated Goods and Services Tax
(IGST) under the Integrated Goods and Services Tax Act, 2017 in the country in lieu of Central
Excise Duty and Central Tax respectively. Till 30.6.2017, imported goods in addition to basic
customs duty leviable under section 12 of the Customs Act, 1962 were subject to:

i. Additional Duty of Customs (Counter Veiling Duty) under section 3 (1) of the
Customs Tariff Act, 1975;
ii. Special Additional Duty of Customs (SAD) under section 3 (5) of the Customs Tariff
Act, 1975 @ 4%; and
iii. Education Cess & Secondary and Higher Education Cess under the Finance Act

After introduction of GST, imported goods except Tobacco and some petroleum products will
be subjected to Integrated Tax in lieu of CVD and SAD mentioned above.

By virtue of Finance Bill, 2018, Education Cess and Secondary and Higher Education Cess are
also abolished and new levy in the form of Social Welfare Surcharge is introduced. Government
has also introduced Road Infra Structure Cess on certain items. All these new levies are
discussed in details below:

Q.1 Name the Amendment to the Constitution of India which enabled the introduction of GST
in India.

Answer 101 Amendment to the Constitution of India vide Constitution (One Hundred and First
Act Amendment) Act, 2016.

Q 2 What is article 246 A of the Constitution?

Answer: Article 246A enables Parliament and the Legislature of every State to make laws with
respect to goods and services tax imposed by the Union or by such State.
Also empowers Parliament to make laws with respect to goods and services tax where the
supply of goods, or of services, or both takes place in the course of inter-State trade or
commerce.

Q.3 What is GST Council?

Answer: GST council is a body of States and Central Governments that makes recommendations
on GST laws to Central Government

Q.4 Which laws are enacted by the Parliament to implement GST?

Answer: After the 101 amendment to the Constitution, Parliament has made following laws:

I. CGST Act, 2017

II. IGST Act, 2017.

Q.5 What is SGST?

Answr: SGST stands for State Goods and Services Tax. The State Governments in India have
also made their respective State Goods and Services Tax Act in 2017 for levy and collection of
SGST on intra state supplies of goods or services or both. For instance, Act passed by Rajsthan
Legislative assembly is known as RGST.

Q. 6 What is UTGST?

Answer: Union Territory Goods and Services Tax. For levy and collection of GST in Union
Territories on intra UT supplies of goods, services or both Union Territory Goods and Services
Tax Act, 2017 for each UT is also enacted by the Parliament.

Q. 7 What is CGST?
Answer: CGST stands for Central Goods and Services Tax. This tax is levied on intra state (within
the state) supply of goods or services or both.

Q.8 Name the goods on which GST is not levied?

Answer: GST is levied on all goods except Pan Masala and some Petroleum products.

Q.8 What is IGST?

Answer: IGST stands for Integrated Goods and Services Tax. IGST is levied on inter-
state supplies of goods or services or both under section 5 (1) of the IGST Act, 2017 except
supplies of liquor for human consumption at such rate, not exceeding 40 %, as notified by the
government on recommendation of the GST Council. This tax is also known as integrated tax.

Q.9 What kind of taxes are levied on imported goods after the
introduction of GST in the country? Discuss in detail.
Answer: With effect from 1.7.2017, all imported goods except Pan Masala and some petroleum
products, in addition to Basic Customs Duty leviable under section 12 of the Customs Act, 1962,
shall attract,-

i. Integrated Goods and Services Tax (Integrated Tax) as a counter veiling duty; and
ii. Compensation Cess wherever applicable;
iii. Now, w. e. f. February, 2018 Education Cess and SHEC stand abolished and new levy
in the form of Social Welfare Surcharge is introduced @ 6%.

Q. 10 What is GSTIN?

Answer: Every person who is required to pay GST i.e. taxpayer should get registered in GST and
take GSTIN (Goods and Service Tax Identification Number). This number is very important for
the purpose of payment of GST, claiming refund etc.

Q. 11 What is legal authority to levy IGST on imported goods?

Answer: IGST as Integrated tax on imported goods is levied under the provisions of sub section
(7) of section 3 of the Customs Tariff Act, 1975. This sub-section provides that any article which
is imported into India shall, in addition, be liable to integrated tax at such rate not exceeding 40
% as is leviable under section 5 of the IGST Act, 1975 on a like article on its supply in India on
the value determined under sub section 8.

Q.12 What is assessable value for the purpose of charging IGST?

Answer: Sub section 8 of section 3 provides that for the purpose of calculating integrated tax on
an imported article where it is levied as a percentage of the value, the value shall be aggregate
of the following:

i. Value determined under section 14 (1) of the Customs Act, 1962 or tariff value fixed
under section 14 (2) of the Customs Act, 1962; and
ii. Basic customs duty levied under section 12 of the Customs Act, 1962; and
iii. Any sum which is leviable under any other law for the time being in force in India but
does not include integrated tax levied under section 3 (7) and compensation cess
 levied under section 3 (9) of the Customs Tariff Act, 1975 and it shall be collected in
the same manner as levies under section 12 of the Customs are collected.

Q.13 Is SAD 4 % also chargeable on imported goods on which IGST is levied?

Answer: No.

Q.14 What is compensation cess?

Answer: Compensation Cess is levied on Imported Goods to collect additional

revenue for compensation to States in case they make loss consequent to
introduction of GST in the country.

Q.15 Under which law compensation cess is levied?

Answer: It is levied under sub section 9 of section 3 of the Customs Tariff Act, 1975.

This section provides that any article which is imported India shall, in addition, be liable to
goods and services tax compensation cess at such rate as is levible on a like article under
section 8 the Goods and Services Tax (Compensation to states) Cess Act, 2017 on its supply in
India on the value of the imported article as determined under sub section 10 of section 3 of
the Customs Tariff Act, 1975.

Q.16 How will you determine assessable value for charging compensation cess?

Answer: Under sub section 10 of section 3 of the Customs Tariff Act, 1975, the value of
imported article shall be the aggregate of following:

i. Value determined under section 14 (1) of the Customs Act, 1962 or tariff value fixed under
section 14 (2) of the Customs Act, 1962; and
ii. Basic customs duty levied under section 12 of the Customs Act, 1962; and
iii. Any sum which is leviable under any other law for the time being in force in India but does
not include integrated tax levied under section 3 (7) and compensation cess levied under
section 3 (9) of the Customs Tariff Act, 1975 and it shall be collected in the same manner as
levies under section 12 of the Customs are collected.

Q.18 What is legal frame work to administer, collect, exempt, refund, demand
the new taxes?

Answer: For the purpose of collection, exemption, refund, demand etc. in

relation to the IGST & Compensation Cess, the provisions of the Customs Act,
1962 and Rules and Regulations framed thereunder shall apply.
Q. 20 Under which notification goods are exempted from the GST?
Answer:

Goods which are exempted from payment of IGST (Integrated Tax) are notified in Notification No 2/
2017-Integrated Tax (Rate) 28.6.2017.

Q.22 What is impact of IGST on imports under Export Promotion Schemes and duty payment
through EXIM scrips?

Answer

Under the GST regime, Customs duties will be exempted on imports made under export
promotion schemes namely EPCG, DEEC (Advance License) and DFIA but IGST and
Compensation Cess will have to be paid on such imports. However, Government has the
power to exempt under section 25 of the Customs Act,

Q.23 Can the Exim Scrips be used for payment of IGST and compensation Cess?

Answer: No; the EXIM scrips under the export incentive schemes of chapter 3 of FTP (for
example MEIS and SEIS) can be utilised only for payment of Customs duties or additional duties
of Customs, on items not covered by GST, at the time of import.

Similarly, scrips cannot be used for payment of CGST, SGST or IGST for domestic
procurements.

Q. 24 What is impact of GST on EOUs and SEZ?

Answer

Impact of EOU/EHTP/STP

EOUs/EHTPs/STPs will be allowed to import goods without payment of basic customs duty
(BCD) as well additional duties leviable under Section 3 (1) i.e. Additional Duty of Customs
(CVD) and 3(5) of the Customs Tariff Act, 1975 i.e. SAD.

GST would be leviable on the import of input goods or services or both used in the manufacture
by EOUs which can be taken as input tax credit (ITC). This Input Credit or ITC can be utilized for
payment of GST taxes payable on the goods cleared in the DTA or refund of unutilized ITC can
be claimed under Section 54(3) of CGST Act.

In the GST regime, clearance of goods in DTA will attract GST besides payment of amount equal
to BCD.
DTA clearances of goods, which are not under GST, would attract Central Excise duties as
before.

Impact on SEZ
Imports / Procurement by SEZs
Authorized operations in connection with SEZs shall be exempted from payment of IGST.
Hence, there is no change in operation of the SEZ scheme.

Q. 25 What is impact of IGST on Project Imports?

Answer

Project Import:
In the GST regime, for the purpose of levying IGST all the imports under the project import
scheme will be classified under heading 9801 and duty shall be levied @ 18%.

Q.26 Is IGST levied on Baggage?

Answer: No; full exemption from IGST has been provided on passenger baggage.

However, basic customs duty shall be leviable at the rate of 35% as applicable on the value
which is in excess of the duty free allowances provided under the Baggage Rules, 2016.

Q. 27 What is Input Tax Credit?

Answer: Input Tax Credit is defined in section 2 (63) of the CGST Act, 2017 and means the
credit of input tax. Integrated Tax paid on the supply of imported goods is also an Input Tax and
credit of this tax is available under section 16 of the CGST Act, 2017. Section 16 is reproduced

Q. 29 What is impact of IGST on Exports?

Answer

Section 16 further provides that registered exporter making zero rated supplies may claim
refund of input tax in either of the following ways:
 a. he may supply goods or services or both under Bond or under Letter of Undertaking
without payment of integrated tax subject the conditions and procedures framed for
the purpose and claim refund of unutilized input tax credit; or
b. he may supply goods or services or both on payment of integrated tax subject to
compliance of conditions and procedure prescribed and claim refund of such tax paid.
Under the GST law, tax payers (exporters) need to file their outward supplies return
inclusive of exports on the GSTN. In the said return, they will declare details of shipping
bills and invoice details. Such details in regard to exports will be validated by the
Customs EDI System once EGM is filed by the person in-charge of the conveyance. On
the basis of such validation, refund of the integrated tax paid on the export goods shall
be granted to the tax payer (exporter).
Such validation will also act as proof of export in case of zero rated supplies made under
bond or under Letter of Undertaking without payment of IGST.

Q. 30: What is procedure for “Zero Rating” the exports?

OR

Q. What is procedure to claim refund of the IGST paid on the inputs of export goods or IGST
paid on export products?

In the GST regime, the governing provisions related to exports are contained in section 16 of
the Integrated Goods and Service Tax Act, 2017 (IGST Act). Supplies of goods and services for
exports have been categorized as 'Zero Rated Supply' implying that goods could be exported
under bond or Letter of Undertaking without payment of integrated tax followed by claim of
refund of unutilized input tax credit or on payment of integrated tax with provision for refund
of the tax paid.

A. Procedure of Export

Any person making zero rated supply (i.e. any exporter) shall be eligible to claim refund
under either of the following options, namely:

(a) he may supply goods or services or both under bond or Letter of Undertaking (Export under
Bond), subject to such conditions, safeguards and procedure as may be prescribed, without
payment of integrated tax and claim refund of unutilized input tax credit; or
(b) he may supply goods or services or both, subject to such conditions, safeguards and
procedure as may be prescribed, on payment of integrated tax and claim refund of such tax
paid on goods or services or both supplied, in accordance with the provisions of section 54
(Refunds) of the Central Goods and Services Tax Act or the rules made there under (i.e. the
Central Goods and Service Tax Rules, 2017).

For the option (a) above,-i. procedure to file refund has been outlined in the Central Goods and
Service Tax Rules, 2017.

Q. 97. What is e way Bill?

A. 97: E Way Bill is a document which is to be generated electronically for the movement of
goods from one place to another if value of the goods is more than Rs 50,000/-; both for inter-
state and intra-state movement of goods.

DUTY DRAWBACK

Q. What is drawback? For the goods exported, if All Industry Drawback rate is not available, what is
the option available for an exporter to get drawback? What is the procedure to be followed in such
cases? Give detailed account on supplementary drawback claims. (V. Imp)

Q. Explain provisions relating to Drawback allowable under section 74 of the Customs Act, 1962. C.BB-
2018

Q. Distinguish between

(i) Duty drawback under Section 74 & Section 75 of the Customs Act, 1962 (Imp)

Answer

What is duty drawback?

Drawback refers to payment of duty drawback on export goods under section 74 or section 75 of the
Customs Act, 1962; it is reimbursement of duties borne by the export product. In other words, when
goods are exported out of the country or deemed to have been exported out of the country, duties paid
on the export product or duties paid on the inputs used in the manufacture of export product are
reimbursed by the customs department to the exporter.

Types of duty drawback

Duty drawback is admissible to exporters under section 74 and section 75 of the Act. These provisions
are discussed below:

Duty drawback Section 74 [C. B. 2018]

Duty drawback under section 74 is available when import duty paid goods are entered for re-export.
This drawback is also of two types.

Type -1: Under section 74 (1) when imported goods are re-exported as such

When goods are re-exported without being put into use, the rate of duty drawback is 98 percent of the
duty paid at the time of importation of such goods subject to procedure and conditions mentioned
below:

Procedure

i. an exporter enters goods for export on which import duty had been paid on importation
and proper officer makes an order for clearance and loading of goods for exportation under
section 51 of the Customs Act; or
ii. Goods are exported as baggage and necessary declaration in respect of contents is made
under section 77; and the proper has permitted the export;
iii. Goods are exported by post under section 82 after orders for export by the proper officer.

Conditions

1. At the time of export, goods entered for export are identified to the satisfaction of the
Assistant/ Deputy Commissioner of Customs as the goods on which duty was paid at the time of
import.
2. Goods are entered for export within two years from the date on which duty was paid at the time
of import thereof. The period of two years can be extended by the Board on sufficient cause
being shown for further period as deemed fit.
3. Drawback for IGST will be given only when exporter produces a certificate from the GST
authorities that no input credit was taken for the IGST paid at the time of import.

Type-2: When goods are entered for export after being put into use

If goods are used after importation thereof, drawback rate varies with the period of usage. However no
drawback is paid if goods are re-exported after more than 18 months from the date of ‘out of charge’
order given under section 47 of the Act to the date when goods are placed under the customs control
for the purpose of export. Rates of drawback are given in Notification No.19/65-Cus, dated 6-2-1965.

Further, no Drawback of the import duty paid is permissible for specific categories of goods such as
wearing apparel, tea chests, exposed cinematographic films passed by Film Censor Board, unexposed
photographic films, paper and plates and x-ray films.

Also, in respect of motor vehicles imported for personal and private use the Drawback is calculated by
reducing the import duty paid according to the laid down percentage for use for each quarter or part
thereof, but up to maximum of four years.
Procedure to claim duty drawback is given in the Re-Export of Imported Goods (Drawback of customs
duties) Rules, 1995.

Drawback under section 75 of the Act [C.B.-2018]

Section 75 of the Customs Act relates to payment of duty draw back when indigenously manufactured
goods are exported out of India. Under these provisions, duties of customs and excise suffered by the
inputs used in the manufacturing process are reimbursed. An exporter can claim drawback of these
duties either at the All Industry Rate specified in the drawback schedule or can get a brand rate fixed for
him if he fulfills the conditions prescribed. The procedure to claim said duty drawback is given in the
Customs and Central Excise Drawback Rules, 2017. In case of goods covered under IGST, duty drawback
is only in relation to customs duty.

All industry rate of Drawback (Imp)

Answer

All Industry Rates of Drawback

The duty drawback scheme reimburses to the exporter element of excise and customs duties paid on
the raw materials used in the manufacture of export goods as provided under section 75 of the Customs
Act, 1962.

Drawback is of two types:

1. ALL Industries Rates: All exporters are eligible to claim duty drawback as per these rates published in
Drawback Schedule.

2. Brand Rate: Brand rate is specific to export product and its exporter.

AIR is an average rate of reimbursement of duties suffered by an average product containing an average
quantity of input. If an exporter is not satisfied with such a rate, he can apply to the jurisdictional
Commissioner of Customs in a prescribed form to fix a Brand Rate for him.

The All Industry Rates are revised every year after the budget by the government based on the
recommendations of Empowered Committee and these are notified in the Drawback Schedule. The
committee before making its recommendations to government consults large number of exporters,
manufacturers trade associations and Export Promotion Councils and based on reliable data makes its
recommendations.

The drawback is sanctioned to exporters on line based on All Industry Rates in the EDI after filing of EGM
and is scrolled to the nominated bank account of the exporter.

Q. What is “Place of Export”?

Answer: “Place of Export” is defined in Explanation to rule 6 and means customs station or any other
place appointed for loading of export goods under section 7 of the Customs Act, 1962 (52 of 1962)
from where the exporter has exported the goods or intends to export the goods in respect of which
determination of amount or rate of drawback is sought

Q. What is relevant date for determination of duty drawback rate?

Answer: As per rule 5 (4) of the Customs and Central Excise Duties Drawback Rules, 2017, the provisions
of section 16, or sub-section (2) of section 83, of the Customs Act, 1962 (52 of 1962) shall determine the
amount or rate of drawback applicable to any goods exported under these rules.

Budgetary Changes (Finance Bill 2018-19)

Q. Define the term “Board”?

A. Board means Central Board of Indirect Taxes and Customs (CBIC).

Q. What is meant by Indian Customs Waters?

A. "Indian Customs Waters" means the waters extending into the sea up to the limit of Exclusive
Economic Zone of India under section 7 of the Territorial Waters, Continental Shelf, Exclusive
Economic Zone and other Maritime Zones Act, 1976, (80 of 1976) and includes any bay, gulf,
harbour, creek or tidal river.

Q. What is meant by the term “assessment”?

A. “assessment” means determination of the dutiability of any goods and the amount of duty,
tax, cess or any other sum so payable, if any, under this Act or under the Customs Tariff Act,
1975 (hereinafter referred to as the Customs Tariff Act) or under any other law for the time
being in force, with reference to––
(a) the tariff classification of such goods as determined in accordance with the provisions of the
Customs Tariff Act;
(b) the value of such goods as determined in accordance with the provisions of this Act and the
Customs Tariff Act;
(c) exemption or concession of duty, tax, cess or any other sum, consequent upon any
notification issued therefor under this Act or under the Customs Tariff Act or under any other law
for the time being in force;
(d) the quantity, weight, volume, measurement or other specifics where such duty, tax,
cess or any other sum is leviable on the basis of the quantity, weight, volume, measurement or
other specifics of such goods;
(e) the origin of such goods determined in accordance with the provisions of the Customs Tariff
Act or the rules made thereunder, if the amount of duty, tax, cess or any other sum is affected
by the origin of such goods;
(f) any other specific factor which affects the duty, tax, cess or any other sum payable on such
goods; and includes provisional assessment, self-assessment, re-assessment and any
assessment in which the duty assessed is nil;’

Q. What is Social Welfare Surcharge?

A. Finance Bill 2018-19 imposes Social Welfare Surcharge, a duty of customs on the goods
specified in the First Schedule to the Customs Tariff Act, 1975 (imported goods) to fulfill
commitment of the Government to provide and finance education, health and social security.
With this cess being imposed, Education Cess and Secondary and Higher Education Cess
levied earlier is abolished.

Q. At what rate Social Welfare Surcharge will be collected? And how value will be
determined for the purpose of charging duty?

A: The Social Welfare Surcharge levied under sub-section (1) of section 108 of the
Finance Act, 2018-19, shall be calculated at the rate of ten per cent. on the aggregate of
duties, taxes and cesses which are levied and collected by the Central Government in
the Ministry of Finance under section 12 of the Customs Act, 1962 and any sum
chargeable on the goods specified in sub-section (1) under any other law for the time
being in force, as an addition to, and in the same manner as, a duty of customs, but not
including––
(a) the safeguard duty referred to in sections 8B and 8C of the Customs Tariff Act;
(b) the countervailing duty referred to in section 9 of the Customs Tariff Act;
(c) the anti-dumping duty referred to in section 9A of the Customs Tariff Act;
(d) the Social Welfare Surcharge on imported goods levied under sub-section (1).

The Social Welfare Surcharge on imported goods shall be in addition to any other duties
of customs or tax or cess chargeable on such goods, under the Customs Act, 1962 or
any other law for the time being in force.

Q What are the legal provisions which will apply in regard to the manner of collection,
assessment, refund, demand, exemption, interest, offences and appeals etc.?

A: The provisions of the Customs Act, 1962 and the rules and regulations made
thereunder, including those relating to assessment, non-levy, short-levy, refunds,
exemptions, interest, appeals, offences and penalties shall apply in relation to the levy
and collection of the Social Welfare Surcharge on imported goods as they apply in
relation to the levy and collection of duties of customs on such goods under the
Customs Act, 1962 or the rules or the regulations, as the case may be .

Q. In simple words, please tell us what will be the assessable value for the purpose of
charging Social Welfare Surcharge?

A: In terms of section 108(1) of the Finance Act 2018-19, the assessable value for the
purpose of charging Social Welfare Cess is sum of Basic Customs Duty levied under
section 12 of the Customs Act+ IGST levied under section 3 (7) of the CTA, 1975 +
Compensation Cess if levied under section 3 (9) of the CTA, 1975.

Q Is SWC leviable on Integrated Tax and GST Compensation Cess on imported goods?
A: No; it is exempted under notification No.13/2018 Cus dated 2.2.2018

Q What is ROAD AND INFRASTRUCTURE CESS? Under what legal provisions it is

levied on the imported goods?
A. Road and Infra structure Cess is levied under Section 109 of the Chapter VII of the
Finance Act, 2018-19 for the purposes of the Union Government, an additional duty of
customs, to be called the Road and Infrastructure Cess, on the goods specified in the
Sixth Schedule (hereinafter referred to as scheduled goods), being the goods imported
into India at the rates specified in the said Schedule for the purpose of financing
infrastructure projects.

The aforesaid additional duty of the customs referred to in sub-section (1) shall be in
addition to any other duties of customs chargeable on scheduled goods under the
Customs Act, 1962 or any other law for the time being in force.

Q. At what rate Road Infra structure Cess is levied on the specified goods?
A Rate is Rs 8 per litre on Petrol and High Speed Diesel as provided in sixth schedule
to the Finance At, 2018-19.

Q What are the legal provisions which will apply for the purpose of assessment,
demand, refund, exemption, offences, appeals etc. in relation to the Road and
Infrastructure Cess?

A. The provisions of the Customs Act, 1962 and the rules and regulations made
thereunder, including those relating to assessment, non-levy, short-levy, refunds,
exemptions, interest, appeals, offences and penalties shall apply in relation to the levy
and collection of the additional duty of customs known as Road and Infrastructure Cess
in respect of scheduled goods.

Q Will the Road and Infrastructure Cess be levied on goods produced or manufactured
in India?

A. Yes; the Road and Infrastructure Cess shall be levied and collected, in accordance
with the provisions of Section 110 of the Chapter VII of the Finance Act, 2018-19, for the
purposes of the Union, an additional duty of excise, to be called the Road and
Infrastructure Cess, on the goods specified in the Sixth Schedule being the goods
manufactured or produced, at the rates specified in the said Schedule for the purpose of
financing infrastructure projects.

The Road and Infrastructure Cess chargeable on the scheduled goods shall be in
addition to any other duties of excise chargeable on such goods under the Central
Excise Act, 1944 or any other law for the time being in force.
Q. In which manner, Road and Infra structure Cess shall be assessed, demanded,
refunded or exempted etc.?

A. The provisions of the Central Excise Act, 1944 and the rules made thereunder,
including those relating to assessment, non-levy, short-levy, refunds, exemptions,
interest, appeals, offences and penalties shall apply in relation to the levy and collection
of the cess leviable under this section in respect of scheduled goods as they apply in
relation to the levy and collection of the duties of excise on scheduled goods under the
said Act or the rules.

Q. What will be the assessable value for the purpose of charging IGST on warehoused
goods?
A As per newly introduced section 8A of the Customs Tariff Act, 1975, the value is
defined as under:

‘Where the goods deposited in a warehouse under the provisions of the Customs
Act, 1962 are sold to any person before clearance for home consumption or export
under the said Act, the value of such goods for the purpose of calculating the integrated
tax under sub-section (7) shall be,—

(a) where the whole of the goods are sold, the value determined under sub-section (8)
or the transaction value of such goods, whichever is higher; or
(b) where any part of the goods is sold, the proportionate value of such goods as
determined under sub-section (8) or the transaction value of such goods, whichever is
higher:
Provided that where the whole of the warehoused goods or any part thereof are sold
more than once before such clearance for home consumption or export, the transaction
value of the last such transaction shall be the transaction value for the purposes of
clause (a) or clause (b):

Provided further that in respect of warehoused goods which remain unsold, the value or
the proportionate value, as the case may be, of such goods shall be determined in
accordance with the provisions of sub-section (8).

Explanation.–– For the purposes of this sub-section, the expression “transaction value”,
in relation to warehoused goods, means the amount paid or payable as consideration
for the sale of such goods.’;

Q. What will be the assessable value for the purpose of charging GST Compensation
Cess on warehoused goods?
A.The assessable value for purpose of charging GST Compensation Cess is
determined under newly introduced section 10 A of the Customs Tariff Act, 1975 which
reads as under:
‘Where the goods deposited in a warehouse under the provisions of the Customs
Act, 1962 are sold to any person before clearance for home consumption or export
under the said Act, the value of such goods for the purpose of calculating the goods and
services tax compensation cess under sub-section (9) shall be,––
(a) where the whole of the goods are sold, the value determined under sub-section
(10) or the transaction value of such goods, whichever is higher; or
(b) where any part of the goods is sold, the proportionate value of such goods as
determined under sub-section (10) or the transaction value of such goods,
whichever is higher:

Provided that where the whole of the warehoused goods or any part thereof are sold
more than once before such clearance for home consumption or export, the transaction
value of the last of such transaction shall be the transaction value for the purposes of
clause (a) or clause (b):

Provided further that in respect of warehoused goods which remain unsold, the value or
the proportionate value, as the case may be, of such goods shall be determined in
accordance with the provisions of sub-section (10).

Q. What is the new methodology for payment of duty?

A. Section 51 A of Chapter VII of the Customs Act, 1962 provides for payment of duty
as under:

(1) Every deposit made towards duty, interest, penalty, fee or any other sum payable
by a person under the provisions of this Act or under the Customs Tariff Act, 1975
or under any other law for the time being in force or the rules and regulations made
thereunder, using authorised mode of payment shall, subject to such conditions and
restrictions, be credited to the electronic cash ledger of such person, to be
maintained in such manner, as may be prescribed.

(2) The amount available in the electronic cash ledger may be used for making
any payment towards duty, interest, penalty, fees or any other sum payable under
the provisions of this Act or under the Customs Tariff Act, 1975 or under any other law
for the time being in force or the rules and regulations made thereunder in such manner
and subject to such conditions and within such time as may be prescribed.

(3) The balance in the electronic cash ledger, after payment of duty, interest, penalty,
fee or any other amount payable, may be refunded in such manner as may be
prescribed.

Q. What are the powers of the Commissioner, Customs (Appeal) in regard to the
order or decision appealed against?
A. In the Customs Act, in section 128A, in sub-section (3), for the words
“just and proper, confirming,
modifying or annulling the decision or order appealed against”, the
following shall be substituted,
namely:––
“just and proper,––
(a) confirming, modifying or annulling the decision or order appealed
against; or
(b) referring the matter back to the adjudicating authority with directions for
fresh adjudication
or decision, as the case may be, in the following cases, namely:—
(i) where an order or decision has been passed without following the
principles of natural
justice; or
(ii) where no order or decision has been passed after re-assessment under
section 17; or
(iii) where an order of refund under section 27 has been issued by crediting
the amount to Fund without recording any finding on the evidence produced by the
applicant.”.

Q. Explain the manner in which summons, notice, order etc. under the Act, rules or
regulations framed thereunder can be served on the person to whom these are issued :

A. In the Customs Act, new section 153 for the intended purpose reads as under:

“153. (1) An order, decision, summons, notice or any other communication under this
Act or the rules made thereunder may be served in any of the following modes,
namely:—

(a) by giving or tendering it directly to the addressee or importer or exporter or his

customs broker or his authorised representative including employee, advocate or
any other person or to any adult member of his family residing with him;
(b) by a registered post or speed post or courier with acknowledgement due,
delivered to the person for whom it is issued or to his authorised representative, if
any, at his last known place of business or residence;
(c) by sending it to the e-mail address as provided by the person to whom it is
issued, or to the e-mail address available in any official correspondence of such
person;
(d) by publishing it in a newspaper widely circulated in the locality in which the
person to whom it is issued is last known to have resided or carried on business;
or
 (e) by affixing it in some conspicuous place at the last known place of business or
residence of the person to whom it is issued and if such mode is not practicable
for any reason, then, by affixing a copy thereof on the notice board of the office
or uploading on the official website, if any.

(2) Every order, decision, summons, notice or any communication shall be deemed to
have been served on the date on which it is tendered or published or a copy thereof is
affixed or uploaded in the manner provided in sub-section (1).

(3) When such order, decision, summons, notice or any communication is sent by
registered post or speed post, it shall be deemed to have been received by the
addressee at the expiry of the period normally taken by such post in transit unless the
contrary is proved.”

Q. What is reimport?
A. When goods exported from India are imported back into India; the activity is called
reimport.
As per provisions of section 21 of the Customs Act, 1962, on re-importation, reimported
goods are chargeable to duty and are subject to same conditions and restrictions which
are applicable to like goods on import thereof
Q. Under which provisions of law, goods reimported into India for repairs, reconditioning
etc. can be exempted from payment of duty?
A. Section 25 A of the Customs Act, 1962 by a notification from the Central
Government.

Questions on Advance Ruling Authority

Note: Please read this chapter from the supplement only as this is latest
and updated. Do not read from the Book.

Q.1: What is Advance Ruling?

A.1: Advance ruling means a written decision on any of the questions referred to in section 28H
raised by the applicant in his application in respect of any goods prior to its importation or
exportation.

Q.2: Under what legal provisions Advance Ruling Authority is appointed?

A.2: Under section 28 EA of the Customs Act, 1962, Central Government can appoint an officer
of Customs of the rank of Principal Commissioner or Commissioner of Customs as Advance
Ruling Authority. There can be more than one Advance Ruling Authority in the Country.

Q.3: Name the Authority before whom Advance Ruling given by the Advance Ruling Authority
can be challenged.

A.3: The Advance Ruling given by the Advance Ruling Authority can be challenged before the
Appellate Authority for Advance Rulings (Central Excise, Customs & Service Tax) constituted
under section 28F of the Customs Act, 1962;

Q.4: Define the term “Appellate Authority”

A.4: Appellate Authority means the Authority for Advance Rulings constituted under section 245-
O of the Income-tax Act, 1961.

Q.5: Who can appeal before the Appellate Authority for Advance Ruling?
A.5: As per provisions of section 28 KA, applicant or any officer authorized by the Board by
notification file appeal against the order passed by the Customs Authority for Advance Ruling.

Q.6: What is time limit for filing appeal before the Appellate Authority?
A.6: As per provisions of section 28KA, any officer authorised by the Board, by notification, or
the applicant may file an appeal to the Appellate Authority against any ruling or order passed by
the Authority, within sixty days from the date of the communication of such ruling or order, in
such form and manner as may be prescribed.
Further as per proviso to this section, the period can be extended for 30 days if sufficient cause
is shown to the Appellate Authority.

Q.7: Who can apply for the Advance Ruling? Or define the term “Applicant” as defined in section
A.7: “Applicant” in terms of section --- means any person,––
(i) holding a valid Importer-exporter Code Number granted under section 7 of the Foreign
Trade (Development and Regulation) Act, 1992; or
(ii) exporting any goods to India; or
(iii) with a justifiable cause to the satisfaction of the Authority, who makes an application for
advance ruling under section 28H;’;

Q.8: What is function of this authority?

A.8: As per section 28 H of the Act, authority gives advance ruling on questions relating to
following:
(a) Classification of goods under the Customs Tariff Act, 1975;
(b) Applicability of a notification issued under sub-section (1) of section 25, having a bearing on
the rate of duty;
(c) The principles to be adopted for the purposes of determination of value of the goods under
the provisions of the Customs Act.
(d) Applicability of notifications issued in respect of tax or duties under this Act or the
Customs Tariff Act, 1975 or any tax or duty chargeable under any other law for the time being
in force in the same manner as duty of customs leviable under this Act or the Customs Tariff
Act;”
(e) Determination of origin of the goods in terms of the rules notified under the Customs Tariff
Act,1975
(f) Any other matter as the Central Government may, by notification, specify.”

Q9: Who will be parties to the case before the Authority?

A.9: Other than the applicant, Principal Commissioner or Commissioner of Customs of the port
where goods are to be imported.

Q10: What types of cases are excluded before the Authority?

A10: The authority will not give advance ruling if matter is already pending before a court of law,
CESTAT or a customs officer. But before rejecting application on this ground, the authority has
to hear the applicant.

Q11: Why was the chapter on Advance Ruling introduced in the Customs Act, 1962?

A12: The provisions were introduced in the Act to bring transparency, predictability and certainty
in the matter of classification, valuation, eligibility under notifications having impact on rate of
duty to attract foreign investment in India.

Q.13: What is time limit for the Advance Ruling Authority to give its advance Ruling?

A.13: As per sub section (6) of section 28 (I), time limit is three months from the date of
application.

Re-import of goods

Q. What is re-import of goods?

A. When goods exported from India are imported back into the country, the activity is known as
re-importation and goods imported back are referred as “reimported goods”.

As per provisions of section 21, the goods on re-importation are chargeable to import duties and
are subject to conditions and restrictions which are applicable to goods of like kind and value on
import thereof.

Q. Can Central Government exempt goods on re-importation into India if these are imported for
the purpose of repairs, processing or manufacture etc.?

A. Yes; section 25 A of the Customs Act, 1962 empowers the central government to do so by
issuing a notification in the public interest in the official Gazette. Subject to following conditions,-

a. the goods shall be re-exported after such repair, further processing or

manufacture, as the case may be, within a period of one year from the date
on which the order for clearance of the imported goods is made;
b. the imported goods are identifiable in the export goods; and
c. such other conditions as may be specified in that notification.
Q. Can Central Government exempt goods on re-importation into India after repairs,
reconditioning etc. outside India?

A. Yes; Section 25 B of the Customs Act, 1962 empowers the Central Government to do so by
issuing a notification to be published in the official Gazette in the public interest. Section 25
provides as below:

Central Government has the power to issue exemption notification to grant exemption to such
goods which are re-imported after being exported for the purposes of repair, further
processing or manufacture, as may be specified therein, from the whole or any part of duty of
customs leviable thereon, subject to the following conditions, namely:––

(a) the goods shall be re-imported into India after such repair, further processing or manufacture
as the case may be, within a period of one year from the date on which the order permitting
clearance for export is made;
(b) the exported goods are identifiable in the re-imported goods; and
(c) such other conditions as may be specified in that notification.”.

Customs Brokers Licencing Regulations, 2018

CBLR, 2013 is now changed to CBLR, 2018. The new regulations are discussed below in question
answer form.

Q1: How do you define a “Customs Broker”?

A.1: Customs Broker means a person who is licensed under the Customs Brokers
Licensing Regulations, 2018 to act as an agent on behalf of the importer or an
exporter for transaction of business relating to import / export of goods or departure
and entry of conveyance at a customs station including audit.

Q.2: Can a person conduct customs clearance work on behalf of an importer or

exporter without a licence granted under regulation 7 of CBLR, 2018?

A.2: No. Regulation 3 provides as under:

No person shall carry on business as a Customs Broker relating to the entry or

departure of a conveyance or the import or export of goods including work relating to
audit at any Customs Station unless such person holds a license granted under these
regulations:

However Proviso to this regulation states no license under these regulations shall be
required by-
(a) an importer or exporter transacting any business at a Customs Station solely on
his own account;

(b) any employee of any person or a firm transacting business generally on behalf of
such person or firm, and holding an identity card or a temporary pass issued by the
Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case
may be; and

(c) an agent employed for one or more vessels or aircrafts in order solely to enter or
clear such vessels or aircrafts for work incidental to his employment as such agent.

Q.2.1: What is procedure for applying for the grant of licence?

A.2.1: In terms of regulation 4,-

1. Director General of Performance Management shall in the month of April of every

year invite applications for conducting examination and subsequent grant of license to
act as Customs Broker in Form A by publication in two leading national daily
newspapers in English and Hindi in addition to disseminating the information on the
web portal.

2. The above said application along with a fee of five hundred rupees shall be made to
the Principal Commissioner of Customs or Commissioner of Customs, as the case may
be, having jurisdiction over the area where the applicant intends to carry on his
business.

Q.3: Under which regulation, license is granted?

A.3: Under regulation 7, licence is granted by the Principal Commissioner or

Commissioner of Customs

Q.3.1: Name the form in which licence is issued to an individual, firm and a
company?

A.3.1: Licence is issued In Form B-1 to an individual and in Form B-2 to a firm,
company or to an association whose partner or Director or an authorized employee
has passed the examination prescribed under regulation 6.

Q. 3.2: Is there a need to take a fresh licence if there is a change in the PAN of
the licencee?

A.3.2: Yes, there is need to take a fresh licence under third proviso to regulation 7 (2).
Licence holder should apply to the Licencing Authority for a fresh licence and should
provide him the details of new PAN.

Q.3.3: Can a Customs Broker conduct business at a Customs Station other than
the Customs Station from where he is issued the licence?
A. 3.3: Yes; but after two years of the issue of licence in Form B-1 or B-2.

Q.3.4 How much is licence fee and what is time limit to pay?

A.3.4: Rs 5000/-only. This is to be paid within two months from the date of
declaration of the result of the oral examination failing which right to get the licence
stands forfeited. The Principal Commissioner or Commissioner shall grant the licence
within one month from the date of payment of said fee.

Q.3.5: Is it necessary for an applicant for a licence to hold Adhaar Number and
Pan Card Number?

A.3.5: Yes; that is a necessary condition under regulation 5 (1).

Q.3.6: What are the conditions that are required to be fulfilled for applying for a
Customs Broker’s licence?

A.3.6: The conditions are prescribed under regulations 5 and are as under:

(1)(a) he is a citizen of India;

(b) he is a person of sound mind;

(c) he is not adjudicated as insolvent;

(d) he holds an Aadhaar number;

(e) he holds a valid PAN card;

(f) he has not been penalised for any offence under the Act, the Central Excise Act,
1944 (1 of 1944), the Finance Act, 1994(32 of 1994), the Central Goods and Services
Act, 2017 (12 of 2017) and Integrated Goods and Services Tax Act, 2017 (13 of 2017);

(g) he has neither been convicted by a competent court for an offence nor any criminal
proceeding is pending against him in any court of law;

(h) an individual applicant or in case the applicant is a firm, its partner or in the case
of a company, its director or an authorised employee who may handle the Customs
work shall —

(i) be a graduate from a recognized University; and

(ii) possess a professional degree such as Masters or equivalent degree in Accounting,

Finance or Management, CA/CS/MBA/LLM/ACMA/FCMA or Diploma in Customs
Clearance work from any Institutes or University recognised by the Government or is
having at least two years’ experience in transacting Customs Broker work as G-Card
holder;
(i) the applicant needs to establish financial viability; he should produce a certificate
issued by a Scheduled Bank or such other proof acceptable to the Principal
Commissioner of Customs or Commissioner of Customs that he possesses assets of
value of not less than five lakhs rupees.

(2) A retired Group A officer from the Indian Revenue Service (Customs and Central
Excise) having a minimum of five years’ experience in Group 'A' post shall also be
eligible to apply for a license to act as a Customs Broker provided he satisfies the
conditions specified at (a), (b), (c), (d), (e), (f), (g) and (i) of sub-regulation (1) above.

(3) The Principal Commissioner or Commissioner of Customs, may enquiries to verify

the eligibility of the applicant as he may deem fit before forwarding the application to
Directorate General of Performance Management.

Q.4: Which section of the Customs Act requires a Customs Broker to be

licensed?

A.4: Section 146 of the Act.

Q.5: If you get your license can you transfer, rent out or sell your license to
another person?

A.5: No; it is prohibited under regulation 1(4) of CBLR, 2018. License granted to a
person is specific to that person to whom it is granted. It cannot be sold and it is non-
transferable.

Q.6: Can the license be suspended?

A.6: Yes; it can be suspended under regulation 16 (1) in appropriate cases where
Principal Commissioner or Commissioner of Customs considers that immediate action
is necessary and enquiry is contemplated or is pending under CBLR, 2018.

As per proviso to regulation 16, he may suspend the licence for specified customs
stations only after recording reasons for such kind of action.

Q.6.1 Can the licence be suspended without giving an opportunity to the

Customs Broker?

A. 6.1: Yes; however in terms of the provisions of regulation 16 (2), where a license is
suspended under regulation 16 (1), the Principal Commissioner of Customs or
Commissioner of Customs shall, within fifteen days from the date of such suspension,
give an opportunity of hearing to the Customs Broker whose license is suspended and
may pass such order as he deems fit either revoking the suspension or continuing it,
as the case may be, within fifteen days from the date of hearing granted to the
Customs Broker.

In case, the Principal Commissioner of Customs or Commissioner of Customs passes

an order for continuing the suspension, further procedure thereafter shall be as
provided in regulation 17.

Q.7: Can the license be cancelled or revoked also?

A.7: Under regulation 14, the Principal Commissioner or Commissioner of Customs

may, subject to the provisions of regulation 17, revoke the license of a Customs Broker
and order for forfeiture of part or whole of security, on any of the following grounds,
namely:—

(a) failure to comply with any of the conditions of the bond executed by him under
regulation 8;

(b) failure to comply with any of the provisions of these regulations, within his
jurisdiction or anywhere else;

(c) commits any misconduct, whether within his jurisdiction or anywhere else which in
the opinion of the Principal Commissioner or Commissioner of Customs renders him
unfit to transact any business in the Customs Station;

(d) adjudicated as an insolvent;

(e) of unsound mind; and

(f) convicted by a competent court for an offence involving moral turpitude or

otherwise.

As per proviso to regulation 17(7), it is mandatory to give personal hearing to the

Customs Broker in case Commissioner considers to revoke the licence.

Q.7.2: Can penalty be imposed on a F card holder also under CBLR, 2018?

A.7.2: Yes; in terms of sub regulation 17 (8) where in proceedings under these
regulations, the Principal Commissioner of Customs or Commissioner of Customs
comes to a conclusion that the F card holder is guilty of grounds specified in
regulation 14 then the Principal Commissioner of Customs or Commissioner of
Customs may pass an order imposing penalty as provided in regulation 18.

In such eventuality, F card holder shall surrender the photo identity card issued in
Form F forthwith to the Deputy Commissioner of Customs or Assistant Commissioner
of Customs.

Under sub regulation (9), where in an offence report, charges have been framed
against an F card holder in addition to the Customs Broker who has been issued a
license under regulation 7, then procedure prescribed in regulations 16 and 17 shall
be followed mutatis mutandis in so far as the prescribed procedure is relevant to the F
card holder.

Q.7.3: Who can take action against G card holder if he contravenes the CBLR,
2018?

A.7.3: Regulation 17 (9), if any action is contemplated against a G card holder alone
under these regulations, then Deputy Commissioner or Assistant Commissioner rank
officer shall pass the order along with debarring such G card holder from transacting
the business under these regulations for a period of six months from such order. In
the eventuality of such an order against a G card holder, G card holder shall
surrender the photo identity card issued in Form G forthwith to the Deputy
Commissioner of Customs or Assistant Commissioner of Customs.

Explanation.— Offence report for the purposes of this regulation means a summary of
investigation and prima facie framing of charges into the allegation of acts of
commission or omission of the Customs Broker or a F card holder or a G card holder,
as the case may be, under these regulations thereunder which would render him unfit
to transact business under these regulations.

Q.8: What are the obligations of a customs broker?

A.8: The obligations of a Customs Broker are prescribed under Regulation 10 of the
CBLR, 2018 and in brief, are as under:

(a) obtain an authorization from each of the companies, firms or individuals by whom
he is for the time being employed as a Customs Broker and produce such
authorization whenever required by the Deputy Commissioner of Customs or Assistant
Commissioner of Customs;

(b) transact business in the Customs Station either personally or through an

authorised employee duly approved by the Deputy Commissioner of Customs or
Assistant Commissioner of Customs;

(c) not represent a client in any matter to which the Customs Broker, as a former
employee of the Central Board of Indirect taxes and Customs gave personal
consideration, or as to the facts of which he gained knowledge, while in Government
service;

(d) advise his client to comply with the provisions of the Act, other allied Acts and the
rules and regulations thereof, and in case of non-compliance, shall bring the matter to
the notice of the Deputy Commissioner of Customs or Assistant Commissioner of
Customs;

(e) exercise due diligence to ascertain the correctness of any information which he
imparts to a client with reference to any work related to clearance of cargo or baggage;
(f) not withhold information contained in any order, instruction or public notice
relating to clearance of cargo or baggage issued by the Customs authorities from a
client who is entitled to such information;

(g) promptly pay over to the Government, when due, sums received for payment of any
duty, tax or other debt or obligations owing to the Government and promptly account
to his client for funds received for him from the Government or received from him in
excess of Governmental or other charges payable in respect of cargo or baggage on
behalf of the client;

(h) not procure or attempt to procure directly or indirectly, information from the
Government records or other Government sources of any kind to which access is not
granted by the proper officer;

(i) not attempt to influence the conduct of any official of the Customs Station in any
matter pending before such official or his subordinates by the use of threat, false
accusation, duress or the offer of any special inducement or promise of advantage or
by the bestowing of any gift or favour or other thing of value;

(j) not refuse access to, conceal, remove or destroy the whole or any part of any book,
paper or other record, relating to his transactions as a Customs Broker which is
sought or may be sought by the Principal Commissioner of Customs or Commissioner
of Customs;

(k) maintain up to date records such as bill of entry, shipping bill, transhipment
application, etc., all correspondence, other papers relating to his business as Customs
Broker and accounts including financial transactions in an orderly and itemised
manner as may be specified by customs;

(l) immediately report the loss of license granted to him to the Principal Commissioner
of Customs or Commissioner of Customs;

(m) discharge his duties as a Customs Broker with utmost speed and efficiency and
without any delay;

(n) verify correctness of Importer Exporter Code (IEC) number, Goods and Services Tax
Identification Number (GSTIN), identity of his client and functioning of his client at the
declared address by using reliable, independent, authentic documents, data or
information;

(o) inform any change of postal address, telephone number, e-mail etc. to the Deputy
Commissioner of Customs or Assistant Commissioner of Customs of all Customs
Stations including the concerned Deputy Commissioner or Assistant Commissioner of
the Commissionerate who has granted the license immediately within two days;

(p) maintain all records and accounts that are required to be maintained under these
regulations and preserve for at least five years and all such records and accounts shall
be made available at any time for the inspection of officers authorised for this purpose;
and

(q) co-operate with the Customs authorities and shall join investigations promptly in
the event of an inquiry against them or their employees.

Q.9: Can the Commissioner of Customs prohibit the custom broker to work in
any one or more sections of the custom house?

A.9: Yes; he can prohibit under regulation 15 of CBLR, 2018 if he is satisfied that he
has not fulfilled obligations prescribed under regulation 10.

As per first proviso to regulation 15, the period for which any Customs Broker may be
prohibited from transacting business in one or more of the Customs Stations shall not
exceed one month from the date of such prohibition:

Q.10: What is the maximum penalty for contravention of the provisions of CBLR,
2018 that can be imposed on a Customs Broker or F card holder?

A.10: Maximum penalty prescribed in the above context under regulation 18 is Rs. 50,
000/-. It can be imposed by the Principal Commissioner of Customs or Commissioner
of Customs.

Q.10.1: How much penalty can be imposed on a G card holder by the Deputy
Commissioner of Customs under regulation 18 for contravening provisions of
CBLR, 2018 after completion of proceedings under regulation 17?

A.10.1: It is Rs 10, 000/- only under regulation 18 (2).

Q.10.2: Can F card and G card holders be penalized under other provisions of the
Customs Act also?

A.10.2: Yes, as per regulation 18 (3), the penalty prescribed under regulation 18 is
without prejudice to action under other provisions of the Act.

Q.10.3: What is remedy available under law if F Card and G card holders feel
aggrieved by the orders passed by the above said authorities?

A.10.3: They can file appeal under regulation 18. The legal provisions are as below:

A Customs Broker or F card holder, who is aggrieved by any order passed by the
Principal Commissioner of Customs or Commissioner of Customs, as the case may be,
under regulation 16 or regulation 17, may prefer an appeal under section 129A of the
Act to the Customs, Central Excise and Service Tax Appellate Tribunal established
under sub-section (1) of section 129 of the Act:

Provided that a G card holder aggrieved by any order passed by the Deputy
Commissioner or Assistant Commissioner of Customs under these regulations may
prefer an appeal under section 128 of the Act to the Commissioner of Customs
(Appeals) against the orders of the Deputy Commissioner or Assistant Commissioner
of Customs, as the case may be, who shall proceed to decide the appeal expeditiously
within two months of the filing of the appeal.

Q.11: Before entertaining a new client how will you make sure that the client is
a genuine importer or exporter?

A.11: Under regulation 10 (n) of CBLR, 2018, a Customs Broker is required to do due
diligence before a client’s order is taken for cargo clearance at a customs station. The
regulation requires the Customs Broker to verify correctness of Importer Exporter
Code (IEC) number, Goods and Services Tax Identification Number (GSTIN), identity of
his client and functioning of his client at the declared address by using reliable,
independent, authentic documents, data or information

Q.12: What do you mean by due diligence? Explain in detail.

A.12: Regulation 10 (n) provides that customs broker should verify antecedent,
correctness of Importer Exporter Code (IEC) number, identity of his client and
functioning of his client at the declared address by using reliable, independent,
authentic documents, data or information; undertaking such an exercise with care is
called due diligence.

Q.13: What is the validity period of a license granted to a customs broker and a
customs broker who is also an Authorized Economic Operator (AEO)?

A.13: The validity period of Customs Broker license is ten years as per regulation 9.
However, in case of Customs Broker who is also an AEO, it is valid till AEO
authorization is valid.

Q.14: Can the license be renewed after expiry of the validity period; if so is the
renewal subject to certain conditions?

A.14: Yes; the license can be renewed under regulation 9 (2) for another 10 years if
application is filed for renewal of the licence before its expiry if the performance of the
licensee is found to be satisfactory with reference, inter alia, to the obligations
specified in these regulations including the absence of instances of any complaints of
misconduct within one month from the date of receipt of the application.

In case of applications filed after expiry of the validity period, if delay was for genuine
reasons, Principal Commissioner can renew the licence after payment of late fee of Rs
2000/-and renewal fee.

Renewal fee is Rs 15, 000/-

Q.15: What is amount of security that is required to be furnished by a customs

broker under regulation 8?
A.15: Rs. 5, 0 0, 000/-only under regulation 8 in the form of NSC, Postal Security,
B.G. or a FDR. Any interest due on the security is payable to the Customs Broker.

Q.16: Who is a G card holder?

A.16: G Card holder is one who is given G card by the Deputy/Assistant

Commissioner of Customs after passing the examination prescribed under regulation
13 (5) of the CBLR, 2018 conducted by the said Deputy/Assistant Commissioner of
Customs.

Q.17: How many attempts a H card employee gets to pass the G card exam?

A.17: In terms of regulation 13 (5), H card holder shall, within four attempts from the
date of his appointment, pass a written examination conducted by the Deputy
Commissioner of Customs or Assistant Commissioner of a Customs station.

Q.18: Is a G card holder required to pass the G card exam again if he switches his job
to another Customs Broker?

A.18: No; he is not required to pass the G card exam again as per regulation 13 6.

Q.19: Who can sign declaration on the B/E or shipping bill or annexure thereof?

A.19: As per regulation 13 (7), a Customs Broker shall authorize only such employee
who has been issued a photo identity card in Form F or Form G to sign the declaration
on the bills of entry, shipping bills, annexure thereof or any other document generated
in connection with the proceedings under the Act or the rules or regulations made
thereunder.

Q.20:Is it necessary under sub regulation (10) to carry photo identity card by F, G
and H card holders and produce the same for inspection on demand by any officer of
the Customs Station?

A.20: Yes.

Powers of Adjudication under the Customs Act, 1962

Section 122 empowers the Customs officers to adjudicate cases of various
categories. The provisions of section 122 are reproduced below:

In every case where anything is liable to confiscation or any person is liable to a

penalty, such confiscation or penalty may be adjudged, -
(a) without limit, by a Principal Commissioner of Customs or Commissioner of
Customs or a Joint Commissioner of Customs;

(b) up to such limit, by such officers, as the Board may, by notification, specify.

The CBIC vide notification No: 50/2018-Customs (N.T.) dated 8th June, 2018 has
given following powers to the officers under section 122 for the purposes of
adjudging confiscation of goods or penalty on persons contravening the
provisions of the Customs Act, 1962:

S. No Designation of officers Limit of Value of goods

1. Assistant Commissioner of Customs or Above rupees one lakh
Deputy Commissioner of Customs but not exceeding rupees
ten lakh
2. A Gazetted officer of Customs lower in rank Not exceeding rupees one
than an Assistant Commissioner or Deputy lakh
Commissioner of Customs

Sea Cargo Manifest and Transhipment Regulations, 2018

The regulations are discussed below:

1. Regulation 2-Definitions

(b) “arrival manifest” means an integrated declaration required to be delivered by an

authorised carrier on arrival of the vessel or train or truck carrying imported goods,
export goods and coastal goods;

(c) “authorised carrier” means an authorised sea carrier, authorised train operator,
shipping line or a custodian registered under regulation 3;

(d) “authorised sea carrier” means the master of the vessel carrying imported goods,
export goods and coastal goods or his agent;
 (e) “authorised train operator” means the train operator carrying imported goods,
export goods and coastal goods;

(f) “Coastal goods transited through a designated foreign route” means: (i) coastal goods
transported between an Indian port on east coast and another Indian port on west coast
or vice versa, by a vessel through the territorial waters of Sri Lanka, whether or not
calling any port in Sri Lanka in between and without change of vessel ;

(ii) coastal goods transported between an Indian port on east coast and a river port in
India or vice versa, by a vessel through a route passing through the Bangladeshi waters
and without change of vessel;

(g) “custodian” means a person approved by the Principal Commissioner or the

Commissioner of customs, for the purposes of section 45 of the Act;

(h) “departure manifest” means integrated declaration required to be delivered by an

authorised carrier before departure of a vessel or train or truck for imported goods,
export goods and coastal goods;

2. Regulation 3-Registration of persons delivering Arrival Manifest or

Departure Manifest:
1. Every person who intends to deliver arrival or departure manifest should apply for
registeration in Form -1 with the jurisdictional Commissioner of Customs.
2. On being satisfied with the information given in Form -1, Commissioner shall
register such a person for transacting business under these regulations for three
years from the date of issue of registration.
3. Once registered as above at a customs station, the person shall be deemed to be
registered at all customs stations in the country.
4. The jurisdictional Commissioner of Customs shall review the registration before
expiry of three years and may extend for five years and in the case of a Authorised
Economic Operator for ten years.

3. Regulation 4-Delivery of an Arrival Manifest

Regulation 4 provides as below:

(1) An authorised sea carrier carrying imported goods, export goods or coastal goods,
shall deliver the arrival manifest to the proper officer electronically and where it is not
 possible to deliver the arrival manifest electronically then the manifest shall be
submitted manually in duplicate with the approval of the Commissioner of Customs.

(2) The arrival manifest shall consist of, -

(a) an application for entry inwards in Form-II (except in case of vessel carrying
exclusive coastal goods);

(b) a general declaration in Form-III;

(c) vessel’s stores list in Form- IV;

(d) list of private property in the possession of the Master and crew, in Form- V (e) cargo
declaration: -

(i) for vessel arriving at an Indian port from a Foreign port in Form-VIA; or

(ii) for vessel arriving at an Indian Port from another Indian Port directly or through
designated foreign route in Form-VIB;

(f) any other declaration which, under the provisions of the Customs Act or any other
Act for the time being in force is required to be delivered to the proper officer on arrival
of vessel.

(3) The general declaration and cargo declaration shall be delivered before
the departure of the vessel from last port of call and the rest of the arrival
manifest shall be delivered before arrival of the vessel.

4. Regulation-5 Delivery of a Departure Manifest

Regulation 5 provides as under:

(1) An authorised sea carrier carrying imported goods, export goods, coastal goods or goods
meant for foreign transit or foreign transhipment, shall before the departure of the vessel from
the port, deliver the departure manifest to the proper officer electronically and where it is not
possible to deliver the departure manifest electronically, then the manifest shall be delivered
manually in duplicate with the approval of Commissioner of Customs before the departure of
the vessel.

(2) The departure manifest shall consist of, -

(a) a general declaration in Form-III;
(b) a vessel’s stores list in Form-IV;

(c) a list of private property in the possession of the Master and crew, in Form-V; (d) a cargo
declaration:

(i) for vessel departing from an Indian port to a Foreign port in Form-VIIA; or

(ii) for vessel departing from an Indian Port to another Indian port directly or through
designated foreign route in Form-VIIB;

(e) any other declaration which, under the provisions of the Customs Act or any other Act for
the time being in force is required to be delivered to the proper officer on arrival of the vessel.

5. Regulation 6 Other Declaration in respect of specific cargo. - (1) the cargo

declaration in respect of —

(a) arms; (b) ammunition; (c) explosives; (d) narcotics and psychotropic substances; (e)
dangerous drugs; (f) gold; (g) silver; (h) radio-active material for import, export, transhipment,
or for being carried as same bottom cargo shall be delivered in separate sheets and shall be set
out in the order of the ports of loading.

(2) Where a vessel does not carry any of the cargoes referred above, a nil declaration shall be
delivered.

6. Regulation 7- Transhipment of imported goods or export goods

between a port/ICD and Inland Container Depot (ICD)/Container
Freight Station (CFS) /Special Economic Zone (SEZ). It provides as
below:
An authorised carrier shall file a departure manifest before the departure of a train or a
truck and arrival manifest upon arrival of the train or truck, as the case may be, in Form-VIII.

7. Regulation 8-Amendments of arrival or departure Manifest. –

Where the proper officer nominated by the Commissioner of customs is satisfied that
the arrival manifest or departure manifest is in any way incorrect or incomplete, and
that there was no fraudulent intention towards incorrect or incomplete submission as
regards the contents thereof, he may permit it to be amended or supplemented.
8. Regulation 9-Conditions governing transhipment or transit through a
designated foreign route. – (1) The transhipment shall be allowed under the
following conditions–
(a) the goods are mentioned in the arrival manifest or departure manifest, as the case
may be, for transhipment to any customs station;
(b) such transhipment is by, a vessel, train or a truck or by a combination of two or more
of these modes of transport;
(c) the authorised carrier executes a bond in the prescribed with or without bank
guarantee or surety. However, where the transhipment of goods is directly between
two sea ports, no bond and bank Guarantee shall be furnished;
(d) in the case of imported goods meant for transhipment by land route, the proper
officer nominated by the Commissioner of customs shall seal the containers before
permitting such transhipment.