Chapter V, VA, and VB of the Indian Customs Act, 1962

Ever wondered how India’s customs duties shape global trade?

Chapter V, VA, and VB of the Indian Customs Act, 1962, are your roadmap to understanding everything from duty assessments and exemptions to advance rulings that ensure trade clarity. Whether you’re importing cutting-edge tech , exporting fashion , or planning your next trade move, these rules empower you to save costs, stay compliant, and trade smarter. Dive into this vibrant guide packed with insights, examples, and visual flair to unlock the secrets of customs success!

Section 12: Dutiable Goods

Explanation: This section mandates that customs duties are levied on all goods imported into or exported from India at rates specified in the Customs Tariff Act, 1975, or other applicable laws. It applies to both private and government-owned goods unless exemptions are granted.
Example: A company importing 200 laptops from Singapore pays duty as per the tariff. Government-imported vaccines are also dutiable unless exempted.

Section 13: Duty on Pilfered Goods

Explanation: If goods are pilfered (stolen) after unloading but before clearance for home consumption or warehousing, the importer is exempt from paying duty on those goods unless they are recovered.
Example: A shipment of 50 cameras arrives, but 5 are stolen before clearance. No duty is charged on the stolen cameras unless they are recovered.

Section 14: Valuation of Goods

Explanation: The customs value for duty calculation is the transaction value (price paid or payable) when the buyer and seller are unrelated, and the price is the sole consideration. This includes costs like commissions, transportation, and insurance. If the transaction value is unreliable, customs officers use alternative valuation methods (e.g., deductive or computed value).
Example: An importer buys machinery for $20,000, with $2,000 shipping and $500 insurance. The customs value is $22,500, and duty is calculated on this.

Section 15: Date for Determining Duty and Valuation of Imported Goods

Explanation: The duty rate and valuation for imported goods are fixed based on:

• (a) The date of filing the bill of entry for home consumption.

• (b) The date of filing the bill of entry for warehousing (for warehoused goods, the date of clearance from the warehouse applies).

• (c) The date of duty payment for other goods.
  Example: A bill of entry for imported cars is filed on July 1, 2025. The duty rate on that date applies, even if the cars arrived earlier.

Section 16: Date for Determining Duty and Valuation of Export Goods

Explanation: For export goods, the duty rate and valuation are determined on:

• (a) The date the proper officer permits clearance and loading for export.

• (b) The date of duty payment for other goods.
  This does not apply to baggage or postal exports.
  Example: A company exports textiles on August 10, 2025, when cleared for loading. The duty rate on August 10 applies.

Section 17: Assessment of Duty

Explanation: Importers/exporters self-assess their duty liability. Customs officers verify this assessment and may reassess if incorrect. If reassessment differs from self-assessment, a speaking order (detailed explanation) is issued within 15 days, unless the importer/exporter accepts the change.
Example: An importer declares a goods value of $10,000, but customs finds it’s $12,000. A reassessment order is issued explaining the adjustment.

Section 18: Provisional Assessment of Duty

Explanation: When self-assessment isn’t possible (e.g., due to incomplete information), customs officers provisionally assess the duty, requiring a security deposit or bond. After verification, the final assessment adjusts any excess or shortfall, with interest if applicable.
Example: An importer lacks valuation documents for chemicals. Customs provisionally assesses duty, and after verification, adjusts the final amount.

Section 19: Duty on Sets of Articles

Explanation: For sets of articles with different duty rates, duty is calculated based on quantity, value, or the highest applicable rate. Accessories or spare parts are charged at the main article’s rate unless separately valued.
Example: A set includes a camera (10% duty) and a lens (5% duty). Duty is charged at 10% unless separate values are provided.

Section 20: Re-importation of Goods

Explanation: Goods exported from India and re-imported are treated as regular imports, subject to the same duties and restrictions unless exempted by notification.
Example: A machine exported for repair and re-imported pays duty as a new import unless exempted.

Section 21: Goods Derelict, Wreck, etc.

Explanation: Derelict ships, wrecks, or flotsam (e.g., goods found at sea) are treated as imported goods and are dutiable unless proven duty-free.
Example: A shipwreck washes ashore in India. It’s dutiable unless the owner proves an exemption.

Section 22: Abatement of Duty on Damaged Goods

Explanation: If imported goods are damaged before clearance, duty is reduced proportionally to the damage. The value of damaged goods is assessed by the customs officer or through a public sale (auction/tender).
Example: A shipment of 100 TVs is damaged, reducing their value by 40%. Duty is calculated on the reduced value after assessment.

Section 23: Remission of Duty on Lost/Destroyed Goods

Explanation: If imported goods are lost or destroyed (except by pilferage) before clearance, the duty is remitted. Importers can also abandon goods to avoid duty, provided no offense is involved.
Example: A fire destroys a shipment of clothes before clearance. The importer gets duty remission or can abandon the goods.

Section 24: Denaturing/Mutilation of Goods

Explanation: The government may allow goods to be denatured or mutilated to make them unfit for certain uses, and duty is charged on the altered form, often at a lower rate, as per prescribed rules.
Example: Imported alcohol is denatured for industrial use, attracting a lower шанс duty rate than potable alcohol.

Section 25: Power to Grant Exemption

Explanation: The Central Government can exempt goods from customs duty, wholly or partially, in the public interest via:

• (1) General notifications, with or without conditions.

• (2) Special orders in exceptional cases.
  Example: During a pandemic, medical equipment is exempted from duty to reduce costs.

Section 25A: Inward Processing of Goods

Explanation: Goods imported for repair, processing, or manufacture can be exempted from duty if re-exported within one year and identifiable in the export goods, subject to government conditions.
Example: Electronic components are imported, repaired, and re-exported within a year, qualifying for duty exemption.

Section 25B: Outward Processing of Goods

Explanation: Goods exported for repair or processing and re-imported within one year can be exempted from duty if identifiable, subject to government conditions.
Example: A machine is exported for repair and re-imported within a year, exempt from duty if identifiable.

Section 26: Refund of Export Duty

Explanation: Export duty is refunded if goods are returned to the exporter (not resold), re-imported within one year, and a refund application is filed within six months of clearance.
Example: Exported garments are returned due to defects within a year. The exporter claims a refund within six months.

Section 26A: Refund of Import Duty

Explanation: Import duty is refunded if goods are defective or not as per specifications and are exported, abandoned, or destroyed within 30 days (extendable to 3 months) of clearance. A refund application must be filed within six months. Perishable goods are ineligible.
Example: Defective electronics are exported within 30 days, and the importer claims a duty refund.

Section 27: Claim for Refund of Duty

Explanation: Anyone who paid or bore the duty can claim a refund within one year, provided the duty wasn’t passed on to others. Refunds are credited to the Consumer Welfare Fund unless specific conditions (e.g., personal use or non-passing) are met.
Example: An importer pays excess duty of ₹1,00,000 and proves they didn’t pass it to buyers. They receive a direct refund.

Section 27A: Interest on Delayed Refunds

Explanation: If a refund under Section 27 is delayed beyond three months, interest is paid at 5–30% per annum, as fixed by the government, until the refund is made.
Example: A ₹50,000 refund is delayed beyond three months. The importer receives interest at the prescribed rate.

Section 28: Recovery of Duties Not Levied or Short-Levied

Explanation:

• (1) If duties are not levied, short-levied, or erroneously refunded due to error, a show-cause notice is issued within two years from the relevant date to recover the amount with interest.

• (2) The person liable must pay the duty before the notice.

• (3) Interest is charged at 10–36% per annum.

• (4) If non-levy or short-levy is due to collusion, willful misstatement, or fraud, the recovery period extends to five years.

• (5) Officers may deduct refunds owed from amounts recoverable.
  Example: An importer under-declares goods’ value, short-paying ₹50,000 in duty. Customs issues a notice within two years (or five for fraud) to recover it with interest.

Section 28A: Non-Recovery of Duties Due to General Practice

Explanation: If non-levy or short-levy of duty results from a general practice accepted by customs, the government may choose not to recover it via notification. Excess duty paid due to such practices can be refunded within six months.
Example: A common practice leads to lower duty on electronics. The government notifies non-recovery of the underpaid duty.

Section 28AA: Interest on Delayed Payment of Duty

Explanation: If duty under Section 28 is paid late, interest is charged at 10–36% per annum from the due date until payment. No interest applies if duty is paid within 45 days of a Board order.
Example: An importer delays paying ₹2,00,000 in duty, incurring 15% annual interest until settled.

Section 28AAA: Recovery of Duties in Certain Cases

Explanation: If an instrument (e.g., license or certificate) is obtained fraudulently and used to avoid duty, the duty is recovered from the instrument holder with interest, as if no exemption applied.
Example: A company uses a fake license to import goods duty-free. Customs recovers the duty from the license holder with interest.

Section 28B: Duties Collected from Buyer

Explanation:

• (1) Excess duty collected from buyers must be deposited with the government, with interest if delayed.

• (2) A show-cause notice is issued if not deposited.

• (3) After final assessment, surplus duty is refunded or credited to the Consumer Welfare Fund.

• (4) Officers may deduct refunds owed from recoverable amounts.
  Example: A seller collects ₹20,000 extra duty from buyers but doesn’t deposit it. Customs issues a notice for recovery.

Section 28BA: Provisional Attachment to Protect Revenue

Explanation: During proceedings under Sections 28, 28AAA, or 28B, customs can provisionally attach the property of the person served with a notice to protect revenue, with approval from the Principal Commissioner. Attachment lasts six months, extendable to two years.
Example: An importer under investigation for duty evasion has their property attached to ensure recovery.

Chapter VA: Indicating Amount of Duty

Section 28C: Price to Indicate Duty
Explanation: Importers must indicate the customs duty amount on invoices and documents for goods sold, ensuring transparency in pricing.
Example: An importer selling smartphones includes ₹5,000 duty on the invoice.

Section 28D: Presumption of Duty Passed On
Explanation: It’s presumed that the duty paid by an importer is passed on to the buyer unless proven otherwise, affecting refund eligibility.
Example: An importer pays ₹10,000 duty. They must prove they didn’t charge buyers to claim a refund.

Chapter VB: Advance Rulings

Section 28E: Definitions
Explanation: This section defines key terms for advance rulings:

• Advance Ruling: A decision on customs matters (e.g., classification, valuation, exemptions) before import/export activities begin.

• Applicant: An importer, exporter, or person with a valid Importer-Exporter Code (IEC) or justifiable cause.

• Authority: The Customs Authority for Advance Rulings, appointed to issue rulings.

Example: A company planning to import solar panels seeks an advance ruling to confirm the duty rate.

Section 28EA: Customs Authority for Advance Rulings
Explanation: The Central Board of Indirect Taxes and Customs appoints a Principal Commissioner or Commissioner as the Customs Authority for Advance Rulings to provide binding decisions on customs matters. The Authority operates from offices like New Delhi.
Example: A Commissioner is appointed to rule on whether a new product qualifies for a duty exemption.

Section 28F: Authority for Advance Rulings
Explanation: The Appellate Authority for Advance Rulings (aligned with the Income-tax Act) handles appeals against rulings. Pending applications from the old system are transferred to the new Customs Authority for processing.
Example: An importer disagrees with a ruling on product classification and appeals to the Appellate Authority.

Section 28H: Application for Advance Ruling
Explanation: An applicant can seek an advance ruling on matters like classification, valuation, duty applicability, or exemptions by filing an application in quadruplicate with a ₹10,000 fee. The application can be withdrawn within 30 days if needed.
Example: A company applies for a ruling to determine if their product qualifies for a duty exemption under a specific notification.

Section 28-I: Procedure for Advance Ruling
Explanation: The Authority reviews the application, calls for relevant records, and may conduct a hearing if requested by the applicant or deemed necessary. The ruling is pronounced within three months, and copies are sent to the applicant and the jurisdictional Commissioner.
Example: An exporter applies for a valuation ruling. The Authority reviews records, holds a hearing, and issues a decision within three months.

Section 28J: Applicability of Advance Ruling
Explanation: An advance ruling is binding on the applicant and customs authorities for the specific matter until the law, facts, or circumstances change. It ensures predictability in trade operations.
Example: A ruling on a product’s classification binds the importer and customs until the tariff schedule is amended.

Section 28K: Advance Ruling Void
Explanation: If an advance ruling is obtained through fraud or misrepresentation, it is declared void, and regular customs procedures apply. The period during which the void ruling was in effect is excluded from duty recovery time limits.
Example: An importer uses false documents to secure a favorable ruling. The ruling is voided, and duties are recalculated.

Section 28KA: Appeal
Explanation: The applicant or an authorized customs officer can appeal an advance ruling to the Appellate Authority within 60 days, extendable by 30 days for valid reasons. The appeal process ensures fair review of rulings.
Example: A company appeals a ruling denying a duty exemption within 60 days to the Appellate Authority.

Section 28L: Powers of Authority
Explanation: The Authority and Appellate Authority have civil court powers, including summoning witnesses, ordering discovery, and inspecting documents, to process advance rulings. Their proceedings are considered judicial under the law.
Example: The Authority summons an importer’s records to verify details for a valuation ruling.

Section 28M: Procedure for Authority
Explanation: The Authority and Appellate Authority follow prescribed procedures to ensure fair and consistent handling of applications and appeals for advance rulings, maintaining transparency and efficiency.
Example: The Authority follows a set process to review an application for a duty exemption, ensuring procedural compliance.