Customs, as a major source of revenue, plays a very important role in the economy of our country. However, the functions of the Customs Department are not confined to the collection of revenue only. It has also many other important roles to play.

During the British days and soon after, the country was importing even the daily requirements like pencils and paper. The exports consisted of mostly agricultural products. With the attainment of independence and introduction of policies with the object of substituting imports and concomitant regulations,the pattern of imports and exports has radically changed. In implementing the policies relating to international trade, the Customs department always has a crucial role to play. The role of the Customs is to act as a sentinel on the economic borders of the country.

The collection of revenue through Customs is known in this country, for the last 3000 years and laws for collection of revenue and punishments for violation thereof are indicated as early as in Kautilya’s "Arthasasthra". The modern system of taxation is, however, a British legacy. It was in England, during the days of King John, in the 13^th Century, the ‘customary dues’ that were till then collected by local sheriffs and chieftains as protection money for the police service rendered to foreign traders came to be collected as revenue to the state . The other major forms of revenue viz. the Excise and Income Tax came to be conceived much later during the 17^th Century.

In India, the "Customs" in the modern form was introduced soon after the consolidation of British rule. The trade in this country was then mainly by sea and with England and other European countries and an enactment known as Sea Customs Act, 1878, was brought forth for collection of revenue and control on the movement of goods. This was followed about 50 years later by an act known as Land Customs Act, 1924, to cover the goods coming by land routes. The Indian Aircraft Act, 1934, covered the export/import by air, which, by then, had made a beginning. The laws then, had however been designed with an eye to protect the British interests only, but independent India allowed these statutes to continue in force, till 1963, when the Customs Act, 1962, repealing all the earlier enactment was passed.

The Customs Act, 1962 is a compact piece of legislation covering all the provisions relating to export/import, movement of people and goods in and out of the country, control of the same, collection of revenue and penal provisions for the contravention of the laws in force. This act came into force on 1.2.63 (Prior to this the laws in force were covered by the Sea Customs Act, 1878, Land Customs Act, 1924, the Indian Bonded Warehouse Act, 1924 and Indian Aircraft Act, 1934 (Sec.16). All these acts were repealed with the coming into force of the Customs Act, 1962. This has been amended a number of times to meet the additional requirements as and when they arose.

The main functions/activities of the Customs Department are as follows:

The functions performed in the Customs Houses essentially correspond to the functions and tasks assigned to the Customs Department . For this purpose a number of departments/sections have been created in each major Custom House which can be divided broadly into the following:

Appraising Department holds a vital position in the Custom House. This Department performs the task of assessment of goods for the purpose of levying Customs duties in accordance with taxing statutes and also performs agency functions of other Departments/Ministries of the Government such as Import Trade Control, Drug Control, Foreign Exchange Control etc. These functions are mainly performed by the Appraisers / Superintendents (assisted by the Examiners / Inspectors in certain areas like Dock) under the overall supervision of the Assistant Commissioner / Deputy Commissioner. These executive officers are assisted by appropriate complement of ministerial staff (O.S., D.O.S., U.D.Cs and Record Clerks) in various documentation processes connected with clearance of goods.

As a measure to enhance administrative efficiency, the Appraising Department in the Custom House is sub-divided into smaller functional units called Appraising Groups. Each Appraising Group consists of 3 or 4 appraisers normally under the charge of an Assistant Commissioner / Deputy Commissioner and deals with certain specified categories of goods; earmarked by Commissioner of Customs from time to time in consultation with Deputy Commissioner/Assistant Commissioner overall in charge of the Appraising Department. Normally goods classified under a set of tariff headings in the Customs Tariff are assigned to each group.

The Appraising Groups in the Custom House are assisted in the discharge of their work by appraising staff posted in the docks consisting mainly of Appraisers and Examining officers under overall charge of one or more Assistant Commissioner / Deputy Commissioners. Major Custom Houses have separate units attached to Appraising Departments such as Special Investigation Branch (which undertakes investigations in important appraising cases). Valuation Branch or Special Valuation Branch (to look into valuation aspect of various import by inter-related parties), a Tariff Unit/Cell ( to look into various classification questions) and a licence Unit (maintaining records of all import licences registered and utilized at the port).

Customs Act’62 envisages that only places notified by the Government shall be Customs ports for unloading and loading of goods. At each Customs port , Commissioner of Customs is empowered to approve places which alone may be used for unloading and loading of goods. Commissioner also specifies limits of Customs areas. The law further provides that no imported goods can be unloaded at approved places except under the supervision of proper officer unless Central Board of Excise and Customs has given general permission . Proper officer gives special permission in any particular casefor any goods or class of goods to be unloaded without the supervision of the proper officer.

It is further obligatory on the master of a vessel not to permit any unloading of imported goods at any approved places unless an order has been passed by the proper officer granting what is called ‘Entry Inward’ to the vessel. To get an entry inward, the master of the vessel (or his agent) is required to submit to the proper officer in the Custom House a document called ‘Import General Manifest’ or ‘Import Manifest’ in a prescribed form which, inter alia, includes the details of all the goods to be unloaded at the port. Except with the permission of the proper officer, no import goods can be unloaded at any Customs station unless they are mentioned in the aforesaid import manifest for being unloaded at that Customs station.

As per statutory provisions, the import general manifest has to be submitted within 24 hours after the arrival of the vessel at the custom station. The Act also provides for submission of such import manifest in advance of the arrival of the vessel to enable submission and processing of assessment documents pending arrival of the vessel to expedite ultimate clearance of the goods after the vessel arrives. The advance manifest so submitted by Steamer Agents is known as ‘prior entry manifest’ and the order for the entry is granted on an undertaking by the Agents to produce all the prescribed documents within 2 hours after the vessels arrival.

In practice, the Steamer Agents after ascertaining details about the expected arrival of the steamer and of the goods to be unloaded at the port submit a prior entry manifest to the Import Noting Department in the Custom House which gives the prior entry inwards to the vessel and this fact is made known to the trade. This enables importers to start submitting documents in connection with clearance of consignment expected by that vessel. The Steamer Agents also intimate Preventive Deptt. Of the Customs House, which is mainly concerned with keeping watch on the movements of the vessel to prevent any unauthorized landing. The Preventive Officers generally board the vessel as it approaches the Customs area of the port. All unloading and loading operations are supervised. As indicated earlier, unloading is permitted only after permission for discharge of the cargo has been obtained after submission of an appropriate Import General Manifest. The goods are unloaded into the port authorities’ wharves as approved by the Commissioner of Customs or into boats, with permission of the proper officer. The preventive officers allow discharge into boats by specific order in each case and keep a systematic account of over side deliveries. The Port Authorities, who act as custodian of all the goods landed in the port premises watch and keep tally/records of the goods landed on wharves and permit deliveries to the importers only after production of approved documents containing authorization for delivery by Customs.

Presentation of bill of entry at Import Noting department

After the Import general manifest has been filed by the Steamer Agent to the Custom House and entry inwards or ‘prior entry’ granted, the importers or their authorized agents can approach Custom House for completing documentary and various procedural formalities as also payment of duties of Customs wherever leviable. The importer has to make an application for clearance of his goods, also termed ‘Entry’, by submitting a prescribed document called ‘Bill of Entry’, declaring various particulars about the goods imported such as description, quantity and identification of packages, value etc. The Bill of Entry (which is normally required to be accompanied by documents such Bill of Lading, Invoice, Import Licence etc.) is presented in the Import Noting Deptt. of the Custom House, where it is ‘Noted’ against the particular entry (called Line No.) of the import manifest submitted by the Steamer Agents after broadly checking for correlating particulars as declared in the Bill of Entry with those in the relevant entry in the manifest. As would be explained later, this ‘Noting’ operation is very crucial for determining the rate of duty leviable on the particular goods.

Once the Bill of Entry has been noted by the Import Noting Deptt, the importer or his Clearing Agent presents it to the relevant Group in the Appraising Deptt where it is scrutinized by an appraiser for the purposes of assessment as also for checking whether any prohibitions or restrictions exist on the goods and if so whether conditions subject to which importation is permissible are complied with by the importer or the goods have been imported in contravention of law attracting penal action against the goods/importer.

If the Appraiser is satisfied about the declaration and the permissibility of importation he determines the appropriate rates of duties which are leviable on the goods under various taxing statutes and passes orders for allowing clearance after physical examination of the goods at the sheds in the Docks after it has been pre-audited and appropriate licence accompanying the Bill of Entry, if any is registered in the Licensing Unit and the duty as assessed is paid in the Nominated Bank / Accounts Deptt. This is also known as Second Appraisement procedure where all formalities are completed in the Custom Hose on the basis of documents and explanation of the importer.

Prior to assessment physical examination of the goods and even drawing of samples may be insisted (under what is known as 1^st Appraisement) if considered necessary by the Appraiser or Assistant Commissioner / Deputy Commissioner in-charge in the Groups for determining appropriate rates of duties or checking permissibility of import from the Import Trade Control angle or for any of the reasons before assessment is finalised and an order allowing clearance is given.

The Internal Audit Department is entrusted with the basic functions of checking and verification of correctness of assessments from revenue angle and checking appropriateness of all refunds and drawback claims sanctioned by different Units in the Custom House. The checking in the case of assessment is a ex post-facto checking from the documents while in the case of refunds and drawback claims normally these functions are performed prior to actual payments are made. It is also concerned with the appropriate liaison with the statutory audit conducted through C.R.A.D (or Customs Revenue Audit Deptt.). C.R.A.D. under the administrative control of Accountant General concerned and takes up checking of various assessment documents/refunds and drawback claims as refereed to above after the check by the Internal Audit Department.

Apart from the appraising staff posted in the Custom House, suitable complement of staff is posted in the Docks where all goods are landed and stored under the custody of the Port Trust authorities. The basic function of the Dock appraising staff is to carry out necessary examination and checks including checking the question of appraisement (classification and value) wherever necessary. The goods are examined according to the orders issued from the appraising groups of the Custom House. The final clearance from the Docks is authorized by Dock staff by affixing ‘out of customs control’ stamp on the duplicate copies of the Bills of Entry. Dock staff carries out further functions like allowing and supervising various types of Surveys (Agents Survey, Insurance Survey etc.), re-bagging in case of packages which are damaged, and liaison with the Port Trust etc.

The final step of accounting of all cargo declared to be unloaded at the port is done in a department of the Custom House called Manifest Clearance Department or M.C.D. All manifests and the related bills of entry (original and duplicate) ultimately come to this Department from the Docks as well as from the different sections of the Custom House. The said MCD gets an outturn report of the goods unloaded from the Port Trust and list of over side deliveries on boats prepared by the Preventive Officers in respect of each manifest. Both short-landing and excess-landing are appropriately taken into account and action is taken against the Steamer Agents for the shortages/excess and ultimately each bill of entry in the manifest is reconciled. After suitable action in each case is taken and all cargo declared to be unloaded are fully accounted for, the manifest is finally closed.

Manifest Clearance Department is a repository of all import documents and makes available these documents to any Department on requisition who may need them for any purpose such as issue of demand , grant of refund etc.

In the case of imports by Air all work relating to clearance of imported consignment is concentrated at the Cargo Complexes set up at the Major Airports. These cargo complexes are miniature Custom Houses where different functions in regard to processing of Bill of Entry and clearance of goods such as noting, assessment, examination, payment of duty etc. are all done more or less on the same lines as in the case of imports by Sea.