Clause wise analysis of proposed legislative amendments vide Union Budget 2019

Customs Act 1962

 1) Clause 69 - Amendment to Section 41 (Authority to Sign IGM/EGM):

  • After this bill is passed, in addition to person in-charge of the conveyance, any other person as may be specified by the Central Government by Notification can also file the said declarations

 2) Clause 70 - New Section 99B (Identity verification of person):

  • Provisions for verification of Aadhaar or any other alternative document of an Importer or Exporter or a person any Duty or Tax Benefits is inserted. Proper Officer will carry out verification of a person’s identity for ascertaining compliance with the provision of the Customs Act or any other law for the time being in force:
    • Power to suspend clearance or refunds: The section will also empower suspension of clearance of goods, or grant of exemption or sanction of any refund or drawback etc, till the claimant identifies himself in the manner prescribed.
    • Power to stop clearance or refunds: Further, where a person fails to authenticate properly, no benefits or clearance shall be allowed. Therefore, very soon in case of individual Importers (Proprietors/ Partners) the Aadhaar of Proprietor or Partner would be necessary. In case of Imports by artificial persons like Company registered under Company Act, the Aadhaar of Directors will be required for authentication.

 3) Clause 71 - Section 103 (Power to search, screen or scan a person):

  • Where the proper officer has reasons to believe that any person secreted inside his body any goods liable for confiscation, the proper officer can directly initiate the process to scan or screen such person with prior approval of Deputy Commissioner of Customs or Assistant Commissioner of Customs instead of the Magistrate’s permission to expedite the process
    In case the screening reports indicate a clandestine clearance, the Magistrate will take necessary legal action.

 4) Clause 72 – Section 104 (Power to arrest)

  • The amendment seeks to widen the scope for arrest by empowering an officer of customs to arrest a person who has committed an offence even outside India or Indian Customs waters.
    Further, two more offences will now be treated as non bailable or cognizable offences:-
    • Any offence relating to fraudulently availing or attempting to avail drawback, or any exemption.
    • Fraudulently obtaining and using an instrument under this Act or the FTP (D & R) Act 1992.

 5) Clause 73 - Amendment to Section 110 (Seizure of Goods, Documents and attachment of Bank Account):

  • This clause seeks to substitute the existing proviso with two provisos as under: -
    • Where it is not practicable for the department to remove, transport, or store or take physical possession of seized goods, the said officer would give back the custody of seized goods to the importer against an undertaking
  • Similar provision is made where it is not possible to seize any goods
    • It is further proposed to empower the proper officer to provisionally attach any bank account for safeguarding the Government revenue and prevention of smuggling for a period not exceeding six months, and further extendable by another 6 months.

 6) Clause 74 - Amendment to section 110A (Provisional release of seized goods and also provisional release of Bank account):

  • This clause empowers an adjudicating authority to release bank account provisionally attached on fulfilment of certain conditions.

 7) Clause 75 - New Section 114B. (Severe Penalty for fraudulently obtaining Instruments (e.g. Advance Authorisation, DFRC, etc):

  • A stringent penalty equal to the value of instrument (and not up to the value of benefits availed) will be imposed on the person who has obtained the said instrument fraudulently. For e.g. If an Advance Authorisation granted duty exemption of 10 Lakhs and before the fraud was detected it was utilised for Rs 1 Lakh, still penalty of Rs 10 lakhs will be imposed.

 8) Clause 76 - Amendment to section 117:

  • For contraventions, not expressly mentioned (General Penalty) is increased from 1 Lakh to 4 Lakhs.

 9) Clause 77 - Amends first proviso to section 125 regarding Fine:

  • At present adjudication process provides for waiver of penalty where the person pays duty and interest before adjudication of the case. Now even fine in lieu of confiscation will not be imposed.

 10) Clause 78 - Amends sub-section (1) of section 135:

  • A new clause (e) is inserted under which obtaining and utilising of an instrument from any authority by fraud, collusion, wilful misstatement or suppression of facts is a non bailable offence. Under this provision the person is liable for imprisonment up to 7 years and in any case not less than 3 years.

 11) Clause 79 - Amend section 149:

  • Board will be empowered to make regulations specifying time, form, manner, restrictions and conditions for amendment of any document under certain circumstances. Earlier it was at the discretion of the officer

 12) Clause 80 - Amends section 157:

  • To give effect to Section 99B, the proposed amendment seeks to empower the Board to make regulations in respect of verification of identity and regarding amendment of documents filed in the Customs House like Bill of Entry and Shipping Bill.

 13) Clause 81 - Amends sub-section (2) of section 158

  • To increase the maximum limit of penalty for violation of any provisions of rules or regulations made under Customs Act from fifty thousand rupees to two lakh rupees

 14) Clause 82 & 83 - Amends specified Notifications retrospectively to Sub Section (1) of Section 25 retrospectively

  • The Bill seeks to make retrospective amendments to notifications Nos:
    • G.S.R. 423 (E) Dated 1st June 2011;
    • G.S.R. 499 (E) Dated 1st July 2011;
    • G.S.R. 185 (E) Dated 17th March, 2012;
    • G.S.R. 785 (E ) Dated 30th June, 2017.
  • issued under sub-section (1) of section 25 of the Customs Act, 1962, in the manner specified in Second Schedule in respect of all notifications other than DT. 30-6-2017, and as specified in Third Schedule in respect of Notification DT. 30-6-2017, so as to change the tariff classification of Stearic acid from "3823 10 90" to "3823 11 00".

 15) Clause 84 - Amends specified Notification retrospectively:

  • The Bill seeks to give retrospective effect to the notification number:
    • G.S.R. 1270(E), dated the 31st December 2018;
    • G.S.R. 665 (E), dated the 2nd August, 1976.
  • Regarding the temporary importation of vehicles as per the Convention on the Temporary Importation of Private Road Vehicles so as to give retrospective exemption from the integrated tax leviable under section 3 of the Customs Tariff Act, 1975.

CA Aumkar Gadgil

  • Disclaimer: The views expressed above are on the basis of our understanding of the provisions of Customs Act 1962 as amended from time to time. Adjudicating or Judicial authorities may or may not agree with the views expressed above.