Page 135 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Indirect Tax Laws

Notes 8.4 Restriction on Import and Export of Goods

Under sub-section (d) of section 111 and sub-section (d) of Section 113, any goods which are
imported or attempted to be imported and exported or attempted to be exported, contrary to
any prohibition imposed by or under the Customs Act or any other law for the time being in
force shall be liable to confiscation. Section 112 of the Customs Act provides for penalty for
improper importation and Section 114 of the Customs Act provides for penalty for attempt to
export goods improperly. In respect of prohibited goods the Adjudicating Officer may impose
penalty upto five times the value of the goods. It is, therefore, absolutely necessary for the trade
to know what are the prohibitions or restrictions in force before they contemplate to import or
export any goods.
The terms “Prohibited Goods” have been defined in sub-section (33) of Section 2 of the Customs
Act as meaning “any goods the import or export of which is subject to any prohibition under the
Customs Act or any other law for the time being in force”.
Under section 11 of the Customs Act, the Central Government has the power to issue Notification
under which export or import of any goods can be declared as prohibited. The prohibition can
either be absolute or conditional. The specified purposes for which a notification under section
11 can be issued are maintenance of the security of India, prevention and shortage of goods in
the country, conservation of Foreign Exchange, safeguarding balance of payments etc. The
Central Govt. has issued many notifications to prohibit import of sensitive goods such as coins,
obscene books, printed waste paper containing pages of any holy books, armored guard, fictitious
stamps, explosives, narcotic drugs, rock salt, saccharine, etc.
Under Export and Import Policy, laid down by the DGFT, in the Ministry of Commerce, certain
goods are placed under restricted categories for import and export. Under sections 3 and 5 of the
Foreign Trade (Development and Regulation) Act, 1992, the Central Government can make
provisions for prohibiting, restricting or otherwise regulating the import of export of the goods.
As for example, import of second hand goods and second hand capital goods is restricted. Some
of the goods are absolutely prohibited for import and export whereas some goods can be
imported or exported against a licence. For example export of human skeleton is absolutely
prohibited whereas export of cattle is allowed against an export licence. Another example is
provided by Notification No.44 (RE-2000) 1997 dated 24.11.2000 in terms of which all packaged
products which are subject to provisions of the Standards of Weights and Measures (Packaged
Commodities) Rules, 1997, when produced/packed/sold in domestic market, shall be subject to
compliance of all the provisions of the said Rules, when imported into India. All packaged
commodities imported into India shall carry the name and address of the importer, net quantity
in terms of standard unit of weights measures, month and year of packing and maximum retail
sale price including other taxes, local or otherwise. In case any of the conditions is not fulfilled,
the import of packaged products shall be held as prohibited, rendering such goods liable to
confiscation.

Another restriction under the aforesaid Notification issued by the Ministry of Commerce is that
the import of a large number of products, presently numbering 133, are required to comply with
the mandatory Indian Quality Standards (IQS) and for this purpose exporters of these products
to India are required to register themselves with Bureau of Indian Standards (BIS). Non-fulfilment
of the above requirement shall render such goods prohibited for import.
Import and export of some specified goods may be restricted/prohibited under other laws such
as Environment Protection Act, Wild Life Act, Indian Trade and Merchandise Marks Act, Arms
Act, etc. Prohibition under those acts will also apply to the penal provisions of the Customs Act,
rendering such goods liable to confiscation under section 111(d) of the Customs Act (for import)
and 113 (d) of the Customs Act (for export).

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