Export Import

Category: Customs, Export, Prohibition
Last Updated: 24 Jun 2021
Pages: 9 Views: 279
Table of contents

Import and export of goods play a vital role in all the economy. That too, India is a developing country, the role of export and import are of greater emphasis. There must be a free flow of exports and imports in order to improve the economy. But, the free flow should not affect the economy. So, the control over import and export of goods become the need of the hour.

Regulation mandated by a state attempts to produce outcome which might not otherwise occur, produce or prevent outcomes in different places to what might otherwise occur, or produce or prevent outcomes in different timescales than would otherwise occur. In this way, regulations can be seen as implementations artifacts of policy statements. The economics of imposing or removing regulations relating to markets is analyzed in regulatory economics. Development of economic legislation is of comparatively recent origin.

Reserve Bank of India was established in 1935 to exercise control over banking and fiscal activities. Need to control economic activities through legislation arose during the Second World War to face shortages. Price and distribution controls were established on arious essential commodities under the Defense of India Act, 1939 (later converted into Essential Supplies (Temporary Powers) Act of 1946 and Essential commodities Act in 1955). Foreign Exchange Regulation Act, 1947 was passed to control the difficult position of foreign exchange. Industries (Development and Regulation) Act, 1951 provided for industrial licensing and registration.

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MRTP Act was passed in 1969 to exercise control over monopolies, unfair trade practices and restrictive trade practices. Sick Industrial Companies (Special Provisions) Act, 1985 was passed as a solution to growing sickness in industries. Securities and Exchange Board of India Act, 1992 was passed to establish a statutory body (SEBI) to exercise control over rapidly growing capital market. Earlier, capital issues (control) Act, 1947 was used to exercise control over capital issues. This Act was scrapped after the formation of SEBI. As international business is growing, importance of controls over foreign transactions is growing.

The main purpose of economic legislation is to support the economic policies of the Government. b. to exercise control over economic activities. to protect consumers from unscrupulous persons. d. To prevent bad side effects of the development. India decided to follow Russian model of 'controlled economy and 'leading role to public sector'. Various Acts were passed atter 1947 to suppo t rt nese ideals. T envisaged various controls, licensing etc... Some Acts like Essential Commodities Act. FERA was designed to support 'shortage economy, where supply was less compared to demand. These economic policies were totally changed in July 1991.

It is ironical that through the policies have changrd, the old Acts still continue. Though some amendments to FERA, MRTP Act etc. have been made, the basic philosophy of these Acts (i. e) controls and licensing continues. Luckily, the Acts provided so much flexibility in framing policies that these old Acts provided so much flexibility in framing policies that these old Acts designed for different purposes and with entirely different concepts can be in fact are being used to implement new policies. Indeed the new policies are against basic philosophy of the old economic legislation.

The country which is purchasing the goods is known as the importing country and the country which is selling the goods known as exporting country. The traders involved in such transaction are importers and exporters respectively. In India, exports and imports are regulated by Foreign Trade (Development and Regulation) Act, 1992, which replaced the Imports and Exports (control) Act, 1947, and gave the Government of India enormous powers to control it. Besides the FTDR Act, there are some other laws which control the export and import of goods.

Import Restrictions

Control over the import ot the goods in to India is exercised by the Import Trade Control Oragnisation, which functions under the ministry of commerce. This rganisation is supervised by the director General of foreign trade station at New Delhi, who is assisted by Additional and Joint director general and by other licensing authorities at various centers.

Current import policy is embodied in the export and import policy book out by the DGFT. Customs Act, 1962 Section 12(1) of the customs Act is the charging section which provides for imposition of a duty called Customs duty levied as per the customs Tariff act 1975, or any other law for the time being in force on the goods imported in to India or exported out of India. The objects of Customs Act are

  1. To regulate imports and exports.
  2. To protect domestic industries from dumping.
  3. revenue in the form of customs duty and indirect tax.
  4. legislations such as FTDR and FEMA.

To collect To assist allied By virtue of the power conferred under Secl 56 of the Customs Act 1962 Central Govt is empowered to make rules consistent with the provisions of the Act. Similarly by virtue of its powers conferred under Sec157 of the Act , the Central Board of Excise and Customs(CBEC) has been empowered to frame regulations( Customs House Agent Regulations)

Export & Import Prohibitions

Sec 1 of the Customs Act 1962 gives powers to central government to prohibit import or export of goods . Such a prohibition can be absolute or conditional.

Absolute prohibition means an importer is totally prohibited in importing/exporting the subject goods. Some of the goods prohibited from time to time are narcotic drugs, explosives, live or dead animals [birds, arms and ammunition, counterfeit currency notes. On the other hand, conditional prohibition would mean that the prohibition would mean that the prohibition would mean that the prohibition is subject to certain conditions imposed. A conditional prohibition would attract in a case where the importer is prohibited in selling/trading the imported goods but can only use the ame as a raw material for manufacture.

Some item like wool, turmeric, onion, black pepper, tea, etc... are allowed to be exported only after they are graded by designated authorities. In terms of Sec. ll (2) of the Customs Act, 1962, the prohibition may among other things relate to the following:

  1. Maintenance of security of India.
  2. Prevention of smuggling
  3. Conservation of foreign exchange and safeguarding balance of payments.
  4. Prevention of serious injury to domestic production of goods.
  5. Protection of national treasures. Maintenance of public order and standards of decency and morality.
  6.  Protection of IPR (Patent/Trademark/Copyright)
  7. Any other matter conducive to the interest of general public.

Sec. 2 (33) of the act defines prohibited goods means any goods the import or export of which is subject to any prohibition under this act or any other law for time being in force but doesn't include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported, have been complied with. Therefore, the prohibition under Customs Act applies to prohibition under any other law in India.

  1. Ancient Monument Prevention Act prohibits/ restricts antiquities e imported or exported without licence.
  2. Arms and ammunition cannot
  3. Wildlife Act prohibits certain exports- 'red sandal wood '(which are used in Middle East countries for making musical instruments)
  4. Environment Protection Act prohibits export of some items.

At the time of import of goods the customs authorities will first check whether the items imported is prohibited / restricted or subject to conditional import, before allowing clearance of the goods.

Similarly at the time export also the goods are given 'let export order' only after they are checked with the reference to restrictions/ rohibitions. If such goods are attempted to be smuggled the goods are liable to seizure/confiscation and the offender liable to penal action including arrest / prosecution under the Customs Act. The word 'confiscation' implies appropriation consequential to seizure. The essence and concept of the confiscation is that after confiscation the property of the confiscated goods vest with the central govt.

Secl 1.1 of the Act provides for confiscation of improperly imported goods. The goods brought from a place outside India shall be liable for confiscation.

Sec. 1.1.1 (d) says "any goods hich are imported or attempted to be imported or are brought within the Indian Customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this act or any other law for the time being in force. Secl 13 of the Act deals with confiscation of goods attempted to be improperly exported .

The export goods shall be liable for confiscation under sec 113 (d) says "any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported contrary to any prohibition imposed by or under this Act or any other law for time being in force. COFEPOSA, 1974 Conservation of Foreign Exchange and prevention of smuggling Activities Act (COFEPOSA) was passed in 1974 when foreign exchange position in India was bleak and smuggling was beyond control.

In view of recent liberalisation, the Act has lost its significance. The Act gives wide powers to executive to detain a person on mere Suspicion of smuggling (the draconian provisions of the act can be compared with provisions of TADA, where a person can be incarnated in Jail merely for possessing a illegal weapon and having acquaintances with some underworld elements, without any proof of direct involvement in terrorist activities). The acts like COFEPOSA, TADA, etc... are criticized on the ground that they violate basic human rights.

Freedom of a man can be taken away under such Acts, without Judicial scrutiny and safeguards. The act has been given special protection by including the same in the 9th schedule to constitution. The validity of COFEPOSA particularly section 5A and SAFEMA smugglers and foreign Exchange Manipulators (forfeiture of property) Act 1976, have been upheld in Attorney General of India Vs. Amaratlal PraJivandas. A 9 member bench SC order. Thus, individual civil liberties can be curtailed for national security and in national interest.

Under provisions of the act, a Government officer, not below the rank of Joint Secretary in case of central Government and Secretary in case of State Government, who is specifically authorized by central or state government for that purpose, is authorised to order detention of a person (including a foreigner) with a view to prevent him from acting in any manner prejudicial to conservation or augmentation of foreign exchange, or to prevent him from smuggling or abetting smuggling of goods, or transporting, keeping conceling or dealing in smuggling goods or harbouring persons engaged in smuggling ot goods. section. ). where an order ot detention is made by state government officer, it should be reported to central government within 10 days. (Section. 3 (2)). When detention is ordered by central government, central govt. is appropriate government. When detention is ordered by state government, that govt. is appropriate government. The significance of this definition is that the 'Appropriate government' has to make a reference to advisory board formed for the purpose of COFEPOSA and take action as per decision of advisory board.

Appropriate government also has powers to revoke a detention, release a person temporarily, etc... SAFEMA, 1976 Another act relevant to COEPOSA is SAFEMA - smugglers and Foreign Exchange Manipulators (Forfeiture of property) Act, 1976. The act applies to persons convicted under customs Act, FERA and to those detained under COFEPOSA. The purpose of the act is to forfeit the illegally acquired properties of the smugglers and foreign exchange manipulators. Property can be forfeited merely on the ground that he is detained under COFEPOSA.

However, in case of customs and FERA, property can be forfeited only if a person is convicted under these Acts. An appellate tribunal has also been formed for this purpose. COFEPOSA is dreaded Act similar to TADA. It permits detention of a person even without a charge. Since the powers are extraordinary, generally courts are strict about the conditions prescribed in respect of detention. FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT, 1992. The FTDR Act is designed to develop and regulate foreign trade by facilitating imports in to India, and augmenting exports from India, and for matters connected therewith.

The salient features of the Act are as follows; 0 It has empowered the Central Government to make provisions for development and regulation of foreign trade by acilitating imports into, and augmenting exports from India and for all matters connected therewith or incidental thereto. 0 The Central Government can prohibit, restrict and regulate exports and imports, in all or specified cases as well as subject them to exemptions. 0 It authorizes the Central Government to formulate and announce an Export and Import (EXIM) Policy and also amend the same from time to time, by notification in the Official Gazette. It provides for the appointment of a Director General of Foreign Trade by the Central Government for the purpose of the Act. He shall advise Central Government in formulating export and import policy and implementing the policy. 01Jnder the Act, every importer and exporter must obtain a 'Importer Exporter Code Number' ('EC) from Director General of Foreign Trade or from the officer so authorised. The Director General or any other officer so authorised can suspend or cancel a licence issued for export or import of goods in accordance with the Act.

But he does it after giving the licence holder a reasonable opportunity of being heard.


Export or import in violation of provisions of the act, rules or policy is an offence. Penalty up to five times the value of goods can be imposed. The contravening goods and conveyance carrying the goods are liable to confiscation. The goods and conveyances confiscated can be released by paying redemption charges equal to market value of such goods or conveyance.

Conveyance will not be confiscated if it is owner proves that the conveyance was used without his knowledge or ne took reasonable precautions against its misuse. Penalty and confiscation can be ordered by 'Adjudicatory authority.


Appeal against the order of DGFT for refusing of suspending or cancelling code umber or licence or imposing penalty can be filed within 45 days with prescribed authority. Appeal can be filed only on payment of penalty imposed, unless appellate authority dispense with such pre deposit (Section. 5 of FTDR). Central Government can call and examine any records and pass revision orders in some cases (section. 16 of the act).


A person can opt for settlement by admitting contravention in the following Contravention was without willful mistake or without any circumstances. a. collusion, fraud or without intention to cause loss of foreign exchange. b. Person mporting has not misutilised the imported goods, but condition of 'Actual user' or 'Export obligation' have not been satisfied.

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Export Import. (2018, Jun 30). Retrieved from https://phdessay.com/export-import/

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