Statutory Requirements for Operating an ICD / CFS / AFS in India

The Central Board of Excise and Customs has passed a regulation under Customs Act 1962. The guidelines provided by the Act state that Customs Cargo Service Providers can be any person or entity responsible for receiving, storing, delivering, dispatching, or handling imported or exported goods.

1. Application: These regulations shall be applicable to the handling of imported and exported goods in customs areas as specified under section 8 of the Act.
2. Retrospective Application: Any Customs Cargo Service Provider appointed after this Act comes into effect, will be deemed to perform actions under the provisions of the same. Any Customs Cargo Service Provider appointed on or before the commencement of this Act shall comply with the provisions of this Act within the period of 3 months and the extension of up to 1 year.
3. Conditions to be fulfilled by the Customs Cargo Service Provider: The Service Provider for custody and handling of goods shall fulfill the below conditions:
   • Provide the following details to the Commissioner of Customs.
     • Infrastructure, equipment, adequate labor for loading, unloading, stacking, handling, stuffing, de-stuffing of containers, storage, dispatch, and delivery of containers and cargo, etc.
     • Safe, secure, and spacious premises for loading, unloading, handling, and storing of the cargo for the projected capacity and for the examination and other operations as may be required in compliance with any law for the time being in force.
   • Insurance for an amount equal to the average value of goods likely to be stored in the customs area based on the projected capacity, and for an amount as the Commissioner of Customs may specify having regard to the goods which have already been insured by the importers or exporters.
   • The Service Provider must undertake the cost of the Customs Officers on a cost recovery basis by the Commissioner and shall make payments at the rates prescribed unless exempted by an order of the Government of India.
   • Execute a bond equal to the average amount of duty involved on the imported goods and 10 percent of the value of export goods to be stored in the facility during a period of 10 days and furnish a bank guarantee or cash deposit, equivalent to the 10 percent of the duty.
   • Execute a separate bond for an amount equal to 10 percent of the value of the export goods with a bank guarantee for an amount equal to 10 percent of the value of the bond, towards the export goods transported from the customs area to any other customs area for export or transshipment.
   • Undertake to comply with the provisions and abide by all the provisions of the Act and the rules, regulations, notifications, and orders issued.
   • Undertake to indemnify the Commissioner of the Customs from any liability arising on account of damages caused or loss suffered on imported or export goods, due to accident, damage, deterioration, destruction, or any other unnatural cause during their receipt, storage, delivery, dispatch, or otherwise handling.
4. Responsibilities of Customs Cargo Service Provider:
   1. The Customs Cargo Service Provider shall:
      • Keep a record of import, and export goods, and activities taking place in relation to the handling of the goods.
      • Demarcate separate areas for loading and unloading of goods, in respect to the nature of the goods, place of destination, or any other criteria as the Commissioner of Customs may specify with regard to the custody and handling of goods.
      • Not to permit movement of the goods from the storage or any export cargo to enter the customs area without a shipping bill or import cargo to enter without the import report.
      • Be responsible for the safety and security of imported and export goods and liable to pay duty on goods pilfered after entry thereof into the customs area.
      • Shall not charge any rent on the goods confiscated or seized.
      • Can dispose of the goods which remained unclaimed or abandoned within a period of 90 days.
      • Cannot make any alterations to the entry and exit points or build boundary walls without permission.
      • Shall observe the Central Government holidays and intimate the variations in the working days to the Commissioner of Customs at least 7 days in advance and abide by all the provisions of the Act and the rules, regulations, notifications, and order issued.
   2. The service provider cannot lease, sell, sublet, or gift any of the imported or exported goods or transfer of any customs area without the written permission of the Commissioner of Customs.
   3. The service provider shall publish and display the schedule of the charges for numerous services provided by him in relation to the goods in the customs area.
5. Power to relax and regulate:
   • If the Commissioner of Customs determines that a Customs Cargo Service Provider is unable to comply with any of the rules mentioned regarding the custody and handling of imported and exported goods in the customs area due to circumstances beyond his control, he may be exempted from fulfilling those requirements.
   • The Commissioner of Customs may regulate the entry of goods into the customs area for efficient handling of such goods.
6. Commencement of operations: Unless the Commissioner of Customs is satisfied that all requirements of the Act have been satisfied and grants permission to commence the operations by an order in writing, the Customs Cargo Service Provider approved for custody of imported or export goods and for the handling of such goods shall not commence any operations in a customs area for the first time.
7. Application for approval of Customs Cargo Service Provider:
   • An application to act as a Customs Cargo Service Provider for custody of imported or export goods and for the handling of such goods in a customs area shall be made in the form of a letter to the jurisdictional Commissioner of Customs.
   • The Commissioner of Customs shall dispose of the application within 45 days of receipt of the application.
8. Approval of appointment of a Customs Cargo Service Provider and review thereof:
   • The Commissioner of Customs may approve an applicant as a Customs Cargo Service Provider for a term of two years from the date of issuance of such approval if he is satisfied that the applicant has achieved the conditions specified in Regulation 3.
   • Before the initial approval period of 2 years or 5 years expires, the Commissioner of Customs must evaluate the approval given and may extend it for up to 5 more years at a time.
9. Suspension or revocation of approval for appointment of a Customs Cargo Service Provider:
   • Subject to the provisions of these regulations, the Commissioner of Customs may suspend or revoke the approval granted to the Customs Cargo Service Provider subject to adherence to the prescribed procedure and may also order forfeiture of security, if any, for failure to comply with any of the provisions of the Act and the rules, regulations, notifications, and orders made thereunder.
   • The Commissioner of Customs may, in appropriate cases where an inquiry against such Customs Cargo Service Provider is pending or contemplated.
10. Procedure for suspension or revocation of approval and imposition of penalty:
    • The Commissioner of Customs must give written notice to the Customs Cargo Service Provider outlining the proposed grounds for suspension or revocation of the approval. The notice must include a deadline of no less than 30 days by which the Customs Cargo Service Provider must submit a written statement of defence to the Assistant Commissioner or Deputy Commissioner of Customs of his choosing.
    • The Assistant Commissioner or Deputy Commissioner of Customs may investigate any grounds that are not acknowledged by the Customs Cargo Service Provider upon receipt of the written statement from the Provider of Customs Cargo Services, or in the absence of a written statement within the time specified in the notice.
    • During the investigation, the Assistant Commissioner or Deputy Commissioner of Customs shall consider any documentary evidence and take any oral testimony that may be pertinent or material to the inquiry regarding the grounds supporting the proceedings, and he may also ask any question of any witness who is presenting evidence for or against the Customs Cargo Service Provider to determine the correct position.
    • The Customs Cargo Service Provider is permitted to cross-examine those who have been interviewed on the grounds that their evidence is irrelevant or unimportant. He must provide written justification for this decision.
    • The Assistant Commissioner of Customs or Deputy Commissioner of Customs shall prepare a report of the inquiry reflecting his findings after the investigation is complete.
    • The Commissioner of Customs shall provide a copy of the Assistant Commissioner’s or Deputy Commissioner’s report to the Customs Cargo Service provider and shall require the Customs Cargo Service provider to submit any objections to the Assistant Commissioner’s or Deputy Commissioner’s findings within the specified period, which shall not be less than 30 days.
    • The Commissioner will issue the orders he considers appropriate after reviewing the inquiry’s report and, if any, the Customs Cargo Service Provider’s comments.
    • Any Customs Cargo Service Provider who violates any of these laws, aids in such violation, or fails to comply with any requirement of the regulation with which it was his responsibility to comply is subject to a fine that may reach Rs. 50,000.
    • Any Customs Cargo Service Provider aggrieved by any decision or order passed under this regulation may appeal under section 129(A) of the Act to the Customs Central Excise and Service Tax Appellate Tribunal established under sub-section 1 of section 129 of the Act.
11. Renewal of approval for the appointment of Customs Cargo Service Provider: If the performance of the approved Customs Cargo Service Provider is found to be satisfactory with regard to his obligations under any of the provisions of the appointment, the Commissioner of Customs may, upon application made by the Customs Cargo Service Provider before the validity of the appointment expires, renew the approval for a further period of 5 years from the date of the original grant of such approval or of the last renewal of such approval, as the case may be.

The contents of this article have been taken from the Handling of Cargo in Customs Areas Regulations, 2009.