Customs Act, 1962 Section 11d — Precautions to be taken by persons acquiring notified goods
Customs Act, 1962 · Precautions to be taken by persons acquiring notified goods
Plain-English Explanation
Overview
Section 11D of the Customs Act, 1962, outlines the precautions a person must take when acquiring notified goods to prevent the circulation of illegally imported items. It essentially imposes a responsibility on purchasers to verify the legitimacy of the goods they are acquiring after a date the goods were "notified". The aim is to curb illegal imports by making it harder to dispose of them within India.
Who Does This Apply To?
This section applies to any person acquiring notified goods in India after the notified date, except when acquired by gift or succession from another individual within India. It primarily targets individuals and businesses involved in the purchase of specified goods, particularly from sources other than established dealers. The rules don't apply if you inherit goods, or receive them as a gift from another person living in India.
How It Works
The mechanism of Section 11D involves two key requirements that must be fulfilled when acquiring notified goods:
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Documentary Evidence: The goods must be accompanied by specific documents.
- (a) Either the voucher referred to in section 11F (relating to goods purchased from specific entities) or the memorandum referred to in sub-section (2) of section 11G (relating to certain duty-free shops) must accompany the goods.
- (b) Alternatively, if the person acquiring the goods imported them directly, they must possess evidence showing clearance of such goods by the Customs Authorities. This would typically be the bill of entry or other import documentation.
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Reasonable Steps for Due Diligence: If acquiring the goods from someone other than a dealer with a fixed place of business, the acquirer must take reasonable steps to ensure that the goods were not illegally imported. The specific steps considered "reasonable" are to be specified by rules made under the Act. These may include verifying the seller's credentials, inspecting the goods for signs of tampering, or checking for any red flags that might indicate illegal importation. The acquirer is only required to act in a "reasonable" manner.
Important Conditions & Exceptions
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Condition 1: The section only applies to notified goods after the specific date the goods were "notified" under the Act. What goods are considered "notified" would be specified elsewhere under the Customs Act.
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Condition 2: The documentary requirements differ depending on the source of the goods (purchase from a registered entity versus direct import).
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Exception: Acquisitions through gift or succession from another individual in India are specifically excluded. This exception exists presumably because such transfers are unlikely to be for commercial purposes and therefore present a lower risk of supporting illegal imports.
Practical Example
ABC Traders, a small business, purchases gold jewellery (assume this is a notified good) from Mr. X, a local artisan who doesn’t have a fixed place of business. To comply with Section 11D, ABC Traders must take reasonable steps to ensure the gold was not illegally imported. They should:
- Ask Mr. X where he acquired the gold. If he bought it from a registered dealer, ABC Traders should obtain a copy of the dealer's invoice.
- If Mr. X states he inherited the gold, ABC Traders should ask for some documentation to support that claim.
- If suspicions persist, ABC Traders should consider obtaining a declaration from Mr. X stating that the gold was legally acquired and not illegally imported.
Failing to do so could expose ABC Traders to potential penalties if the gold is later found to be illegally imported.
Key Amendments
No major amendments since enactment.
No case laws found for this provision yet.
Browse all case laws →Frequently Asked Questions
What are 'notified goods' under Section 11D of the Customs Act, 1962, and how do I know if this section applies to a transaction I am considering?
'Notified goods' are goods specifically designated by the government in official notifications. Section 11D applies if you are acquiring these notified goods (excluding gifts or inheritance) after the notification date. To determine if it applies, check the official notifications issued by the Central Government to see if the goods you intend to acquire are listed as 'notified goods'.
What documentation am I required to have when acquiring notified goods under Section 11D of the Customs Act, 1962?
According to Section 11D(i), you must have either the voucher referred to in section 11F, the memorandum referred to in section 11G(2), or evidence showing customs clearance if the goods were imported by the person you are acquiring them from. These documents prove the legal origin and import status of the notified goods.
What 'reasonable steps' must I take to ensure the acquired notified goods are not illegally imported, as required by Section 11D(ii)?
Section 11D(ii) mandates you take reasonable steps to verify the legality of the goods if you are acquiring them from someone who isn't a dealer with a fixed place of business. The specific 'reasonable steps' are detailed in rules made under the Customs Act. Consult these rules for specific actions, such as checking the supplier's import documentation or conducting due diligence on their business operations, to avoid acquiring illegally imported goods.
If I acquire notified goods without the proper documentation or without taking reasonable steps as per Section 11D, what are the potential consequences?
Failure to comply with Section 11D could lead to penalties, seizure of the goods, and potential legal action under the Customs Act, 1962. The exact penalties would depend on the specific circumstances of the violation, including the value of the goods and the intent behind the non-compliance, as determined by customs authorities.
Does Section 11D apply to gifts or inheritances of notified goods?
No, Section 11D specifically excludes acquisitions of notified goods received as gifts or through succession (inheritance) from any other individual in India. The obligations regarding documentation and reasonable steps do not apply in these cases, making the acquisition process for gifted or inherited notified goods simpler.
I imported the notified goods myself. What evidence of customs clearance is sufficient to comply with Section 11D if I subsequently sell those goods?
Acceptable evidence of customs clearance includes the Bill of Entry, which contains details of the imported goods, duty paid, and clearance date. Additionally, any other documents issued by Customs Authorities confirming legal importation, such as assessment orders or release orders, can serve as valid proof under Section 11D(i)(b).
How frequently are 'notified goods' lists updated, and where can I find the most current list to ensure compliance with Section 11D?
The lists of 'notified goods' are updated periodically through official notifications issued by the Central Government. The most reliable source for the current list is the Central Board of Indirect Taxes and Customs (CBIC) website, where all relevant notifications and circulars related to customs regulations are published. Regularly checking the CBIC website helps ensure up-to-date compliance with Section 11D.
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Acquisition restriction after 'notified date' | No person can acquire notified goods after the date specified in a notification, except through gift or succession. |
| Voucher/Memorandum or import clearance evidence required | Acquired notified goods must be accompanied by a valid voucher (Sec 11F), memorandum (Sec 11G(2)), or proof of customs clearance if imported directly. |
| Due diligence required when acquiring from non-dealers | If acquiring notified goods from someone without a fixed place of business, reasonable steps, as per relevant rules, must be taken to ensure goods are not illegally imported. |
| Exception: Gift or succession | Acquisition of notified goods is permitted if it is through a gift or inheritance from another individual within India. |
| Applicability limited to 'notified goods' | Section 11D applies only to goods that have been specifically identified and notified by the government. |
| Focus is on legality of import | The primary concern is ensuring that the acquired goods have not been illegally imported into India. |
Amendment History
No amendment records available for this provision.
Customs Act, 1962 Section 11d — Precautions to be taken by persons acquiring notified goods