Customs Act, 1962 Section 151b — Reciprocal arrangement for exchange of information facilitating trade
Customs Act, 1962 · Reciprocal arrangement for exchange of information facilitating trade
Plain-English Explanation
Overview
Section 151B of the Customs Act, 1962 enables the Indian Central Government to enter into agreements with foreign governments for exchange of information to facilitate trade, enforce customs laws, and prevent offenses. This section enhances cooperation between countries to streamline trade and combat customs-related crimes.
Who Does This Apply To?
This section primarily impacts the following:
- Importers and Exporters: Facilitation of trade translates to smoother customs procedures for legitimate businesses.
- Customs Authorities: Provides a legal framework for international cooperation and information exchange.
- Investigation Agencies: Allows use of foreign intelligence in customs investigations.
How It Works
Here's a breakdown of the process:
- Government Agreement: The Central Government enters into agreements or arrangements with foreign governments or their competent authorities. The agreement focuses on:
- Trade facilitation: Reducing bottlenecks and streamlining processes.
- Enforcement of customs laws: Sharing intelligence to prevent illegal activities.
- Effective risk analysis: Identifying high-risk shipments and traders.
- Verification of compliance: Ensuring adherence to customs regulations.
- Prevention, combating, and investigation of offences: Cooperation in cases involving customs violations.
- Notification: The Central Government issues a notification specifying the countries (contracting States) to which the provisions of Section 151B will apply. This notification may include conditions, exceptions, or qualifications.
- Information Exchange: Information is exchanged between India and the contracting State as outlined in the agreement. This includes data related to shipments, valuations, and identities of traders.
- Use of Information: Information received can be used as evidence in investigations and proceedings under the Customs Act, subject to sub-section (2).
- Multilateral Agreements: For multilateral agreements focused on compliance verification, the Central Board of Indirect Taxes and Customs (CBIC) specifies the exchange procedure, conditions, and designated personnel.
Important Conditions & Exceptions
- Condition 1: The agreements must be entered into with the government or competent authorities of a country outside India.
- Condition 2: The application of this section to a specific contracting State is contingent upon a notification issued by the Central Government.
- Exception: Actions taken under agreements made before the enactment of the Finance Act, 2018 (assent of the President) are validated as if taken under this section.
Practical Example
A large garment exporter in Tirupur, India regularly ships consignments to a distributor in the United States. The Indian Customs authorities suspect under-invoicing to avoid customs duties. Under Section 151B, based on an existing reciprocal agreement, they request information from US Customs regarding the declared import value and any discrepancies found during US Customs inspections. US Customs provides documentation that reveals a significantly higher value declared by the US importer, leading to an investigation and recovery of evaded duties in India.
Key Amendments
No major amendments since enactment.
No case laws found for this provision yet.
Browse all case laws →Frequently Asked Questions
What is the purpose of Section 151B of the Customs Act, 1962?
Section 151B facilitates trade by allowing the Central Government to enter into agreements with foreign governments for the exchange of information. This exchange aims to enforce the Customs Act, analyze risks effectively, verify compliance, and prevent/combat offenses both in India and the partner country, ultimately streamlining trade processes.
With which entities can the Central Government enter into reciprocal arrangements under Section 151B?
Under Section 151B(1), the Central Government can enter into agreements or arrangements with the government of any country outside India, or with the competent authorities of that country. The arrangements must be deemed appropriate for facilitating trade and enforcing customs laws.
How does Section 151B impact investigations and proceedings under the Customs Act, 1962?
Information received through reciprocal arrangements under Section 151B(1) can be used as evidence in investigations and proceedings under the Customs Act, 1962, as stated in Section 151B(3). This strengthens the investigative power of customs authorities.
What is a 'contracting State' as defined in Section 151B, and how does it relate to the applicability of the section?
According to the explanation in Section 151B, a 'contracting State' is any country outside India with which the Central Government has an agreement or arrangement for information exchange. Section 151B(2) allows the Central Government to notify the applicability of the section's provisions to such contracting states, potentially with specific conditions, exceptions, or qualifications.
What happens to agreements entered into before the Finance Bill, 2018 received presidential assent, concerning information exchange?
Section 151B(5) provides a validation clause, stating that any actions taken under agreements entered into before the Finance Bill, 2018 received presidential assent are deemed to have been done under the provisions of this section. This provides legal backing to existing arrangements.
How are multilateral agreements for information exchange handled under Section 151B?
When the Central Government enters into a multilateral agreement for information exchange to verify compliance, Section 151B(4) mandates the Central Board of Indirect Taxes and Customs (CBIC) to specify the procedure for such exchange. This includes conditions and the designation of the person through whom information will be exchanged.
Can Section 151B be used to enforce laws other than the Customs Act, 1962?
Yes, Section 151B(1) allows for the exchange of information to combat offences under the corresponding laws in force in the contracting country. 'Corresponding law' is defined as any law in the contracting state that corresponds to the Customs Act or deals with offenses similar to those under the Customs Act.
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Agreement with foreign government required | The Central Government must enter into an agreement or arrangement with a foreign government or its competent authorities. |
| Purpose of the agreement | The agreement aims to facilitate trade, enforce Customs Act provisions, and exchange information for trade facilitation, risk analysis, compliance verification, and prevention/investigation of offences. |
| Notification requirement for application | The Central Government must issue a notification to apply the provisions of this section to a contracting state, potentially with conditions, exceptions, or qualifications. |
| Use of information as evidence | Subject to conditions, information received under the agreement can be used as evidence in investigations and proceedings under the Customs Act. |
| Multilateral agreement procedure | For multilateral agreements, the Board specifies procedures for information exchange, including conditions and designated persons. |
| Retrospective validation of prior arrangements | Actions taken under agreements made before the Finance Bill 2018's assent are deemed valid under this section. |
| Definition of 'contracting state' | A 'contracting state' is any country outside India with which an agreement or arrangement has been made. |
| Definition of 'corresponding law' | 'Corresponding law' means a law in the contracting state equivalent to the Customs Act or dealing with similar offences. |
Amendment History
Inserted by section 98 (w.e.f. 29-3-2018) of the Finance Act, 2018 (13 of 2018). *29th March, 2018