BUDGETARY CHANGES IN CUSTOMS

Budget for the year 2026-27 was presented before the Lok Sabha by the Finance Minister on 01.02.2026.  Finance Bill, 2026 was introduced by the Finance Minister.  The said Bill brought many changes in the Customs Act, 1962.  In this article we may discuss about the changes in the Customs Act (‘Act’ for short) by the Finance Bill.

Amendment to Section 1

Section 1(2) of the Act provides that the Act extends to whole of India.  Clause 129 of the Bill further extended the Act to the fishing and fishing related activities by Indian-flagged fishing vessels beyond territorial waters of India.

Indian flagged fishing vessels

Clause 130 of the Bill inserted a new section 2(28A).  The already existing sub-section 2(28A) is re-numbered as 2(28B).  The expression ‘Indian flagged fishing vessels’ is defined as a vessel which is used or intended to be used for the purpose of fishing in the seas and entitled to fly the flag of India.

Amendment of Section 28

Section 28 of the Act provides for the recovery of customs duty not levied or not paid or short levied or short paid or erroneously refunded.  Section 28(6) (i) of the Act provides that where the importer or the exporter or the agent or the employee of the importer or the exporter, as the case may be, has paid duty with interest and penalty under sub-section (5), the proper officer shall determine the amount of duty or interest and on determination, if the proper officer is of the opinion that  that the duty with interest and penalty has been paid in full, then, the proceedings in respect of such person or other persons to whom the notice is served under sub-section (1) or sub-section (4), shall, without prejudice to the provisions of sections 135, 135A and 140be deemed to be conclusive as to the matters stated therein. 

Clause 131 of the Bill substituted the words “, be deemed to be conclusive as to the matters stated therein and penalty so paid under sub-section (5), on determination under this sub-section, shall also be deemed to be a charge for non-payment of duty” for the words ‘be deemed to be conclusive as to the matters stated therein’ in Section 28(6)(i).

Amendment to Section 28J

Section 28J of the Act provides for the application of Advance Ruling.  Section 28J (2) of the Act provides that the advance ruling given under the Act is valid for 3 years.  Clause 132 of the Bill extended the said period from 3 years to 5 years. 

Clause 132(b) of the bill substitutes a new proviso for the existing proviso.  The newly inserted proviso provides that in respect of any advance ruling in force on the date on which the Finance Bill, 2026 receives the assent of the President, the Authority shall, upon a request by the applicant, extend the validity for five years from the date of the ruling.

New Section 56A

Clause 133 of the Bill proposed to insert  a new Section 56A which provides free of duty for Indian flagged fishing vessel beyond territorial waters of India.

The newly inserted Section 56A (1) provides that notwithstanding anything contained in this Act or in any other law for the time being in force, fish harvested by an Indian-flagged fishing vessel beyond territorial waters of India,-

1. may be brought into India free of duty;
2. that has landed at foreign port may be treated as export of goods,

in such manner and subject to such conditions as may be provided by rules.

Section 56A(2) provides that the Board may make regulations providing for the form and manner of making an entry in respect of fish harvested including its declaration, custody, examination, assessment of duty, clearance, transit or transhipment. 

Amendment to section 67

The existing section 67 of the Act provides that the owner of any warehoused goods may, with the permission of the proper officer, remove them from one warehouse to another, subject to such conditions as may be prescribed for the due arrival of the warehoused goods at the warehouse to which removal is permitted.

Clause 134 of the Bill substituted a new provision for the existing one.  According to the new section the owner of any warehoused goods may remove them from one warehouse to another, subject to such conditions as may be prescribed.  The amendment dispenses with the permission of the proper officer to be obtained for the removal of warehoused goods from one warehouse to another warehouse.

Amendment to section 84

Section 84 of the Act gives powers to Board for make regulations regarding goods imported or to be exported by post or courier.  The said section provides that the Board may make regulations providing for –

1. the form and manner in which an entry may be made in respect of goods imported or to be exported by post or courier;
2. the examination, assessment to duty, and clearance of goods imported or to be exported by post or courier;
3.  the transit or transhipment of goods imported by post or courier, from one customs station to another or to a place outside India.

Clause 135 of the Bill substituted the words ‘the custody, examination’ for the words the examination.