Trade Facilitation During Maritime Disruptions: A Legal Analysis of Circular No. 09/2026-Customs and Circular No. 10/2026-Customs Issued Under Section 143AA of the Customs Act, 1962

Trade Facilitation During Maritime Disruptions: A Legal Analysis of Circular No. 09/2026-Customs and Circular No. 10/2026-Customs Issued Under Section 143AA of the Customs Act, 1962

Abstract

Global trade is highly vulnerable to geopolitical disruptions affecting critical maritime routes. The closure of the Strait of Hormuz, one of the worlds most strategic shipping corridors, created unprecedented disruptions in international maritime logistics, affecting vessels carrying export cargo from India. Several vessels that had departed from Indian ports were compelled to return to Indian territorial waters without reaching their intended destinations, thereby creating complex regulatory and procedural challenges under the Customs Act, 1962.

In response to these exceptional circumstances, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 09/2026-Customs dated 08 March 2026 and Circular No. 10/2026-Customs dated 10 March 2026. Both circulars were issued in exercise of powers conferred under Section 143AA of the Customs Act, 1962, and are aimed at providing procedural simplification and regulatory relief to exporters affected by maritime disruptions.

Circular No. 09/2026-Customs prescribes procedures for the handling of export cargo returning to Indian ports due to the closure of the Strait of Hormuz, while Circular No. 10/2026-Customs provides waiver of fees for amendment or cancellation of export documents in force majeure situations.

This article undertakes a comprehensive legal and procedural analysis of these circulars, examining their statutory basis, operational framework, implications for exporters and customs administration, and their role in strengthening India's trade facilitation mechanisms during extraordinary disruptions in global supply chains.

1. Introduction

International trade is intrinsically dependent on the uninterrupted functioning of global transport networks. Maritime shipping routes, particularly strategic chokepoints, play a vital role in facilitating the movement of goods across continents. Disruptions in these routes can significantly affect global trade flows, supply chains, and export logistics.

The Strait of Hormuz is one of the most critical maritime chokepoints in the world, connecting the Persian Gulf with the Arabian Sea and serving as a major transit route for global energy supplies and commercial cargo. Any disruption in this strategic waterway inevitably has cascading effects on global maritime logistics.

The closure or operational disruption of the Strait of Hormuz resulted in significant uncertainty for vessels transporting export cargo from Indian ports. Shipping lines were compelled to cancel sailings, alter routes, or return vessels to their ports of origin. Consequently, cargo that had already been loaded for export could not reach its destination ports and was required to be brought back to India.

Under normal customs procedures, such situations create multiple regulatory complications, including:

• Filing of manifests for returning vessels,
• Treatment of export cargo that has technically left Indian territorial waters,
• Cancellation or amendment of shipping bills,
• Handling of export incentives such as duty drawback or IGST refund, and
• Levy of statutory fees for amendment or cancellation of customs documents.

Recognizing the exceptional nature of the situation, the CBIC introduced a series of temporary procedural relaxations through Circular No. 09/2026-Customs and Circular No. 10/2026-Customs.

These circulars represent an important example of responsive customs administration, aimed at facilitating trade while preserving regulatory oversight and revenue safeguards.

2. Statutory Framework: Section 143AA of the Customs Act, 1962

Both circulars derive their legal authority from Section 143AA of the Customs Act, 1962, which empowers the Board to prescribe procedures for import and export processes.

Section 143AA authorizes the Board to:

• Specify the manner of processing of import or export documents,
• Provide for digital or simplified procedures,
• Introduce operational measures for trade facilitation.

The provision was introduced as part of broader reforms aimed at modernizing customs administration and facilitating ease of doing business in international trade.

In the present case, CBIC invoked this provision to introduce procedural relaxations addressing the operational difficulties faced by exporters due to disruptions in maritime shipping routes.

By invoking Section 143AA, the Board ensured that these procedural relaxations possess clear statutory backing and can be implemented uniformly across customs formations.

3. Circular No. 09/2026-Customs: Procedure for Handling Returning Export Cargo

Circular No. 09/2026-Customs addresses a unique logistical challenge: vessels carrying export cargo from India being compelled to return to Indian ports due to disruptions in maritime routes.

The circular prescribes a simplified procedural framework to handle such cargo efficiently while preventing misuse of export incentive schemes.

A key condition stipulated in the circular is that vessels returning with export cargo should normally berth at the same Indian port from which they originally departed, except in cases involving transshipment cargo.

The circular categorizes situations into three operational scenarios based on the status of the vessel and its voyage.

3.1 Scenario I: Vessel Within Indian Territorial Waters Without Filing EGM/SDM

The first scenario covers cases where the vessel:

• Has not crossed Indian territorial waters, and
• The Export General Manifest (EGM) or Shipping Departure Manifest (SDM) has not been filed.

In such cases, the procedure is simplified considerably.

The master or captain of the vessel is required to submit an undertaking confirming that the vessel has not crossed Indian territorial waters. Based on this undertaking, the vessel may be permitted to berth without filing a Sea Arrival Manifest (SAM), provided it has not called at any foreign port.

Containers may be offloaded at the port terminal without filing a Bill of Entry, subject to verification of the relevant shipping documents.

Customs officers must verify:

• Container particulars against the corresponding Shipping Bills,
• Integrity of container seals,
• Consistency of seal numbers with those declared in export documentation.

Where container seals are found tampered or not intact, the cargo must be subjected to 100 percent examination to prevent potential misuse or diversion.

The proper officer must also ensure cancellation of the Shipping Bills and the Let Export Order (LEO). Where exporters request, the cargo may be permitted to return to the domestic market under the Back-to-Town facility.

3.2 Scenario II: Vessel Returning After Filing EGM/SDM or After Crossing Territorial Waters Without Calling Foreign Ports

The second scenario covers situations where:

• EGM or SDM has already been filed, or
• The vessel has crossed Indian territorial waters but returns without calling at any foreign port.

In such cases, the vessel may still be permitted to berth without filing a Sea Arrival Manifest, provided that it had earlier departed from an Indian port and has not called at any foreign port.

Containers may be offloaded without filing a Bill of Entry, subject to verification of shipping documents and container details.

A key feature introduced in this circular is the development of a new system functionality in the ICES system to allow post-EGM cancellation of Shipping Bills.

This system will ensure that export incentives such as IGST refund or duty drawback are not disbursed where the export has effectively not taken place.

Additionally, the details of cancelled Shipping Bills will be shared with regulatory authorities such as the Reserve Bank of India (RBI) and the Directorate General of Foreign Trade (DGFT) through the ICEGATE platform.

Until the new system is operational, customs formations are required to maintain manual records and subsequently upload the details once the system becomes functional.

3.3 Scenario III: Vessel Returning After Calling a Foreign Port Without Cargo Discharge

The third scenario addresses cases where a vessel:

• Has called at a foreign port, but
• Has not discharged any containers.

In such cases, the cargo is legally considered to have been exported out of India, since it has crossed territorial waters and entered foreign port jurisdiction.

Accordingly, the shipping line must file a Sea Arrival Manifest (SAM) upon the vessel's return.

The subsequent procedures relating to container verification, documentation, and regulatory compliance follow the framework applicable to returning vessels under the circular.

4. Safeguarding Export Incentive Schemes

A critical aspect addressed in Circular No. 09/2026-Customs is the potential misuse or incorrect disbursement of export incentives.

Export incentive schemes such as:

• IGST refunds on exports,
• Duty drawback,
• Remission-based benefits,

are contingent upon the actual export of goods out of India.

Where export consignments return to India without reaching their destination ports, it becomes necessary to ensure that incentives are not improperly granted.

The circular therefore directs field formations to recover export incentives that may already have been disbursed. Such recovery may initially be undertaken manually until the automated system functionality for cancellation of Shipping Bills becomes operational.

5. Circular No. 10/2026-Customs: Waiver of Fees for Amendment or Cancellation of Export Documents

While Circular No. 09/2026-Customs addresses the operational handling of returning export cargo, Circular No. 10/2026-Customs addresses the financial implications faced by exporters.

Under the Levy of Fees (Customs Documents) Regulations, 1970, fees are normally levied for the amendment or cancellation of customs documents, including Shipping Bills.

In the context of the current maritime disruptions, exporters were compelled to amend or cancel export documents due to circumstances beyond their control.

Recognizing this, the Board clarified that where amendment or cancellation of export documents becomes necessary solely due to force majeure circumstances, the proper officer may allow such amendment or cancellation without insisting on payment of the prescribed fee.

6. Scope of Force Majeure Circumstances

The circular identifies several situations that may qualify as force majeure for the purposes of granting fee waiver.

These include:

• Cancellation or non-operation of flights,
• Withdrawal or rescheduling of vessels,
• Suspension of cargo services by carriers,
• Operational disruptions at ports or airports,
• Natural disasters,
• Government-mandated restrictions affecting transport operations.

The key principle underlying the waiver is that the amendment or cancellation should not arise due to any error or omission on the part of the exporter or customs broker.

7. Procedure for Grant of Fee Waiver

Exporters or their authorized customs brokers must submit a request to the jurisdictional Deputy Commissioner or Assistant Commissioner of Customs.

The request must be supported by documentary evidence such as:

• Communications from shipping lines or airlines,
• Official notices from ports or airports,
• Any other documentation demonstrating that the amendment or cancellation arises from circumstances beyond the exporter's control.

Upon verification, the proper officer may grant the waiver of fees.

The circular also clarifies that these instructions apply across all customs stations, including:

• Sea ports,
• Air cargo complexes,
• Inland Container Depots (ICDs),
• Container Freight Stations (CFSs).

8. Temporal Validity of the Relaxations

Both circulars specify that the relaxations introduced therein will remain in force for a period of fifteen days from the date of issuance.

This limited duration indicates that the measures are intended as temporary relief in response to extraordinary circumstances.

However, depending on the evolving geopolitical situation and trade disruptions, the Board may extend or modify these measures as necessary.

9. Significance for Customs Administration and Trade Facilitation

The issuance of these circulars highlights several important aspects of modern customs administration.

First, they demonstrate the capacity of the regulatory framework to adapt rapidly to unforeseen global disruptions.

Second, they illustrate the increasing use of Section 143AA as a tool for procedural flexibility and trade facilitation.

Third, they reflect a balanced approach that protects exporters from undue financial or procedural burdens while ensuring that revenue safeguards and compliance mechanisms remain intact.

These measures also align with India's broader objective of improving its ranking in global trade facilitation indices and strengthening the ease of doing business for exporters.

10. Conclusion

The closure of the Strait of Hormuz created unprecedented disruptions in global maritime logistics, directly affecting vessels carrying export cargo from India. In response, the Central Board of Indirect Taxes and Customs issued Circular No. 09/2026-Customs and Circular No. 10/2026-Customs to provide procedural clarity and financial relief to exporters facing exceptional circumstances.

Circular No. 09/2026-Customs establishes a structured framework for handling returning export cargo while ensuring that export incentives are not misused. Circular No. 10/2026-Customs complements this framework by waiving fees for amendment or cancellation of export documents where such actions are necessitated by force majeure events.

Together, these circulars represent a pragmatic and legally sound approach to managing disruptions in international trade. They reinforce the role of customs administration as not merely a regulatory authority but also a facilitator of legitimate trade.

As global supply chains continue to face uncertainties arising from geopolitical tensions, climate events, and logistical disruptions, such responsive regulatory measures will play an increasingly important role in maintaining the stability and resilience of international trade operations.

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