Prohibition of the Import and Export of Goods

Introduction

The import and export of goods in India are governed primarily by the Customs Act, 1962, the Foreign Trade (Development and Regulation) Act, 1992, and the Foreign Trade Policy issued by the Central Government. Although most goods may be imported or exported subject to applicable duties and procedures, certain goods may be prohibited or restricted in the public interest.

Power of the Central Government

Section 11 of the Customs Act, 1962, empowers the Central Government to prohibit, through a notification in the Official Gazette, the import or export of goods of any specified description.

A prohibition may be:

• Absolute, meaning the goods cannot be imported or exported under any circumstances; or
• Conditional, meaning the goods may be imported or exported only when prescribed conditions are satisfied.

These conditions may be required to be fulfilled before or after the clearance of the goods.

Purposes of Prohibition

Under Section 11(2), prohibitions may be imposed for the following purposes:

1. Maintaining the security of India.
2. Maintaining public order and standards of decency or morality.
3. Preventing smuggling.
4. Preventing shortages of goods of any description.
5. Conserving foreign exchange and safeguarding the balance of payments.
6. Preventing injury to the country's economy caused by the uncontrolled import or export of gold, silver, or any other goods.
7. Preventing a surplus of agricultural or fishery products.
8. Maintaining standards for the classification, grading, or marketing of goods in international trade.
9. Establishing any industry.
10. Preventing serious injury to domestic production of any description.
11. Protecting human, animal, or plant life or health.
12. Protecting national treasures of artistic, historical, or archaeological value.
13. Conserving exhaustible natural resources.
14. Protecting patents, trademarks, copyrights, designs, and geographical indications.
15. Preventing deceptive practices.
16. Enabling the State, or a corporation owned or controlled by the State, to carry on foreign trade in any goods to the complete or partial exclusion of Indian citizens.
17. Fulfilling obligations under the Charter of the United Nations for the maintenance of international peace and security.
18. Implementing any treaty, agreement, or convention with any country.
19. Ensuring that imported goods comply with laws applicable to similar goods manufactured or produced in India.
20. Preventing the dissemination of documents containing material that is likely to prejudicially affect friendly relations with a foreign state or that is derogatory to national prestige.
21. Preventing the contravention of any law currently in force.
22. Serving any other purpose conducive to the interests of the general public.

Meaning of "Prohibited Goods"

Section 2(33) of the Customs Act defines prohibited goods as goods whose import or export is prohibited under the Customs Act or any other law currently in force.

However, goods subject to conditions are not treated as prohibited goods when all the prescribed conditions have been fulfilled. Therefore, the expression covers both:

• Goods that are absolutely prohibited; and
• Restricted goods imported or exported without complying with the applicable conditions.

Difference Between Prohibited and Restricted Goods

Prohibited goods

These goods cannot ordinarily be imported into or exported from India. Examples may include counterfeit currency, certain narcotic substances, and goods that threaten national security or public safety.

Restricted goods

These goods may be imported or exported only after obtaining the required license, authorization, permit, or clearance from the competent authority. The importer or exporter must comply with all conditions attached to the authorization.

Freely importable or exportable goods

These goods generally do not require a special license. Nevertheless, the importer or exporter must comply with customs procedures, duty payments, product standards, labeling requirements, and other applicable laws.

Authorities Responsible for Regulation

The Central Government issues prohibition notifications under Section 11 of the Customs Act. Customs authorities enforce these prohibitions at ports, airports, land customs stations, and other customs areas.

The Directorate General of Foreign Trade also classifies goods under the Indian Trade Classification (Harmonised System), or ITC (HS), as:

• Free;
• Restricted;
• Prohibited; or
• Subject to exclusive trading through State Trading Enterprises.

Other regulatory authorities may also prescribe conditions relating to food safety, drugs, plants, animals, wildlife, hazardous materials, telecommunications equipment, and product standards.

Consequences of Contravention

Importing or exporting prohibited or restricted goods in violation of the applicable law may result in:

1. Detention or seizure of the goods.
2. Confiscation of improperly imported goods under Section 111 of the Customs Act.
3. Confiscation of goods improperly attempted to be exported under Section 113.
4. Monetary penalties under Sections 112 or 114, as applicable.
5. Imposition of a redemption fine in lieu of confiscation, where permitted, under Section 125.
6. Suspension or cancellation of licences or authorisations.
7. Prosecution and imprisonment in serious cases under Section 135.
8. Action under other applicable laws in addition to the Customs Act.

The consequences depend on the nature of the goods, the applicable prohibition, the value of the goods, and the circumstances of the violation. Absolutely prohibited goods may not be eligible for release on payment of a redemption fine.

Compliance Requirements

Before importing or exporting goods, a trader should:

• Check the applicable ITC (HS) classification.
• Confirm whether the goods are free, restricted, prohibited, or subject to State Trading Enterprise requirements.
• Review relevant customs and foreign-trade notifications.
• Obtain all necessary licenses, permits, certificates, and no-objection certificates.
• Comply with labeling, packaging, quality, safety, and technical standards.
• Declare the goods accurately in the bill of entry or shipping bill.
• Retain documents establishing compliance with all applicable conditions.

Conclusion

The power to prohibit or restrict imports and exports is intended to protect India's security, economy, public health, environment, cultural heritage, domestic industries, and international obligations. Importers and exporters must verify the current legal status of goods before entering into a transaction because restrictions and government notifications may change from time to time.

Note: This article provides a general overview. Current statutory provisions, judicial decisions, Foreign Trade Policy requirements, and government notifications should be checked before relying on it for legal or commercial purposes.