Importer’s Compliance Risk Under Section 111 of Customs Act
When importing goods into India, the responsibility doesn’t end with shipping. Importer’s compliance risk extends deep into documentation, classification, and truthfulness of declarations. The Customs Act, 1962 — especially Section 111 — gives customs officers strong powers to confiscate improperly imported goods.
Let’s decode what that means for importers and how to avoid costly penalties.
What Does Section 111 of the Customs Act Say?
Section 111 of the Customs Act, 1962 deals with confiscation of improperly imported goods. If any goods violate customs procedures or are misdeclared, undervalued, or restricted without permission, they can be seized and confiscated.
Common reasons for confiscation under Section 111:
- Wrong declaration of quantity, weight, or description
- Undervaluation to avoid customs duty
- Restricted/prohibited goods imported without valid license
- Goods imported through fraud or misrepresentation
- Non-compliance with FSSAI, BIS, or other regulatory approvals
Key Legal Interpretations
Recent judicial decisions clarify that even if the importer was unaware of the misdeclaration or error, they are still liable.
Example:
In Collector of Customs v. Sanjay Chandiram (SC AIR 1995 SC 1373), the Supreme Court held that intent is not necessary for confiscation. The moment goods fall within the scope of Section 111, they can be confiscated.
Who Is Responsible — Importer or Agent?
Many importers argue that errors were caused by Customs House Agents (CHA). But courts have repeatedly held that importers are ultimately responsible, even if the CHA makes a mistake.
Expert Tip:
Always cross-verify bills of entry, HS codes, invoice details, and licensing requirements. Don’t blindly sign what the agent prepares.
Checklist to Avoid Confiscation
| Compliance Requirement | What You Must Do |
|---|---|
| Correct Classification (HS Code) | Match HS codes with DGFT & CBIC notifications |
| True & Complete Invoices | Ensure accurate pricing, product name, country of origin |
| Import Licenses | Obtain and attach required licenses for restricted goods |
| Valuation Under Customs Rules | Don’t suppress price to save duty — it may backfire |
| Pre-import Approvals (FSSAI, BIS) | Ensure certifications are obtained before clearance |
Relevant Legal References
- Section 111, Customs Act, 1962
- Customs Valuation Rules
- DGFT Policy & Licensing Handbook
- Aban Exports v. Commissioner of Customs (2021) — Madras HC clarified that misdeclaration by CHA doesn’t exempt importer from liability.
Efiletax Expert View
“Customs compliance is not just about clearing goods — it’s about safeguarding your business from seizure and penalties. We always advise clients to maintain full transparency and documentation when importing.”
– Efiletax Legal & Compliance Team
FAQ – Importer’s Compliance & Section 111
Q1. Can goods be confiscated even if I paid duty?
Yes. If the import is illegal or misdeclared, duty payment doesn’t protect you from confiscation.
Q2. What happens after confiscation?
You may face redemption fines, penalties, or even prosecution under Section 135 of the Customs Act.
Q3. Can I blame the CHA for errors?
No. The importer is legally responsible for the correctness of all declarations.
Summary
Importer’s compliance risk under Section 111 goes beyond paperwork. Even unintentional misdeclaration can lead to confiscation. This blog explains how to stay compliant and avoid heavy penalties.
Final Word:
Don’t let compliance errors sink your business. Efiletax helps importers with customs classification, valuation checks, and legal support.