Customs Duty on Baggage refers to the tax levied on goods carried by international passengers when arriving in India. The duty is applicable based on the Customs Act, 1962 and the Baggage Rules, 2016, which outline the exemptions, duty rates, and conditions for dutiable goods.
Table of Contents
- Introduction
- Applicable Customs Duty on Baggage
- Valuation of Baggage
- Baggage Fully Exempt or Subject to Concessional Duty
- Export Certificate for Returning Baggage
1. Introduction
India’s customs regulations for baggage are well-defined, catering to the prevalent demand for foreign goods such as electronics, white goods, liquor, and perfumes. Under Section 2(3) of the Customs Act, baggage includes ‘unaccompanied baggage’ but excludes motor vehicles. This ensures that baggage regulations apply even to items sent separately before or after a traveller’s departure.
To streamline procedures, the New Baggage Rules, 2016, have been in effect since 01-04-2016. These rules govern customs duties on baggage brought in by passengers or crew members.
2. Applicable Customs Duty on Baggage
2.1 General Rate on Baggage
Baggage is classified under Chapter 9803 of the Customs Tariff, regardless of its actual classification under the Customs Tariff. The relevant entry is described as ‘All dutiable articles, imported by a passenger or member of the crew in his baggage’. The tariff rate is prescribed at 100%. However, as per Notification No. 26/2016-Cus dated 31-3-2016, the effective basic customs duty rate applicable from 1-3-2005 is 35%.
While baggage is exempt from Countervailing Duty (CVD), a Social Welfare Surcharge (SWS) of 10% is applicable. As a result, the total customs duty on baggage is 38.50% w.e.f. 2-2-2018, [earlier it was 36.05%].
This concessional rate is not applicable to:
- Firearms
- Firearm cartridges exceeding 50 in number
- Cigarettes, cigars, or tobacco exceeding the prescribed quantity allowed for duty-free import under the Baggage Rules
- Goods imported through courier services, as per para 2 of Notification No. 26/2016-Cus dated 31-3-2016, with corrections made on 2-4-2016.
2.2 Exemption for Laptop Computers
A laptop computer (notebook computer) brought as baggage by a person over 18 years of age (excluding crew members) is fully exempt from customs duty, as per Notification No. 11/2004-Cus dated 8-1-2004.
A laptop is classified as a small, portable personal computer (‘PC’). A notebook computer is considered a type of laptop, as confirmed in CC v. Hewlett Packard India (Sales) P Ltd. (2007) 215 ELT 484 (SC). Additionally, a laptop is distinct from a desktop computer, as held in CC v. Acer India P Ltd. (2007) 218 ELT 17 (SC).
2.3 Duty Payable at Baggage Rate Despite Lower Tariff Duty
In Associated Cement Companies Ltd. v. CC (2001) AIR SCW 559 = 128 ELT 21 = 124 STC 59 (SC – Three Judge Bench), the Supreme Court held that if goods are brought as ‘baggage‘ they shall be classified under Chapter 9803, and the baggage duty rate shall apply, even if the applicable Customs Tariff rate is lower. However, if the Customs Tariff specifies a rate as ‘FREE‘ such goods do not fall within the definition of ‘dutiable goods’ under Section 2(14) of the Customs Act, thereby exempting them from customs duty. In the said case, technical drawings had a tariff rate of ‘FREE’ and were therefore allowed duty-free import, even when brought as baggage.
However, if the goods are ‘dutiable’ but are covered under an exemption notification, the above ruling may not apply. It was further held that baggage is classified under HS Code 9803.00, and any exemption applicable under other notifications is not available for goods imported as baggage. This principle was upheld in Ranjit Kumar Sarkar In re (2000) 115 ELT 850 (GOI) and reaffirmed in Prerna Textiles v. CC (2000) 117 ELT 241 (CEGAT). The Supreme Court later dismissed the civil appeal against this ruling, as reported in (2001) 134 ELT A169. These decisions remain valid when the Customs Tariff prescribes a duty rate but the goods are exempt under an exemption notification.
2.4 Relevant Date for Duty and Valuation
As per Section 78 of the Customs Act, the relevant date for determining the rate of duty and valuation for baggage is the date on which the declaration is made under Section 77 of the Customs Act.
3. Valuation of Baggage
In Naresh Lokumal Serai v. CC (2006) 203 ELT 580 (CESTAT), it was held that there are no separate provisions for the valuation of baggage, and hence, the general valuation rules apply. As baggage often consists of used items, valuation should be conducted based on the best judgment assessment.
It was also ruled that valuation cannot be based on internet prices or price tags affixed to the goods, as such prices are intended for domestic sale and not for export to India. Similarly, the price of similar goods in India cannot be taken as a basis for valuation. The Supreme Court upheld this ruling by dismissing the departmental appeal on 9-4-2009 (2010) 256 ELT A19.
4. Baggage Fully Exempt or Subject to Concessional Duty
The following baggage categories are fully exempt from customs duty as per Notification No. 49/1996-Cus dated 23-7-1996:
- Personal property re-imported
- Free replacement of private personal property under warranty
- Foodstuff up to Rs. 50,000
- Free gifts and donations to the Red Cross, CARE, or the Government of India for relief and rehabilitation
- Samples, price lists, prototypes, and commercial samples
- Goods brought for display, exhibition, or fairs, subject to specified conditions
- Agricultural products or goods manufactured/produced in Nepal
- Newspapers, drawings, designs, and other specified goods
Additionally, minor amounts of customs duty are exempt under Section 25(6) of the Customs Act, wherein customs duty is not payable if the total amount of duty is Rs. 100 or less.
4.1 Bona Fide Baggage Exempt from Duty
Section 79(1) of the Customs Act, exempts bona fide baggage of passenger meant for personal or family use. This includes wearing apparel, toiletries, and other personal effects necessary for travel.
5. Export Certificate for Returning Baggage
Individuals traveling abroad should obtain an Export Certificate while carrying out items such as jewelry or cameras etc. Failure to do so may result in customs duty being levied upon bringing the goods back into India. However, customs authorities generally do not require an Export Certificate for personal items such as small cameras or regularly worn jewelry.
In Rubeena Khalid v. CC (2001) 137 ELT 446 (CEGAT), it was held that a college student carrying a gold chain and six gold bangles (weighing a total of 135 grams) could not be deemed to be attempting smuggling.
In Pushpa Lakhumpal Tulani v. ACC (2008) 227 ELT 368 (Del HC – Division Bench), a wealthy woman returning with jewelry worth Rs. 25 lakhs (some used, some appearing new) was not found to have imported the jewelry with the intent to sell. The court ruled that these were ‘personal effects’ and could not be confiscated.
