A Brief Overview of ICDs/CFSs/AFS under Customs Act, 1962

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ICDs/CFSs/AFS under Customs Act 1962

The Indian Customs Department is responsible for regulating and controlling the import and export of goods into and out of the country. In order to facilitate the smooth movement of goods across borders, the customs department has set up various infrastructure facilities like Inland Container Depots (ICDs), Container Freight Stations (CFSs), and Air Freight Stations (AFS). These facilities provide necessary infrastructure, handling equipment, and storage facilities to importers and exporters for clearance of their goods. In this article, we will discuss the setting up of ICDs/CFSs/AFS under Customs Act 1962.

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Quick Look

Inland Container Depots (ICDs) are designated places where containers are stored for clearance by customs authorities. They are usually located in the interior regions of the country, away from the ports. Container Freight Stations (CFSs) are facilities where cargo is consolidated, deconsolidated, and temporarily stored before being transported to the final destination. Air Freight Stations (AFS) are facilities for handling and clearing of air cargo. Let us now move on to discuss them in brief.

What are ICDs?

ICD stands for Inland Container Depot, which is a facility designed for the handling and temporary storage of imported and exported goods. These depots are situated away from the seaport or airport and serve as a transit point for the cargo. The use of ICDs is beneficial for various reasons, such as reducing congestion at the ports, facilitating faster clearance of goods, and providing better security for the cargo.

Under the Customs Act, 1962, the use of ICDs is regulated by Section 45, which provides for the appointment of a person to be in charge of the depot. The section also specifies the procedure for the clearance of goods from the ICD, which involves the filing of a bill of entry and payment of customs duties. The use of ICDs has been instrumental in improving the efficiency of the customs clearance process, thereby reducing costs and improving overall trade facilitation.

What are CFSs?

CFS stands for Container Freight Station, which is a facility designed for the handling and temporary storage of cargo containers. These stations are situated near the seaports or airports and serve as a transit point for the cargo. The use of CFSs is beneficial for various reasons, such as reducing congestion at the ports, facilitating faster clearance of goods, and providing better security for the cargo.

Under the Customs Act, 1962, the use of CFSs is regulated by Section 45, which provides for the appointment of a person to be in charge of the station. The section also specifies the procedure for the clearance of goods from the CFS, which involves the filing of a bill of entry and payment of customs duties. The use of CFSs has been instrumental in improving the efficiency of the customs clearance process, thereby reducing costs and improving overall trade facilitation.

What are AFSs?

AFS stands for Air Freight Station, which is a facility designed for the handling and temporary storage of air cargo. These stations are situated near the airports and serve as a transit point for the cargo. The use of AFSs is beneficial for various reasons, such as reducing congestion at the airports, facilitating faster clearance of goods, and providing better security for the cargo.

Under the Customs Act, 1962, the use of AFSs is regulated by Section 45, which provides for the appointment of a person to be in charge of the station. The section also specifies the procedure for the clearance of goods from the AFS, which involves the filing of a bill of entry and payment of customs duties. The use of AFSs has been instrumental in improving the efficiency of the customs clearance process, thereby reducing costs and improving overall trade facilitation.

Role of ICDs/CFSs/AFS under Customs Act, 1962

The role of the ICDs/CFSs/AFS under Customs Act, 1962 are as follows:

  • Role of ICDs under the Customs Act, 1962: ICDs play a crucial role in the smooth functioning of customs procedures. They act as a nodal point for the clearance of imported and exported goods, and they help in the efficient movement of goods from one mode of transport to another. The Customs Act, 1962, provides for the establishment and regulation of ICDs. The customs authorities are responsible for the regulation and supervision of ICDs, and they ensure that all the necessary facilities are provided for the smooth clearance of goods.
  • Role of CFSs under the Customs Act, 1962: CFSs play a significant role in the customs procedures. They act as a hub for the consolidation and de-consolidation of cargo, and they provide all the necessary facilities required for customs clearance. The Customs Act, 1962, provides for the establishment and regulation of CFSs. The customs authorities are responsible for the regulation and supervision of CFSs, and they ensure that all the necessary facilities are provided for the smooth clearance of goods.
  • Role of AFSs under the Customs Act, 1962: AFSs play a crucial role in the customs procedures. They act as a hub for the handling, storage, and customs clearance of air cargo, and they provide all the necessary facilities required for the efficient clearance of air cargo. The Customs Act, 1962, provides for the establishment and regulation of AFSs. The customs authorities are responsible for the regulation and supervision of AFSs, and they ensure that all the necessary facilities are provided for the smooth clearance of air cargo.

Significance of ICDs/CFSs/AFSs under Customs Act, 1962

ICDs, CFSs, and AFSs play a crucial role in the smooth functioning of international trade. These facilities provide a range of services that are essential for the clearance and storage of goods that are imported or exported. Some of the key services that are offered by ICDs, CFSs, and AFSs include:

  • Customs Clearance: ICDs, CFSs, and AFSs are authorized by the Customs authorities to carry out customs clearance of imported and exported goods. This includes the filing of customs declarations, payment of customs duties and taxes, and other related formalities.
  • Storage and Warehousing: ICDs, CFSs, and AFSs provide storage and warehousing facilities for imported and exported goods. This ensures that the goods are kept in a safe and secure environment until they are ready for clearance or shipment.
  • Transportation and Logistics: ICDs, CFSs, and AFSs provide a range of transportation and logistics services that are essential for the movement of goods from one location to another. This includes the loading and unloading of containers, as well as the provision of transportation services via rail, road, sea, or air.
  • Value-Added Services: ICDs, CFSs, and AFSs also provide a range of value-added services such as packing, labeling, and repackaging of goods. These services are particularly useful for exporters who need to ensure that their goods are in compliance with international standards and regulations.

Regulation of ICDs/CFSs/AFSs under the Customs Act, 1962

The Customs Act, 1962, provides for the regulation of ICDs/CFSs/AFSs through various provisions. Let’s take a look at some of these provisions.

  • Licensing of ICDs/CFSs/AFSs: Under Section 57 of the Customs Act, 1962, any person who wants to operate an ICD, CFS, or AFS must obtain a license from the Commissioner of Customs. The license is valid for a period of five years and can be renewed thereafter. The license is granted subject to certain conditions, such as the provision of adequate infrastructure, security measures, and compliance with customs regulations.
  • Clearance of goods: ICDs/CFSs/AFSs are designated as customs areas under Section 8 of the Customs Act, 1962. This means that all goods imported or exported through these facilities must be cleared by customs before they can be released for further transportation or storage. The customs clearance process involves the examination of goods, verification of documents, and payment of customs duty, if applicable.
  • Bonded Warehousing: Under Section 59 of the Customs Act, 1962, ICDs/CFSs/AFSs are designated as bonded warehouses. This means that goods imported into these facilities can be stored without payment of customs duty, provided they are re-exported within a specified period. Bonded warehousing allows importers to defer payment of customs duty until the goods are sold or consumed, thus reducing the cost of inventory.
  • Security Measures: ICDs/CFSs/AFSs are high-security areas due to the sensitive nature of the goods they handle. The Customs Act, 1962, provides for the regulation of security measures at these facilities. Under Section 45 of the Act, the Commissioner of Customs can prescribe the measures to be taken for the security of goods, vehicles, and persons within the customs area. These measures may include the use of electronic seals, CCTV cameras, and access control systems.

Setting up of ICDs/CFSs/AFS under Customs Act, 1962

The setting up of ICDs, CFSs, and AFSs is governed by the provisions of the Customs Act, 1962. The following are the steps involved in setting up these facilities:

  • Step 1: Obtain a license from the Customs Authorities: The first step is to obtain a license from the customs authorities. The application for the license should be made in the prescribed format along with the necessary documents such as proof of ownership/lease of the land, building plan, and other statutory clearances.
  • Step 2: Obtain Approval from the Board of Approval: The application for setting up ICDs, CFSs, and AFS needs to be approved by the Board of Approval. The Board of Approval is a committee appointed by the Ministry of Commerce and Industry, which is responsible for approving proposals for setting up ICDs, CFSs, and AFS.
  • Step 3: Obtain Environmental Clearance: The proposal for setting up ICDs, CFSs, and AFS needs to obtain environmental clearance from the State Pollution Control Board. The application for environmental clearance should be made in the prescribed format along with the necessary documents such as the Environmental Impact Assessment (EIA) report.
  • Step 4: Obtain other Statutory Approvals: Apart from the above approvals, the proposal for setting up ICDs, CFSs, and AFS also needs to obtain other statutory approvals such as clearance from the Fire Department, the Health Department, and other local authorities.
  • Step 5: Construction of Infrastructure: After obtaining all the necessary approvals, the construction of the infrastructure for ICDs, CFSs, and AFS can commence. The infrastructure should be constructed as per the approved plan and should comply with all the necessary regulations.
  • Step 6: Obtain Custom Clearance: After the construction of the infrastructure, the ICDs, CFSs, and AFS need to be approved by the customs authorities for clearance of goods. The customs authorities will inspect the infrastructure and verify whether it meets all the necessary requirements for clearance of goods.

Important points of consideration while setting up of ICDs/CFSs/AFS under Customs Act, 1962

Here are some important points to consider while setting up ICDs/CFSs/AFS under Customs Act, 1962.

  • Location and Site Selection: The location of an ICD/CFS/AFS plays a critical role in its success. The site should be easily accessible by road, rail, and air, and should be strategically located near industrial hubs or ports. The site should also be large enough to accommodate the required infrastructure, including warehouses, container yards, parking lots, and administrative offices. The site should comply with zoning and environmental regulations, and should have easy access to basic amenities like water, electricity, and telecommunications.
  • Security and Surveillance: ICDs/CFSs/AFSs are high-security areas, and therefore, it is important to ensure adequate measures are in place to prevent theft, pilferage, and smuggling. The facility should have a robust security system, including CCTV cameras, perimeter fencing, and access control systems. Personnel should be trained in handling security breaches, and the facility should have emergency response protocols in place. The facility should also comply with relevant international security standards, such as the World Customs Organization’s (WCO) SAFE Framework of Standards.
  • Customs Clearance and Documentation: ICDs/CFSs/AFSs are essentially customs-bonded facilities, and therefore, customs clearance and documentation procedures are critical. The facility should have adequate infrastructure and personnel to handle customs clearance procedures, including examination, assessment, and release of cargo. The facility should also have a robust documentation system, including electronic data interchange (EDI) and electronic data processing (EDP) capabilities. The facility should comply with the requirements of the Indian Customs Electronic Commerce/Electronic Data Interchange (EC/EDI) Gateway Regulations, 2013.
  • Infrastructure and Equipment: ICDs/CFSs/AFSs require a range of infrastructure and equipment to handle cargo efficiently. The facility should have adequate container handling equipment, including cranes, forklifts, and trailers. The facility should also have sufficient warehouse space, with appropriate temperature control systems and pest control measures. The facility should have adequate parking space for trucks and other vehicles. The facility should also have a robust IT system, with capabilities for tracking and tracing of cargo.
  • Human Resources: ICDs/CFSs/AFSs require a range of skilled and unskilled personnel to manage operations. The facility should have adequate staffing, with appropriately qualified and experienced personnel for different roles, such as customs clearance, cargo handling, security, and administration. Personnel should be trained on relevant regulations, procedures, and safety protocols. The facility should also have a robust human resources management system, including policies and procedures for recruitment, training, performance evaluation, and compensation.

Endnote

Setting up ICDs, CFSs, and AFS requires obtaining several approvals from various authorities. It is essential to ensure that all the necessary approvals are obtained before commencing the construction of the infrastructure. The infrastructure should be constructed as per the approved plan and should comply with all the necessary regulations. Once the infrastructure is constructed, it needs to be approved by the customs authorities for clearance of goods. By setting up ICDs, CFSs, and AFS, the movement, storage, and clearance of goods can be streamlined, which will lead to more efficient and faster trade.

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