© DG Education (P) Ltd [Cus : Baggage]

BAGGAGE:
BAGGAGE- MEANING

1. Is there any difference between “Baggage” and “Bona-fide Baggage”.

[CS Inter, Dec 2004 // CS Inter, June 2005]
Baggage is synonymous with luggage. In general words, it means articles of personal use of a person (passenger). The word `baggage’
is a comprehensive term which means the luggage of a passenger, accompanied or unaccompanied, and comprises of the trunks or
bags and the personal belongings of the passenger contained therein. Customs Act, 1962 has defined the term “baggage”, but only in
an inclusive manner. It has been defined u/s 2(3) to include unaccompanied baggage but excluding motor vehicle.
On the other hand, the term “bond-fide baggage” has not been defined under Customs Act, not even under Baggage Rules, 1998.
Sec 79, which allows duty-free clearance of baggage in terms of Baggage Rules, 1998 uses this term in its title. Whether the baggage is
bona-fide or not has to be determined keeping in mind the status of a person concerned. If the baggage is bona-fide only then that
person can claim exemption from payment of duty on certain part of that baggage. It shall be noted that general free allowance is
applicable only in respect of bona-fide baggage. Goods imported in commercial quantity can’t be termed as “bona-fide baggage” and
thus, can’t be allowed general free allowance [GFA][A. MAHESH RAJ – 2007 – SETTLEMENT COMMISSION]

2. What are the circumstances under which goods imported by a passenger, could be considered as his “bonafide baggage” under the
Customs Act, 1962. (5 Marks)

The term “bond-fide baggage” has not been defined under Customs Act, not even under Baggage Rules, 1998. Sec 79, which allows
duty-free clearance of baggage in terms of Baggage Rules, 1998 uses this term in its title. Whether the baggage is bona-fide or not has
to be determined keeping in mind the status of a person concerned. If the baggage is bona-fide only then that person can claim
exemption from payment of duty on certain part of that baggage. It shall be noted that general free allowance is applicable only in
respect of bona-fide baggage. Goods imported in commercial quantity can’t be termed as “bona-fide baggage” and thus, can’t be
allowed general free allowance [GFA].
In terms of Sec 79 read with Baggage Rules, 1998 both “used” as well as “unused/new” articles can be construed as “bona-fide
baggage” and hence, admissible duty-free.

Tutorial Notes:
Passenger returning from abroad Articles Whether admissible as Reasons thereof
claimed as ‘bona-fide baggage’ or
baggage not?
Mr X, returning India after 5 days 5 TVs (42’ Not bona-fide baggage Goods imported in commercial quantity can’t be
tour in Bangkok LED) termed as “bona-fide baggage” [A. MAHESH RAJ –
2007 – SETTLEMENT COMMISSION]

Mr A, Indian software engineer, 1 Dog Even ‘pet animals’ are CBEC Circular 15/2013: import of 2 pet animals
coming to India after staying in bona-fide baggage as baggage is allowed to persons transferring their
USA for 3 years – he is now residence to India after two years of continuous
transferring his residence back to stay abroad in terms of Baggage Rules 1998
India subject to production of the required health
certificate from the country of origin and
examination of said pets by the concerned
Quarantine Officer at this end.

3. Whether gold belt tied around waist by a passenger arriving into India is also ‘baggage’ and needs to be declared u/Sec 77?

Yes, ‘baggage’ shall cover not only the goods carried in handbag but it shall also cover articles carried on the body. [MAYOR HANS
GEORGE –1999-SC]

Author: Contrary view has been taken by Kerala HC in a recent judgment, which in Author’s opinion is improper and needs review.
Vigneshwaran Sethuraman – 2014- Kerala HC [Writ]
• Goods carried on body of passenger (‘gold chain’ in the instant case) is not ‘baggage’ and hence, need not be declared u/Sec 77.
© DG Education (P) Ltd [Cus : Baggage]

CLEARANCE OF BAGGAGE- DECLARATION OF CONTENTS

4. Discuss the validity of following statements:

(a) Declaration of Content u/Sec 77 is not required to be filed by passenger carrying goods within duty-free limit and passing
through ‘green channel’
(b) Disembarkation card (arrival card) is required to be filled by Indian National.

(a) The given statement is invalid.

Sec 77 provides for filing of declaration of contents of baggage. The manner of filing of declaration of contents is as prescribed by
CBEC. CBEC has recently made it mandatory for every passenger, whether going through green channel or red channel, to file
declaration of contents. [It is filed in ‘Form-I’]

(b) The given statement is invalid.

Disembarkation card is used for verifying identity of traveller. It is basically used by Ministry of Home Affairs. Ministry of Home
Affairs has declared that ‘disembarkation card’ shall be filed only by foreign nationals.

ASSESSMENT OF DUTY ON BAGGAGE

5. Explain in brief the duty exemption to baggage under Section 79(1) of the Customs Act, 1962.
(May 2010- 3 Marks)
Sec 79 provides exemption from customs duty to bona-fide baggage of passengers. It provides that:
i) Used goods in baggage shall be allowed to be cleared duty-free without any limit.
ii) Unused goods in baggage of passenger shall also be allowed to cleared duty-free up to certain limits as set in Baggage Rules,
1998. Baggage Rules, 1998 has prescribed different limits for different kind of passengers (e.g, for tourists, for professionals, for
person transferring resident to India)

6. After visiting USA, Mrs. & Mr.X brought to India a lap-top computer valued at Rs. 80,000, personal effects valued at Rs. 90,000 and
a personal computer for Rs. 72,000. What is the customs duty payable?
(May 2007 3 Marks)
BAGGAGE OF Mr X BAGGAGE OF Mrs X
Value of Admissible Value Duty Value of Admissible Value subject Duty
goods Duty-free subject to goods Duty-free Limit to ID
Limit ID
Used Personal XXXXX Full Value Nil Nil XXXXX Full Value Nil Nil
Effects
Unused Articles:
 Laptop* 80,000 Full Value Nil Nil ------ ------- ------- -----
 Personal 72,000 45,000 27,000 @36.05% ------ ------- ------- -----
Computer** = 9,734
Working Notes:
1. Presuming that Mr X and Mrs X (are of age above 18 years) and have returned from USA after stay for more than 3 days, the admissible GFA (in
terms of Rule 3 of Baggage Rules, 1998) shall be Rs 45,000 to both the passengers independently.
2. Laptop imported as baggage by passenger of age above 18 years is exempt (this is in addition to the GFA of 45,000 allowed to passenger).
3. Both the passengers shall claim GFA independently; they cannot pool it. Thus, personal computer cannot be cleared by Mr X and Mrs X by pooling
their GFA together.
Would there be a change in yours answer, if Mrs & Mr X would have returned from Hongkong instead of USA?
.

BAGGAGE RULES, 1998

Rule 3 Rule 4
Passengers returning from Passengers returning from Nepal, Bhutan, Mynamar
Countries other than Nepal, Bhutan, Mynamar or or China
China.
Mode of transport Exemption limit is applicable irrespective of mode of Exemption limit is applicable only if mode of transport
of passenger transport through which passenger is returning (air, through which passenger is returning is air or sea.
sea, land) Exemption limit is not applicable if passenger returning
by land route.
GFA Limit
Stay abroad less GFA limit is available (17,500 / 3,000, depending upon GFA limit is not available at all.
than 3 days age)
Stay abroad more Admissible GFA is 45,000 / 17,500 (depending upon Admissible GFA is 6,000 / 1,500 (depending upon age)
than 3 days age)
© DG Education (P) Ltd [Cus : Baggage]

.
Passenger returning from HongKong: Which baggage rule is applicable -- Rule 3 or Rule 4?
• Hong Kong is separate customs territory from China. It maintains its own passport, currency, policy force, legal and judicial system.
However, the mainland Chinese government manages Hong Kong's military defense as well as its diplomacy with foreign countries.
• CBEC Circular 25/2010 has clarified that
• The matter has been examined in consultation with the Ministry of External Affairs. The Ministry of External Affairs has clarified that
Hong Kong Special Administrative Region (SAR) is a separate Customs territory from China. Therefore, they are not to be treated as
one.
• Rule 3 shall be applicable in case of passengers returning from Hongkong.

Thus, there would have been no change in ours answer even if Mrs & Mr X would have returned from HongKong.

7. An Indian resident comes to India after visiting Germany for seven days. He brings the following goods on his return:
a) Used Personal effects like cloth etc. valued at Rs 20,000/-
b) One litre of liquor of Rs 1,500/-;
c) One Laptop of Rs 80,000/-;
d) New Camera of Rs 44,800.
Compute the amount of customs duty payable by him for clearing his baggage.
[CWA Inter, Dec 2003, Adapted]
Statement showing computation of duty payable on Baggage
Articles in Baggage Value of goods Admissible Duty- Value subject to ID Customs Duty (Rs)
free Limit
Used Personal Effects 20,000 Full value Nil 0.00
Unused Articles: 46,300 45,000 1,300 1,300 * 36.05% = 469
-- Liquor Bottle (1 Lt) (Aggregated value)
-- Camera
Total Customs Duty Payable for clearance of baggage 469

Working Notes:
1. The customs duty liability of the passenger has been computed in accordance with Sec 79 of Customs Act read with Rule 3 of the Baggage
Rules, 1998, which is applicable for passengers returning from any country other than Nepal, Bhutan, Myanmar or China.
2. In accordance with Rule 3, the used personal effects are admissible duty-free without any limit. In relation to other articles, it provides General
Free Allowance (GFA) of Rs 45,000/- (as amended in July, 2014).
3. One lap-top computer imported as baggage is admissible duty-free in addition to the GFA of Rs 35,000/- (as it has been exempted separately
by way of an exemption notification ---- E/N 11/2004).
4. The applicable rate of duty in respect of baggage for the time being is 35% Basic Customs Duty and 2% EC and SHEC @1% thereon.


8. Mr A has returned from Singapore with his son and seven other members of family (total nine members). Both Mr A and his son has
filed separate baggage declarations for two 'Kitchen Utensil sets' of Rs. Worth 81,000 each. Mr A is arguing that since all family
members have arrived at same time, General Free Allowance (GFA) of all family members is to be considered and therefore, no duty
was payable.
Discuss the validity of argument raised by Mr A?

Baggage covers goods which are for use of passenger or his family. Thus, kitchen utensils are admissible baggage in the hands of Mr A
as well as his son.
In terms of Sec 79 read with Baggage Rules, 1998 (Rule 3), all passengers of and above 1o years of age and returning after stay
abroad of more than 3 days shall be eligible to duty free clearance of his baggage upto the limit of Rs 45,000. Implied thereby, the
baggage in excess of this limit shall be chargeable to import duty @36.05%. Explanation to rules clearly provides that ‘the free
allowance under the rule shall not be allowed to be pooled with the free allowance of any other passenger’.
Thus, Mr A as well his son cannot pool limit of other family members to clear their declared baggage duty free from customs.
Argument raised by Mr A as to poling of GFA of all family members is invalid and not sustainable in law.
Author:
• Import Duty payable by Mr A = [(81,000 – 45,000) * 36.05%]
• Import Duty payable by Son of Mr A = [(81,000 – 45,000) * 36.05%]
DINESH KUMAR GOYAL – 2015- DELHI HC [Writ]
• In case of imports by baggage, GFA is allowed to passenger if article in baggage is for his or his family's personal use; use of word 'family'
does not mean that family members of passengers can be pooled together, as Explanation to [rule 3 of Baggage Rules, 1998] bars any
such pooling.
© DG Education (P) Ltd [Cus : Baggage]

9. Mr and Mrs. K visited the USA and bought from there a CAMERA for US $ equivalent to Rs 51,000 while returning to India. They
carried used personal effects also, valued at Rs 46,000.
What is the customs duty payable? [CWA Inter, June 2003]
The customs duty liability shall be determined in accordance with Sec 79 of Customs Act read with Rule 3 of the Baggage Rules,
1998, which is applicable for passengers returning from any country other than Nepal, Bhutan, Myanmar or China.
… Clearance of used personal effects:
So far as used personal effects are concerned, these are admissible duty-free without any limit and thus, entire quantity of used
personal effects of value of Rs 46,000 is admissible duty-free.
… Clearance of Camera:
Both Mr K & Mrs K shall be eligible for separate “General Free Allowance (GFA)” of Rs 45,000/- in respect of goods other than
used personal effects. However, they can’t pool their GFA to clear a particular article. Thus, either Mr K or Mrs K shall have to
declare the camera as a part of his or her baggage and shall pay customs duty @ 36.05% on the value of camera in excess of his
or her admissible GFA. Thus, customs duty payable would be Rs 2,163/- [ 36.05% of (Rs 51,000 – Rs 45,000)]

10. Mr and Mrs. K visited the USA and bought from there a TV (LED) for US $ equivalent to Rs 51,000 while returning to India. They
carried used personal effects also, valued at Rs 46,000.
What is the customs duty payable? [CWA Inter, June 2003]

The customs duty liability shall be determined in accordance with Sec 79 of Customs Act read with Rule 3 of the Baggage Rules,
1998, which is applicable for passengers returning from any country other than Nepal, Bhutan, Myanmar or China.
… Clearance of used personal effects:
So far as used personal effects are concerned, these are admissible duty-free without any limit and thus, entire quantity of used
personal effects of value of Rs 46,000 is admissible duty-free.
… Clearance of TV:
Both Mr K & Mrs K shall be eligible for separate “General Free Allowance (GFA)” of Rs 45,000/- in respect of goods other than
used personal effects. However, they can’t pool their GFA to clear a particular article. Thus, either Mr K or Mrs K shall have to
declare the TV as a part of his or her baggage. Further, in respect of TV (LED), benefit of limit of ‘general free allowance’ cannot
be claimed. Thus, full value of TV shall be subjected to customs duty @36.05%. Thus, customs duty payable would be Rs
18,386/- [36.05% of Rs 51,000]

 (Imp)
11. At the last minute, Pankaj, an Indian resident, cancels his journey from Singapore to Chennai. However, his baggage is allowed to
be sent Chennai without him accompanying it. Is general free allowance under the Customs Act available in respect of this baggage
at Chennai?
[CS Final, Dec 2008]
Baggage Rules, 1998 – General Free Allowance cannot be used in respect of “unaccompanied baggage” (as Baggage Rules permit use
of general free allowance only on accompanied baggage). – Thus, baggage of Pankaj shall be liable to customs duty @36.05%.

TEMPORARY DETENTION OF BAGGAGE


12. Explain briefly the provisions relating to temporary detention of baggage under Customs Act.
(5 Marks)
Section 80 of the Customs Act, 1962 contains the provisions regarding the temporary detention of baggage of a passenger coming into
India. It provides that where the baggage of a passenger contains any article which is dutiable or the import of which is prohibited
and in respect of which true declaration has been made under Section 77, the proper officer may at the request of the passenger detain
such article for the purpose of being returned to him on his leaving India.
The purpose of Sec 80 is to safeguard the interests of the passengers who may not be aware or well versed with the customs laws of
India. Such passengers might have brought with themselves goods which are prohibited for importation under Indian Customs Laws.
In respect of such goods, a true declaration shall be made by the passenger and request shall be made to the Proper Officer for
temporary detention of same. Similarly, if there is any good which the passenger is carrying in his baggage but which is not of any use
in India, then instead of clearing such item upon payment of duty and then claiming duty drawback under section 74 on re-export
thereof, the passenger can prefer to leave those goods in the custody of Customs Officer.
An article which is detained by the Customs Department under sec 80 shall be returned to the passenger at the time of his leaving
India. But if on account of any reason, if the passenger is not able to collect that article, then such article can be returned to him
through any other passenger authorized by him and leaving India. Otherwise, it can be send as cargo consigned in his name.
© DG Education (P) Ltd [Cus : Baggage]

13. Hemal K. Shah, a passenger, who arrived at Ahmedabad Airport, declared the total value of goods as Rs 13,500 in the
disembarkation slip. On detailed examination of his baggage, it was found to contain Saffron, Unicore Rhodium Black, Titan Wrist
watches, Mobile Phones, assorted perfumes, Imitation stones and bags. Since, the said goods were in commercial quantity and did
not appear to be a bona fide baggage, the said goods were placed under seizure.
The passenger admitted the offence but requested for re-shipment of the said goods in terms of Sec 80 of Customs Act. However,
the adjudicating authority denied his claim for re-export un/Sec 80.
Discuss whether rejection of request of re-export is proper?
(5 Marks)
Rejection of request for re-export is proper.
On identical facts, in case of HEMAL SHAH- 2011, it was held that the passenger had grossly mis-declared the goods with intention to
evade duty and smuggle the goods into India. As per the provision of section 80 of Customs Act, 1962 when the baggage of the
passenger contains article which is dutiable or prohibited and in respect of which the declaration is made under section 77, the proper
officer on request of passenger detain such article for the purpose of being returned to him on his leaving India. Since passenger
neither made true declaration nor requested for detention of goods for re-export, before customs at the time of his arrival at airport. So,
the re-export of said goods cannot be allowed under section 80 of Customs Act.