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Mundra CFS Approval Process

Background
1. 2. 3. Mundra Port will have permission from Government of India (Ministry of Finance) under Section 7 and Local Customs Commissioner under Section 8, for Port operations; Mundra port wants to setup CFS facility under said notified area; for which it can have permission from Customs Commissioner under Section 8 defining CFS area and limits. Adani Logistics Limited will operate and maintain CFS Mundra Port on long term arrangement with billing to Customs from ALL account.

Facts
1. To monitor the growth of ICDs/CFSs, a regulatory authority in the form of Inter Ministerial Committee has been constituted in the year 1992. The proposal for setting up ICDs/CFSs are examined by the Inter Ministerial Committee, and on acceptance thereof by Inter Ministerial Committee, Letter of Intents are issued to the applicants by the Infrastructure Division in the Ministry of Commerce. After issuance of LOI, the facility is notified as a CFS under Section 8 of the Customs Act 1962 Section 7 of Customs Act 1962 is as follows: Appointment of customs ports, airports, etc. – (1) The Board may, by notification in the Official Gazette, appoint (a) the ports and airports which alone shall be customs ports or customs airports for the unloading of imported goods and the loading of export goods or any class of such goods; (aa) the places which alone shall be inland container depots for the unloading of imported goods and the loading of export goods or any class of such goods; (b) the places which alone shall be land customs stations for the clearance of goods imported or to be exported by land or inland water or any class of such goods; (c) the routes by which alone goods or any class of goods specified in the notification may pass by land or inland water into or out of India, or to or from any land customs station from or to any land frontier; (d) the ports which alone shall be coastal ports for the carrying on of trade in coastal goods or any class of such goods with all or any specified ports in India. (2) Every notification issued under this section and in force immediately before the commencement of the Finance Act, 2003 shall, on such commencement, be deemed to have been issued under the provisions of this section as amended by section 105 of the Finance Act, 2003 and shall continue to have the same force and effect after such commencement until it is amended, rescinded or superseded under the provisions of this section.

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Section 8 of Customs Act 1962 is as follows: Power to approve landing places and specify limits of customs area. – The Commissioner of Customs may, — (a) approve proper places in any customs port or customs airport or coastal port for the unloading and loading of goods or for any class of goods; (b) specify the limits of any customs area.

4. As per circular No. 133/95-Cus dated 22/12/95. Paragraph 3 and 4 reads as follows which enables APSEZ to get Section 8 approval for CFS directly from Customs and there is no need to take IMC approval in this case. “3. Commissioners of Customs are authorised to notify a CFS as a Customs area under Section 8 of the Customs Act in any place declared by the central Government as a Customs station under Section 7 of the Customs Act. However, before declaring a CFS, the Commissioners may assess the requirements of such facility in each Port/ ICD/ ACC for creation of such additional Customs area (CFS). If need be, the the Commissioners may discuss such feasibility in the Regional Advisory Committee Meetings or meetings with the Trade. Commissioners are advised, however before notifying any new C.F.S. as Customs area in a Customs Station, they should call for the proposals by wide publicity and grant such facility only after fully satisfying themselves on the need, security, credibility of the persons concerned, suitability of the condition and other details of the applicant.” “4. Proposals for CFS are also CFS are also processed in the Ministry of Commerce when applicants make proposals to the Ministry. As and when such proposals are cleared and communicated to the Board, Commissioners are required to notify it under Section 8 of the Customs Act, as early as possible, after ensuring suitability and other criteria for such declaration.” Further, As per Circular no. 18/2009-Customs dated 8 June, 2009. Para 2.3 reads as follows: “Section 8 of the said Act provides that the Commissioner of Customs may approve the landing places for unloading and loading of goods [clause (a)] and specify the limits of the customs area [Clause (b)] within a notified customs port or customs airport or any other category of customs station. Container Freight Stations are specified as customs areas under Clause (b) of the said Section 8 wherein imported goods or export goods are ordinarily kept before clearance by customs. With the increase in volume of international trade and the bottlenecks / lack of sufficient infrastructure at the ports, a number of CFSs have been developed around the seaports over the years.”
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Conclusion
It is concluded from the above facts that Mundra port can take CFS approval from Commission Customs directly under Section 8 (hence the CFS can be made operational without taking IMC approval as Mundra Port has already got permission under Section 7). For approving CFS,

Commission Customs only needs to see approval under Section 7 as per above GOI circular and notify facility under section 8.