The Standard English Dictionary defines the term 'Customs' as duties imposed on imported goods or less commonly exported goods. Duties on import and export of goods have been levied from time immemorial by all countries. The Customs Act was passed in India by the Parliament in the year 1962, while replaced the Sea Customs Act, 1878. Further, the Customs Tariff Act was passed in the year 1975 to replace the Indian Tariff Act, 1934. The Customs and Act and Customs Tariff Act stands complete code to the levy and collection of duties on import and export of goods.

Article 265 of the Constitution provides that "No tax shall be levied or collected except by authority of Law". The Customs Act, 1962 extends to whole of India. Indian customs water cover both the Indian territorial waters and exclusive economic zones as well. The introduction of GST does not disturb the provisions of Customs Act, 1962. However some very significant changes are only made in Customs Act, 1962.

The customs duty is levied on the goods and not on the person importing the goods or paying the duty. The taxable event is import and export of goods. The duty shall be charged at such rates as may be prescribed under the Customs and Tariff Act, 1975. There is no general exemption to goods imported by Government. But imports by Navy, specific equipment required by police, Ministry of Defence, Coastal Guard etc.., are fully exempted from customs duty by virtue of specific notifications.

Customs duties are of two types:

1. Revenue duties : are those which are levied for the purpose of raising customs revenue.
2. Protective duties : are intended to give protection to indigenous industries. If resort to protective duties is not made there could be a glut of cheap imported articles in the market making the indigenous goods unattractive.

All taxes and duties are imposed in three stages, which are levy, assessment, and collection :

1. Levy : is the stage where the declaration of liability is made and persons or the properties in respect of which the tax or duty is to be levied is identified and charged.
2. Assessment : is the procedure of quantifying the amount of liability. The liability to pay tax or duty does not depend upon assessment.
3. The final stage is where the tax or duty is actually collected. The collection of tax or duty may for administrative or other reasons be postponed to a later time.