Customs and trade newsletter
March 2023
Policy updates, notifications and instructions
1. Foreign Trade Policy 2023 and its Handbook of Procedures notified1
The New Foreign Trade Policy and its Handbook of Procedures was released on 31 March 2023 and is ef f ective from 1 April 2023 onwards. Please refer to the below links for our Tax Insights.
Tax Insights dated 1 April 2023 and Tax Insights dated 3 April 2023
2. DGFT extends the timeline for mandatory electronic filing of NP-CoO up to 31 December 20232 The Directorate General of Foreign Trade (DGFT) has further extended the date for the mandatory
electronic filing of the Non-Preferential Certificate of Origin (NP-CoO) till 31 December 2023. The exporters and NP-CoO–issuing agencies have an option to use the Common Digital Platform (https://coo.dgft.gov.in/).
However, the same is not currently mandatory. As a transition measure, the existing systems of processing NP-CoO applications in manual or paper mode is permitted.
3. Clarifications issued with regard to implementation of origin procedures under India–Australia ECTA3
The Central Board of Indirect Taxes and Customs (CBIC) has clarified the following aspects with respect to the implementation of Rules of Origin and Operational Certification Procedures under the India–Australia Economic Cooperation and Trade Agreement (ECTA):
- Electronically issued Certificates of Origin (e-CoO) by the issuing bodies of Australia will be valid in India if they have been issued in the prescribed format.
- They are mandatorily required to be uploaded on e-Sanchit by the importer for availing preferential benef it.
- The f ollowing are not grounds for initiating verification or denial of preferential benefit:
• Non-affixation of QR Code on the e-CoO.
• Absence of overleaf notes from the CoO which provide guidance on how to fill certain entries in the CoO f ormat.
• The issuing bodies of Australia putting ‘Any ports in India’ in the port of destination field of the CoO.
4. Guidance issued for coverage and effective identification of certain telecommunication products covered under CTH 8517.62.90 and CTH 8517.69.90 of the Customs Tariff for the purpose of exemption4
Notif ication No. 57/2017-Cus. dated 30 June 2017, as amended, provides concessional rate of Basic Customs Duty (BCD) exemption on the import of certain goods to be used in the manufacturing of mobile phones in India. It also provides an exclusion list of goods under Customs Tariff Heading (CTH) 8517.62.90 and CTH 8517.69.90 of the Customs Tariff Act, 1975 (Customs Tariff) to which such concession or
exemption benefit is not available. Coverage and exclusion from the aforesaid exemption is often prone to disputes; hence, the CBIC has issued a clarification or guidance, wherein different exclusion categories have been elaborately listed. Moreover, it has been clarified that at the time of filing import declarations for such goods, regardless of whether they are covered in the inclusion or exclusion category of the said exemption, the importer needs to file its Bill of Entry (BoE) with an alphanumeric code or identifier with ef f ect from 1 April 2023 (as mentioned in the Annexure to the circular).
1 Notification No. 55/2015-2020 dated 7 February 2023
2 Trade Notice No. 27/2022-2023 dated 28 March 2023
3 Instruction No. 10/2023-Cus. dated 10 March 2023
4 Circular No. 08/2023-Cus. dated 13 March 2023
5. Section 65A introduced in the Customs Act for dispensation of IGST and compensation cess deferment provided to goods on which manufacturing and other operations are undertaken under section 65 of the Customs Act5
Section 65A provides that goods imported under section 65 of the Customs Act, 1962 (Customs Act) will be warehoused on payment of the applicable Integrated Goods and Services Tax (IGST) and compensation cess, and they will be considered as warehoused goods for the purpose of deferring BCD only. The said section will be applicable to goods on which manufacturing and other operations are carried out under section 65 of the Customs Act (with exceptions, when notified). Moreover, instead of ‘Bill of entry for warehousing’, a ‘Bill of entry for home consumption’ will be filed and will be finally assessed or pro visionally assessed to duty at the rate applicable at the time of filing of the said BoE.
6. Phased implementation of ECL
With ef fect from 1 April 2023, the Electronic Cash Ledger (ECL) functionality has been enabled for making any payment towards duty, interest, penalty, fees, etc. under the customs law in a phased manner.
However, till 30 April 2023, the following deposits will continue to be exempt from making payments via ECL:
- Deposits with respect to goods imported or exported in customs stations where the Customs Automated System is not in place.
- Deposits with respect to accompanied baggage.
- Deposits with respect to goods imported or exported at international courier terminals, etc.
With ef fect from 1 May 2023, the exemption provided to deposits made for goods imported or exported at international courier terminals will discontinue.
7. Finance Act, 2023 operationalised6
With ef fect from 1 April 2023, the Finance Act, 2023 has been notified. Hence, certain categories of
conditional exemptions, e.g. FTAs, re-import or temporary imports, exemption extended under FTP, etc. will not be covered under the sunset clause of section 25 of the Customs Act. Moreover, the timeline of nine months, extendable by an additional three months, for the disposal of the application by the Settlement Commission has also come into effect.
8. Clarifications issued with regard to acceptance of e-CoO under India–Japan CEPA7
The CBIC has clarif ied that the e-CoO released by the issuing bodies of Japan will be valid in India if they have been issued in the prescribed format. Moreover, they are mandatorily required to be uploaded on e- Sanchit by the importer for availing preferential benefit.
9. Rectification of labelling information on imported food consignments found non-compliant during laboratory analysis8
In November 2022, the Food Safety and Standards Authority of India (FSSAI) had instructed that if any f ood consignments imported into India were f ound to have non-compliant labels, the said label could be rectif ied at the port itself in a customs bonded warehouse.
In f urtherance to the same, the CBIC has now clarified that in case of any food consignment whereby the labelling is found to be non-compliant by the laboratory during analysis, the importer may rectify the label.
Thereaf ter, the concerned Authorised Officer will verify the compliance and issue the No Objection Certif icate (NOC) f or the said consignment.
5 Finance Bill, 2023, as passed by the Lok Sabha on 24 March 2023
6 Notification No. 21/2023-Customs (N.T.) dated 31 March 2023
7 Instruction No. 13/2023-Cus. dated 31 March 2023
8 Instruction No. 09/2023-Cus. dated 7 March 2023
Key judgments and Advance Rulings
1. Fire TV Stick 4K Max classifiable under CTH 8517.62.90 instead of CTH 8528 of the Customs Tariff as a ‘reception apparatus for voice, image and other data in a wireless network’9
This Advance Ruling was sought for the classification of HDMI Digital Media Receiver with a voice remote as a kit under the Customs Tariff. While the importer submitted that the said goods merit classification under CTH 8517, the Revenue contended that the appropriate classification should be CTH 8528 of the Customs Tariff.
The Authority for Advance Ruling determined that the appropriate classification for the said goods should be CTH 8517.62.90 as it operates as a reception apparatus with an inbuilt PCB and software containing several applications which run on over the internet platform, and media is streamed to television sets for display. Moreover, these devices do not receive signals from satellite, cable or terrestrial sources to convert them to the form suitable for display on the television screen, which is a mandatory requirement for
classification under CTH 8528 of the Customs Tariff.
2. Seed processing lines imported as a composite unit under two separate BoEs to be classified under CTH 8437.10.00 as seed processing machines10
In the instant case, the importer imported machinery for its seed processing plant under two different BoEs and classified the same under CTH 8437.10.00 as ‘machines for cleaning, sorting or grading seed’. The Revenue rejected the classification of goods imported under the second BoE as the said goods were imported separately without the main machinery. Moreover, the importer directed to classify the goods imported in the second BoE under their respective Tariff Heading.
The Chennai bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) observed that the proforma invoice and the order show purchase of a composite unit comprising two seed processing lines which would be complete only by including the goods imported under both BoEs. Theref ore, it was held that merely because some parts were imported separately and cleared under a separate BoE, the equipment can still be classified as a whole and not under different Tariff Headings.
3. Cartridges of I stat blood gas investigation classifiable under CTH 9027 as instruments for chemical analysis11
The instant case pertains to the classification of I stat blood gas investigation cartridges, i.e. instruments or apparatus used at the bedside of a patient or in a laboratory to analyse the critical parameters of his or her blood. It is typically used when such parameters are urgently needed, say before a surgical procedure or af ter a trauma. A few drops of blood are placed on the cartridge, which is an accessory of the analyser, and the doctor would be able to read the blood gas levels, sugar levels, electrolytes, and other parameters of the patient on the analyser screen.
The importer sought classification under CTH 9027 of the Customs Tariff as instruments for chemical analysis. The Revenue contended that the appropriate classification should be CTH 9018, which covers instruments used in medical or surgical science.
The Hyderabad bench of the CESTAT held that the said goods merit classification under CTH 9027 as the WCO Explanatory Notes to CTH 9018 specifically provide that instruments or apparatus used in
laboratories to test blood, tissue fluids, urine, etc. regardless of whether such tests serve in diagnosis, are excluded from the purview of CTH 9018 and are generally classifiable under CTH 9027.
9 2022 (10) TMI 329
10 2023 (3) TMI 751
11 2023 (3) TMI 593
4. Time limit of one year for refund claim under section 27 of the Customs Act to be computed from the date of final assessment12
In the instant case, the importer was engaged in the import of certain vitamin premixes, which required an NOC f rom FSSAI. However, the shelf life of these goods had already expired; hence, FSSAI did not issue the NOC to the importer.
As the Revenue ordered for the destruction of the said goods, the importer requested for the final
assessment of the filed BoE and a ref und of the customs duty paid. However, the refund claim was rejected on the ground that the same had become time barred under section 27 of the Customs Act and also because section 26A(3) of the Customs Act applied. This section provides that no refund under section 26(A)(1) of the Customs Act will be allowed in respect of perishable goods and goods which have exceeded their shelf life or their recommended storage-before-use period.
The Chennai bench of the CESTAT held that section 26(A)(1) of the Customs Act covers instances where ref und is being claimed for goods cleared for home consumption. Since, in the instant case, the goods are to be destructed, they cannot be said to be cleared for home consumption. Thus, the provisions of section 26(A) of the Customs Act would not be applicable. Moreover, it was remarked that section 27 of the Customs Act prescribes a time limit of one year subject to the proviso that where any duty is paid
provisionally, the limitation of one year will be computed from the date of the final assessment. Since, in the instant case, the final order has not been passed as yet, the refund claim of the importer is not time barred.
5. Refund of customs duty on account of amendment of BoEs is covered under section 27 of the Customs Act; the limitation period to be computed from the date of the rectification made in the BoE and not from the date of assessment13
In the instant case, the importer sought refund of customs duty based on amendment to the BoEs under section 149 of the Customs Act. However, the Revenue disallowed the refund on the ground that BoEs were not appealed against before the Commissioner of Customs (Appeals) under section 128 of the Customs Act.
The New Delhi bench of the CESTAT relied upon the law laid down by the Supreme Court in the case of ITC Limited14 and allowed the refund application. It was held that if the self-assessment is modified under the Customs Act and the same results in lowering of the duty liability than what was paid on account of self- assessment, a ref und claim would arise. The same has to be entertained under section 27 of the Customs Act.
It was f urther held in case of amendment of BoEs that the cause of action for claiming refund would arise only af ter the amendment is made; therefore, the limitation for claiming ref und would begin from that date.
Thus, the ref und claims were not time-barred.
12 2023 (1) TMI 1194
13 2023 (3) TMI 25
14 ITC Limited v. CCE [2019] (368) ELT 246 (SC)
Data Classification: DC0 (Public)
In this document, PwC refers to PricewaterhouseCoopers Private Limited (a limited liability company in India having Corporate Identity
