Case Law Details
In re Magnett Enterprises (CAAR Delhi)
In a recent case, the Customs Authority for Advance Rulings (CAAR) in Delhi faced an application from M/s. Magnett Enterprises. The applicant sought an advance ruling regarding the classification of certain goods under the Quality Control Order, 2022. This case explores the limitations of CAAR’s authority in providing such rulings.
Background of the Case: M/s. Magnett Enterprises is engaged in importing goods described as “parts/components/accessories of footwear.” These goods include items like ‘shoe charm-accessory,’ ‘upper,’ ‘sole,’ ‘sole-semirigid,’ ‘insole,’ ‘strap,’ and are intended for use as parts/components/accessories in ‘shoes and other footwear for kids and adults.’ The company sought an advance ruling to determine whether these goods, which fall under the Quality Control Order, 2022, are subject to Bureau of Indian Standards (BIS) requirements.
Questions Raised by the Applicant: The applicant presented two main questions in their advance ruling application:
- Whether goods such as ‘shoe charm-accessory,’ ‘sole,’ ‘insole,’ etc., intended to be used in footwear are eligible goods that must comply with the BIS requirements outlined in the ‘Footwear made from all Rubber and all Polymeric material and its Components (Quality Control) Order, 2022’?
- In the event that compliance is required, should the responsibility of obtaining BIS certifications, as per Indian law, fall on the applicant (as the importer) or on the overseas supplier (located outside India) before importing these goods into India?
Comments from the Concerned Commissionerate: The Commissionerate clarified that applicants seeking an advance ruling should base their application on specific questions as per the provisions of the Customs Act, 1962. These questions can cover the classification of goods under the Customs Tariff Act, 1975, and the applicability of notifications affecting the rate of duty, among other matters. The Commissionerate highlighted that the application from M/s. Magnett Enterprises didn’t align with the permissible questions under section 28H of the Customs Act, 1962, as it concerned BIS regulations on footwear parts, which were beyond the scope of advance rulings.
Personal Hearing and CAAR’s Clarification: A personal hearing took place on 11.10.2023, during which the applicant’s advocate reiterated the concerns. They wanted clarity on whether the goods they intended to import needed to adhere to the Quality Control Orders or comply with BIS requirements. The CAAR referred to the Customs Act and explained that such questions fell outside the authority’s mandate. While acknowledging that a specific ruling on this particular question might not be issued, the advocate requested clarity on the requirements.
CAAR’s Decision: After reviewing the application, Commissionerate comments, and statements made during the personal hearing, the CAAR concluded that the applicant sought a ruling related to the applicability of the ‘Footwear made from all Rubber and all Polymeric material and its Components (Quality Control) Order, 2022.’ However, they pointed out that the applicant had filed the application based on an incorrect premise. The issues raised were not in alignment with the questions specified under section 28H of the Customs Act, 1962.
Scope Limitations: The CAAR emphasized that section 28H of the Customs Act, 1962, clearly outlined the subjects on which questions for advance rulings could be sought. These included classification of goods under the Customs Tariff Act, 1975, and the applicability of notifications related to tax or duties. The applicant’s questions regarding the Quality Control Order, 2022, did not fall under these provisions. They reiterated that the questions presented by the applicant did not align with the provisions under section 28H, and thus, the application lacked merit.
Conclusion: This case involving M/s. Magnett Enterprises highlights the need for a clear understanding of the scope and limitations of advance rulings provided by the Customs Authority for Advance Rulings (CAAR). While CAAR can provide valuable insights into matters within its mandate, it cannot issue rulings on subjects that are outside the specific questions outlined in the Customs Act, 1962. This case underscores the importance of being aware of the boundaries of CAAR’s authority and the types of questions it can address.
FULL TEXT OF ORDER OF CUSTOMS AUTHORITY FOR ADVANCE RULINGS
M/s. Magnett Enterprises, E-867, DSIIDC Industrial Area, Narela, New Delhi-110040 having IEC No. AONPM5918A, and PAN- AONPM5918A (applicant, in short) has filed an application dated 24.05.2023, received in this office on 25.05.2023, seeking advance ruling under section 28-H of the Customs Act, 1962, before the Customs Authority for Advance Rulings, New Delhi (CAAR, New Delhi, in short). The application was accordingly registered under Serial No. 36/2023 dated 25.05.2023.
2. The applicant has stated in their application for advance rulings that, the activity proposedisimportation of goods of description. ‘Parts/components/accessories of footwear’. The applicant, vide the aforesaid application has raised the following questions on which advance ruling is required:
A) Whether the goods of description i.e. footwear parts/components/accessories like ‘shoe charm-accessory’, ‘upper’. `sole’, ‘sole-semirigid’, ‘insole’, ‘strap’ etc. which are intended to be used as the parts/components/accessories of ‘shoes and other footwear for kids and adults’ are classifiable as eligible goods which requires compliance with the BIS requirements as provided under the `Footwear made from all Rubber and all Polymeric material and its Components (Quality Control) Order. 2022?
B) Even, if so. whether, in case of import of above goods, either applicant, being an importer or the overseas supplier (who do not fall under the territory of India), is required to obtain BIS certifications (as per Indian laws) before import of such goods in India?
3. The applicant has also stated that, by the said Quality Control Order, the BIS certification has been mandated for manufacturing as well as import of footwear made from all rubber and all polymeric material and its components. The applicant has also stated that issues framed for deliberation of the present Authority are covered under the questions prescribed under section 28H of the Customs Act, 1962; the classification of goods intended to be imported under the Customs Tariff Act, 1975 attracts all the provisions of other laws well as for the purpose of deciding it’s eligibility of imports. Also, if the other conditions of laws are not satisfied, the intended goods cannot be imported.
4. Comments in the matter have been received from the concerned Commissionerate wherein. it is inter-alia stated that an applicant desirous of obtaining an advance ruling may make an application in such form and in such manner as may be prescribed. stating the question on which advance ruling is sought and the questions on which the advance ruling can be sought are the following: classification of goods under the Customs Tariff Act, 1975, applicability of a notification issued under Sub-section (1) of section 25 having a bearing on rate of duty. the principles to be adopted for the purposes of determination of value of goods under the provisions of the act, applicability of notifications issued in respect of tax or duties under the Act or the Customs Tariff Act, 1975 or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of Customs leviable under this Act or the Customs Tariff Act, and determination of origin of the goods in terms of the rules notified under the Customs Tariff Act, 1975 and matters relating thereto. In the comments, it is further stated that on perusal of the said advance ruling application, it is noted that the applicant seeks information regarding BIS on footwear parts; however, the information pertaining to the Bureau of Indian Standards (BIS) regulations on footwear parts is not within the scope of the questions of law that can be addressed through an advance ruling under section 28H of the Customs Act. 1962; therefore, no comments to offer in the said matter.
5. Personal hearing, in the matter was held on 11.10.2023 wherein advocate appearing for the applicant briefed about the application and stated that the shoe parts are intended for import by the applicant and their concern is as to whether the goody to be imported are required to comply with the Quality Control Orders or they have to fulfil BIS requirements: the Authority referred to provisions under Chapter V-B of the Customs Act. 1962 and informed that such a question is beyond the mandate assigned to Customs Authority for Advance Rulings: advocate replied that they are aware that on such a specific question. advance ruling may not be issued but they request to give clarity on such requirements.
6. Thus, having gone through the application for advance ruling, comments of the concerned Commissionerate and having heard the authorized representatives of the applicant during the personal hearing, I note from the submissions of the applicant that the applicant intend to seek ruling on questions on applicability of ‘Footwear made from all Rubber and all Polymeric material and its Components (Quality Control) Order. 2022’. However. I note that the applicant has filed the application for advance rulings on wrong premise that the issues framed for deliberation of the present Authority are covered under the questions prescribed under section 28H of the Customs Act, 1962 and the classification of goods intended to be imported under the Customs Tariff Act, 1975 attracts all the provisions of other laws as well as for the purpose of deciding ifs eligibility for imports.
7. I also note that under the provisions of Sub-section (2) of Section 28H of the Customs Act, 1962, subjects on which questions for advance ruling can be sought are listed out. Such questions include classification of goods under the Customs Tariff Act, 1975 and applicability of a notification issued in respect of tax or duties under this Act or the Customs Tariff Act, 1975 or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of Customs leviable under this Act or the Customs Tariff Act. Thus, the provisions under Sub-section (2) of the Section 28H refer only to classification of goods under the Customs Tariff Act, 1975 and not to the classification of goods covered under the said Quality Control Order, 2022. Also, question for advance ruling can only be sought on applicability of notifications issued in respect of tax or duties under the Customs Act, 1962 or the Customs Tariff Act, 1975 or any tax or duty chargeable under any other law for the time being in force and not applicability of notification issued in respect of any subject including importability of goods in India. It is needless to say that provisions laid down regarding classification and applicability of notification under the Customs Act, 1962, are amply clear and unambiguous. I also note that the questions framed by the applicant for seeking advance ruling is not in accordance with the provisions under Sub-section (2) of the Section 28H of the Customs Act, 1962. Accordingly. I do not find any merit in the application made by the applicant, seeking ruling on the said question and thus, I order to reject the application for advance ruling of the applicant registered under Serial No. 36/2023 dated 25.05.2023 as the issue and questions raised by the applicant are beyond the provision laid down. in this regard under Chapter V-B of the Customs Act, 1962.
