Concept and Origin of  of Advance Rulings

The concept of advance ruling is discussed and finalised in Kyoto Convention of WCO on the Simplification and Harmonization of Customs procedures and was adopted in June, 1999 as a blueprint for modern and efficient Customs procedures. Article 3 of WTO Agreement on Trade Facilitation, make it obligatory for the each member countries to have mechanism of Advance Ruling. The Article 3 of Agreement on Trade Facilitation reads as under

ARTICLE 3: ADVANCE RULINGS

Each Member shall issue an advance ruling in a reasonable, time bound manner to an applicant that has submitted a written request containing all necessary information. If a Member declines to issue an advance ruling it shall promptly notify the applicant in writing, setting out the relevant facts and the basis for its decision.

Customs Authority for Advance Rulings (CAAR)

Why Advance Ruling

The facility for advance rulings in customs matters is an important trade facilitation initiative of the government, and a commitment under the WTO’s Trade Facilitation Agreement

(I) To minimizing disputes

(II) To imparting certainty in relevant taxation matters

(III) To attract Foreign Direct Investment (FDI)

(IV) To pronounce ruling expediously in transparent and inexpensive manner

Statutory provisions relating to advance rulings in matters relating to Customs

The statutory provisions relating to advance rulings in matters relating to Customs are contained in Chapter V-B of the Customs Act, 1962. The said chapter V-B substantially amended vide Finance Act, 2018 and also inserted a new section 28EA relating to ‘Customs Authority for Advance Rulings’, which empowers the Central Board of Indirect Taxes and Customs (CBIC) to appoint officers of the rank of Principal Commissioner of Customs or Commissioner of Customs as Customs Authority for Advance Rulings.

Procedure to be followed by the Customs Authority for Advance Rulings

Customs Authority for Advance Rulings shall follow procedure prescribed under  Customs Authority for Advance Rulings Regulations, 2021 notified vide Notification No. 01/2021-Customs (N.T.) dated 04.01.2021. This notification has superseded the earlier Authority for Advance Rulings (Customs, Central Excise and Service Tax) Procedure Regulations, 2005.

Definition of advance ruling under Indian Customs Act

Post Finance Act 2018 Prior to Finance Act 2018
“Advance Ruling” means a written decision on any of the questions referred to in section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation. “Advance ruling” means the determination, by the Authority, of a question of law or fact specified in the application regarding the liability to pay duty in relation to an activity which is proposed to be undertaken, by the applicant

Authority for Advance Rulings means

Post Finance Act 2018 Prior to Finance Act 2018
The Customs Authority for Advance Rulings appointed under section 28EA of the Customs Act;’; The Authority for Advance Rulings constituted under section 245-O of the Income-tax Act, 1961
Prior to implementation of Finance Act 2018 Advance Rulings constituted under Income Tax Act was empowered to pronounce the ruling under Income Tax Act  as well as under the Customs Act. Now, as per Customs Act as amended vide Finance Act 2018 Customs Authority for Advance Rulings appointed separately by the Central Board of Indirect Tax and Custom only for ruling under the Customs Act.

Section 28EA inserted vide Finance Act 2018 empower CBIC to appoint Customs Authority for Advance Rulings

The CBIC may by notification, appoint an officer of the rank of Principal Commissioner or Commissioner of Customs to function as a Customs Authority for Advance Rulings.

The offices of the Authority may be established in New Delhi and at such other places, as the CBIC may deem fit.

Creation of post of Customs Authority for Advance Rulings

CBIC vide notification No.102/2020 – Customs (N.T.) dated 23.10.2020 has notified two posts of Principal Commissioner/Commissioner (Customs Authority for Advance Rulings) New Delhi and Mumbai.

Appointment of Customs Authority for Advance Rulings

CBIC vide Office Order No. 152/2020 dated 22.12.2020 has appointed following officers as Customs Authority for Advance Rulings.

Mumbai New Delhi
Shri Manas Ranjan Mohanty- Customs Authority for Advance Rulings, Mumbai Shri Vijay Singh Chauhan- Customs Authority for Advance Rulings, New Delhi.

Contact Detail and address of Customs Authority for Advance Rulings

CBIC vide Office Order No. 01/2020 (Legal) dated 09.02.2020, as amended vide Office Order No. 03/2021 (Legal) dated 12.04.2021 has notified the contact details of the two authorities in terms of regulation 6(3) of the Customs Authority for Advance Rulings Regulations, 2021. The details are as below:

Mumbai New Delhi
Customs Authority for Advance Rulings, Mumbai New Custom House, Ballard Estate, Mumbai-400001. Phone 022-22757750/51 E-mail: [email protected] Customs Authority for Advance Rulings, Delhi 5th Floor, NDMC Building, Yashwant Place, Satya Marg, Chanakyapuri, New Delhi-110021. Phone 011-26117895 E-mail: [email protected]

Jurisdiction of Customs Authority for Advance Rulings

The jurisdiction of the two authorities shall be determined in terms of the address provided by the applicant while making the application, as detailed below

Customs Authority for Advance Rulings Mumbai Customs Authority for Advance Rulings New Delhi
Andhra Pradesh Telangana,
Karnataka Kerala
Lakshadweep Puducherry
TamilNadu Gujarat
Dadra and Nagar Haveli Damanand Diu
Maharashtra Goa
MadhyaPradesh Chhattisgarh
 

Jammu & Kashmir Himachal Pradesh, Punjab
Chandigarh Uttar Pradesh, Delhi
Haryana Uttarakhand Bihar
Jharkhand West Bengal Andaman and Nicobar Islands
Sikkim Odisha Rajasthan
Assam Arunachal Pradesh Manipur
Meghalaya Mizoram Nagaland
Tripura and Ladakh

Applicants providing an address other than that within the territory of India will have Delhi jurisdiction.

Existing/ erstwhile Authority for Advance Rulings constituted under the Income-tax Act, 1961 was the Authority for giving advance rulings for the purposes of Customs Act prior to Finance Act 2018

Till the aforesaid date of appointment of the Customs Authority for Advance Rulings, the existing Authority for Advance Rulings constituted under section 245-O of the Income-tax Act, 1961 was the Authority for giving advance rulings for the purposes of Customs Act.

On and from the date of appointment of the Customs Authority for Advance Rulings, every application and proceeding pending before the erstwhile Authority for Advance Rulings shall stand transferred to the new Authority from the stage at which such application or proceeding stood as on the date of such appointment.

Appellate Authority against advance ruling pronounced under Customs by the Customs Authority for Advance Rulings

“Appellate Authority” means the Authority for Advance Rulings constituted under section 245-O of the Income-tax Act, 1961;’

As per section 28F of Customs Act the Authority for Advance Rulings constituted under section 245-O of the Income-tax Act, 1961 shall be the Appellate Authority for deciding appeal against advance ruling pronounced under Customs by the Customs Authority for Advance Rulings:

Who can seek  advance ruling under Customs i.e who can be “applicant”

Applicant can be any person,—

(i) Holding a valid Importer-exporter Code Number; or

(ii) Exporting any goods to India; or

(iii) With a justifiable cause to the satisfaction of the Authority, who makes an application for advance ruling under section 28H;

Question on which advance ruling may be sought

(a) Classification of goods under the Customs Tariff Act, 1975 ;

(b) Applicability of an exemption notification issued under sub-section (1) of section 25, having a bearing on the rate of duty;

(c) The principles to be adopted for the purposes of determination of value of the goods.

(d) Applicability of notifications 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;”

(e) Determination of origin of the goods and matters relating thereto.

(f) Any other matter as the Central Government may, by notification, specify.

Cases where advance ruling not allowed

Where the question raised in the application is –Already pending/decided by/before in the applicant’s case.

(i) any officer of customs,

(ii) the Appellate Tribunal or

(iii) any Court; or

Form and manner of application before Authority for Advance Ruling

An application for obtaining an advance ruling shall be made in Form CAAR-1 as notified under Customs Authority for Advance Rulings Regulations, 2021 notified vide Notification No. 01/2021-Customs (N.T.) dated 04.01.2021 .

Number of application and Fee for application

Every application shall be filed in quadruplicate and shall be accompanied by a fee of ten thousand rupees in the form of demand draft drawn in favour of “Customs Authority for Advance Rulings, Delhi” or “Customs Authority for Advance Rulings, Mumbai”, as the case may be.

Time Limit for pronouncement of ruling

The Authority shall pronounce its advance ruling in writing within three months of the receipt of application.

Dress regulation.

An authorised representative shall appear before the Authority in dress specified for the members of his profession by the competent professional body.

Extract of “Section 245O of Income Tax Act “Authority for Advance Rulings” related with Customs Authority for Advance Rulings as amended vide Finance Act, 2018 are as under

Sec 245-O. (1) The Central Government shall constitute an Authority for giving advance rulings, to be known as “Authority for Advance Rulings”:

Provided that the Authority shall cease to act as an Authority for Advance Rulings for the purposes of Chapter V of the Customs Act, 1962 (52 of 1962) on and from the date of appointment of the Customs Authority for Advance Rulings under section 28EA of that Act. [Inserted vide Finance Act 2018]

(1A) On and from the date of appointment of the Customs Authority for Advance Rulings referred to in the proviso to sub-section (1), the Authority shall act as an Appellate Authority, for the purpose of Chapter V of the Customs Act, 1962 (52 of 1962): [Inserted vide Finance Act 2018]

Provided that the Authority shall not admit any appeal against any ruling or order passed earlier by it in the capacity of the Authority for Advance Rulings in relation to any matter under Chapter V of the Customs Act, 1962 (52 of 1962) after the date of such appointment of the Customs Authority for Advance Rulings. [Inserted vide Finance Act 2018]

Section – 245Q of Income Tax Act: Application for advance ruling

245Q. (1) An applicant desirous of obtaining an advance ruling under this Chapter 17[or under Chapter V of the Customs Act, 1962] may make an application in such form and in such manner as may be prescribed18, stating the question on which the advance ruling is sought.

*****

Disclaimer: Effort have been made to make document error free, but it is possible that some error might have crept into this document

Prepared by: CA Rajnish Kumar, [email protected] Phone : 011-29832120, Mobile :+91-8588867453/8130883807/9811226085.

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