In re Metro Brands Limited (CAAR Mumbai)
M/s Metro Brands Limited filed an application before the Customs Authority for Advance Rulings (CAAR), Mumbai seeking an advance ruling on whether imports of footwear from Vietnam and Bangladesh under eligible Free Trade Agreement (FTA) notifications qualify for the benefit of NIL Agriculture Infrastructure and Development Cess (AIDC) under Serial No. 19 of Notification No. 11/2021-Customs dated 01.02.2021 where the importer claims and is allowed a concessional rate of Basic Customs Duty (BCD), and not necessarily a NIL rate. The applicant imports footwear under CTH 6402, 6403 and 6404 from Vietnam, Bangladesh, Brazil, Cambodia and China, and avails preferential BCD under Notification No. 46/2011-Customs (AIFTA) and Notification No. 99/2011-Customs (SAFTA) supported by valid Certificates of Origin and compliance with the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR). Effective from 02.02.2025, BCD on footwear was reduced from 35% to 20%, Social Welfare Surcharge was exempted, and AIDC at 18.5% became applicable, while Notification No. 11/2021-Customs provided a NIL AIDC rate under Serial No. 19 for goods where exemption from BCD is claimed and allowed under specified notifications listed in its Annexure.
The applicant contended that Notification Nos. 46/2011-Customs and 99/2011-Customs are expressly included in the Annexure to Notification No. 11/2021-Customs. It argued that Section 25(1) of the Customs Act, 1962 empowers the Government to exempt goods from the whole or any part of customs duty, meaning that both complete and partial exemptions constitute “exemption” for the purposes of Serial No. 19. The applicant further relied on Annexure C of the Union Budget, 2021, stating that imports under FTAs were intended to remain exempt from AIDC, and submitted that nothing in Notification No. 11/2021-Customs restricts the benefit only to cases where BCD becomes NIL. According to the applicant, once concessional BCD under an eligible FTA notification is claimed and allowed, the conditions of Serial No. 19 stand fulfilled.
