1 Enhancement of Monetary Limits gives relief to Importers and Exporters from Arrest and Prosecution
Arrest and Prosecution are the most feared weapons in the armory of the Tax administrator. The recent guidelines introduced by the Government, put restraints on the manner of exercise of these powers to rule out arbitrariness, unfairness and to restrict such actions to serious offenders.
There is no monetary limit for the exercise of the powers of arrest under the statute, but by Circular Nos. 12/2022-Cus. and 13/2022-Cus. both dated August 16, 2022, the Board has clarified that arrest should be made only in exceptional circumstances.
Under the new guidelines, no arrests or prosecutions can be initiated in the following cases:
- Unauthorized baggage imports made under Transfer of Residence and smuggling of precious metals, restricted and prohibited items, and notified goods, where market value of goods is below Rs. 5 million.
- Unauthorized bringing in or taking out of foreign currency of a value below Rs. 5 million.
- Import or export of misdeclared goods or concealment of restricted or prohibited goods, fraudulent evasion of customs duty or availment of drawback, where the market value of imported goods is below Rs. 20 million.
- Obtaining an instrument from any authority by fraud, collusion,
willful misstatement or suppression of facts and utilization of
such instrument, where the duty involved is below Rs. 20
The notable exceptions to these limits are serious offences relating to items such as fake Indian currency, arms, ammunitions and explosives, antiques, art treasures, wildlife items and endangered species of flora and fauna.
2 Withdrawal of facility for Manufacture in Warehouse for Solar Power Generating Units - Instruction No. 13/2022 dated July 9, 2022
Under Section 65 of the Customs Act, 1962, read with the Manufacture and Other Operations in Warehouse Regulations, 2019 importers have been extended the facility of duty free import of capital goods for undertaking manufacture in the customs warehouse. The facility is sought to be withdrawn for Solar Power Generating Units on the pretext, that electricity, their end product cannot fulfil the requirement of being kept under one time lock at the time of storage and removal. The Instructions appear to be at variance with the statutory intent and may not survive legal scrutiny. These instructions will have devastating consequences for solar power units operating in the bonded warehouses.
This issue is under consideration by the Delhi High Court in a challenge made by one of the Solar Power Generating Units. The Court has stayed the operation of the customs show cause notice and posted the matter for hearing later this month.
3 Free Trade Agreements to override CAROTAR in case of inconsistency – Instructions No. 19/2022-Cus. dated August 17, 2022
Bilateral and multilateral trade agreements strengthen partnerships and boost trade. India has inked FTAs with several countries, including the UAE, Mauritius, Japan, South Korea, Singapore, and ASEAN members. The Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 ["CAROTAR"] were introduced to streamline the rules of origin and curb the misuse of the preferential rate of duty. With these Rules, came more stringent obligations on exporters and importers for establishing the origin of goods, and authorities questioned or sought validation for certificates issued by agencies in the exporting country, by calling for extensive information from the importer. This caused delays and diluted the benefit sought to be conferred by the Free Trade Agreements (FTAs).
Now, the Board has issued Instructions clarifying that in case of inconsistency, provisions of FTA would override the CAROTAR. The Customs officers can call for information, date or evidence only to the extent permissible under the FTA. This comes as a huge relief to importers and exporters grappling with uncertainties and delays caused by the CAROTAR, and confirms the legal position maintained by us, that the FTAs have a legal binding effect.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.