INTERNATIONAL JOURNEY OF CUSTOMS
The General Agreement on Tariffs and Trade (GATT), established in 1947 from the 1944 Bretton Woods Conference, played a pivotal role in shaping the modern global trading system by reducing the trade barriers and promoting economic recovery post war.
The World Customs Organisation (WCO), headquartered in Brussels, Belgium, was established in 1952 as Customs Co-operation Council (CCC) and renamed in 1994. The WCO has 183 members countries, representing over 98% of international trade. WCO develops international standards and best practices, conducts research on trade trends, and coordinates efforts to combat cross-border crime through Customs Enforcement Network (CEN). It also conducts research and analysis on emerging trends and challenges in international trade and customs administration, providing guidance to its members. WCO also issues technical advisories from the issues raised by the member countries and generally customs authorities follow such advisories for the determination of the value of imported goods.
- GATT Code on Customs Valuation 1981 - Article VII - the concept of "Actual Value" - charged in the ordinary course of value
- Works on Customs-related matters - classification, valuation, rules of origin, collections of customs revenue etc.
- Successor to the GATT - WTO members operate a non-discriminatory trading system-guarantees that exports of member nations will be treated fairly.
CUSTOM'S GOVERNANCE IN INDIA
The governance of Customs in India is overseen by Central Board of Indirect Taxes and Customs (CBIC), which operates under the Department of Revenue, Ministry of Finance, Government of India. CBIC formulates policies on customs and indirect taxes, implements customs laws, and prevents illicit activities like smuggling and tax evasion. Customs is enforced through the field formations of CBIC including Customs Commissionerate's, Central Excise Commissionerate and Directorates. CBIC also represents India in international customs forums and organisations, fostering cooperation and collaboration on customs matters with other countries. CBIC has launched the Single Window Interface for Facilitating Trade (SWIFT) for electronic customs submissions and automated systems like the Indian Customs EDI System (ICES) and Indian Customs Risk Management System (ICRM) to enhance efficiency.
To ensure compliance with the Customs laws, CBIC conducts audits and inspections of customs records and premises. It also conducts anti-smuggling operations to prevent the illicit movement of goods across borders and protect national security and economic interests.
Customs Valuation
Customs valuation is a subject matter of dispute and major challenges are found in determining the transaction value of imported goods, especially in cases involving related parties, royalties, or the inclusion of additional costs. Customs authorities may question the transfer pricing arrangements between related entities, leading to valuation disputes.
Classification issues
Classification issues may arise under harmonised system of nomenclature, impacting the applicable customs duties and tariffs. Further issues related to the origin of goods can lead to disputes regarding preferential tariff treatment, especially in cases involving free trade agreements or rules of origin requirement.
Other areas may involve anti-dumping and countervailing duties, safeguard measures, seizures and penalties, dispute resolution etc.
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.
