Key changes proposed for import of goods
The Government has recently proposed two key changes which shall have a significant bearing on importers of goods. The following is a brief up about these changes:
- Review / monitoring of imports under “Others” category
- Directorate General of Foreign Trade, Ministry of Commerce & Industry (‘DGFT’) has off late been focusing on classification of imported products under “Others” HS Codes assuming ‘mis-declaration of products, DGFT issued Trade Notice in October 2019 (Trade Notice No. 37/2019-20 dated October 22, 2019) highlighting the mindless use of “Others” HS Codes by importers / exporters. The importers were advised to carefully classify their products and use specific HS codes wherever available.
- Subsequently, DGFT issued another Trade Notice No. 46/2019-20 dated January 17, 2020 citing non-adherence to earlier advisory relating to mis-declaration of imported products and increased use of “Others” HS Codes. The importers were further advised to avoid using “Others” HS Codes. It was highlighted that the Government shall shortly address this issue and may introduce licensing regime for such items imported under “Others’ HS codes by shifting them from ‘free’ to ‘restricted’ category.
- DGFT released third Trade Notice No. 47/2019-20 dated January 29, 2020 seeking online submission of data regarding appropriate HS codes for goods imported under “Others” HS codes (applicable where existing HS codes are not sufficient). Notably, such data was required to be submitted till February 16, 2020. It is pertinent to note that the said link is still accessible and data can be submitted by importers at (https://docs.google.com/forms/d/e/1FAIpQLSdBYDXTN7Sg07hi3afOjehyOGloawtm72_EBGCHV6hmNIfKCg/viewform).
NITYA Comments: This is a significant development and is in line with the Government’s intentions to regulate imports in the country and placing stringent measures for adopting wrong HS codes for imported products.
As a next step, it is imperative for all importers to re-evaluate classification of all imported products under “Others” category. The importers can consider adopting following action plan:
- Re-evaluation of “Others” HS codes adopted for imported products.
- Intimating DGFT regarding lack of specific HS codes for imported products wherein “Others” HS codes have been presently used.
- Where specific HS codes are available, strategizing to ensure compliance with past as well as future imports.
- Stringent regime proposed for claiming benefits under Preferential / Free Trade Agreements (‘PTA’)
To monitor imports under PTAs, a new Chapter governing ‘Administration of Rules of Origin Under Trade Agreement’ is proposed to be introduced under the Customs Act, 1962 wherein:
- An importer needs to make a specified declaration on import of goods for claiming PTA benefit.
- An importer can be asked to furnish information as to how goods satisfy origin criteria. Proper Officer may call for further information, if needed.
- On failure to furnish such information, Proper Officer can temporarily suspend the preferential tariff treatment.
- After suspension, Proper Officer can seek specific information within 5 years from claiming preferential benefit, regarding origin of goods from issuing authority. If issuing authority does not provide specific information, proper officer can disallow preferential tariff treatment.
- Preferential treatment can also be withdrawn wherein tariff item is not eligible for preferential tariff treatment, certificate of origin is defective, not authenticated or expired.
NITYA Comments: Again, this proposal is in line with Government’s intent to control unscrupulous imports wherein the benefit of PTA is claimed.
To comply with this change, importers are suggested:
- Validating existing import documentation for claiming PTA benefit.
- Obtain requisite documentation / clarification from exporter regarding its status as a “manufacturer”, activities carried-out on supplied products and satisfaction of ‘Country of Origin’ criterion.