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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
- 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The facility is sought to be withdrawn for Solar Power Generating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
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.
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