The government has notified the rules for advance rulings on Customs matters. This notification comes three years after the Customs Act, 1962 was amended incorporating Sections 28E to 28 M dealing with Advance Rulings matters, in 1999.
The idea of advance rulings is to give an entrepreneur an opportunity to put his interpretation of law or facts before a statutory authority and get an opinion, even before he starts his activity.
Once he gets the opinion, he can go ahead with the firm assurance that the Customs authorities are also bound by the opinion given by the statutory authority. That is an insurance against uncertainty.
The facility for getting advance rulings is, however, available only to joint ventures. A non-resident, collaborating with a resident or another non-resident can get advance ruling.
A resident collaborating with a non-resident can also ask for advance ruling. A resident or non-resident who does not have joint ventures cannot get advance rulings.
The request for advance ruling can be made in respect of three matters -- classification of goods under the Customs tariff, applicability of exemption notifications involving duty and principles to be adopted for valuation. Essentially, the matters should relate to duty liability.
A chairperson and two members shall constitute the Advance Ruling Authority. The chairperson must be a retired Supreme Court judge. One member shall be a person qualified to be a member of Central Board of Excise and Customs and the other must be an Indian legal service officer or a person qualified to be an additional secretary to the Central Government.
The Advance Ruling Authority shall not entertain questions that are already pending before or already decided by any appellate tribunal or court. The Advance Ruling Authority will not take up even questions pending before any Customs officer.
The Customs Act, 1962 contains the usual provisions of natural justice like hearing the concerned parties, how the Advance Ruling Authority shall be constituted, time limits etc. , The important point is that the jurisdictional Customs commissioner has to be made a party to the proceedings and whatever decisions the Advance Ruling Authority gives will be binding only in matters concerning the applicant party. No other party can take advantage of a ruling given in respect on an application. Section 28 H prescribes a fee of Rs 2,500 for each application.
The Customs (Advance Rulings) Rules, 2002, now notified, prescribes the application form. These can be signed by only by the principal officer of a company or a partner of a partnership firm. In case of other entities, the competent persons as mentioned in the Rules have to sign the application.
The notes to the application form warn that hypothetical questions will not be entertained. The question should be based on the proposed activity. The nature and purpose of the proposed activity (i.e. import or export), likely date and relevant facts must be disclosed. The statement of facts must incorporate the relevant facts reflected in the documents. The applicant must state his own interpretation of law of facts.
The government seems quite reluctant to make the advance rulings operational. Nothing else explains such a long delay in notifying the rules. The Advance Ruling Authority is yet to be constituted. After its constitution, the authority will frame Rules for conduct of its own business. Then only, something tangible can be expected.
