8-Digit Code For Commodities On The Horizon

The government will soon amend the Customs and Excise Act as a precursor to the adoption of an eight-digit national classification code for commodities from the next financial year. Sources said that the eight-digit code will bring the tariff structure in the country in tune with the global system. The code will be a welcome development for both exporters and importers as they will be able to locate commodity details with the help of a single number. The code will also help in harmonising sales tax structure in the states, especially after adoption of the VAT regime, sources said. The uniform code will also facilitate preparation of a single document including details relating to customs, central excise and importability of a product. Such a document could also be used for capturing import/export trade statistics. There is no uniformity in the codes used by different agencies in the country at present. Businessmen need to look at three different documents for classification, capturing trade statistics and to determine the importability of a product. The government had earlier set up a task force, comprising officials from the CBEC, DGFT, commerce ministry and directorate-general of commercial intelligence and statistics (DGCIS), to evolve a system of classification at the eight-digit level. The task force has already designed a comprehensive national classification code and the rest of the information will made available by other departments soon. Sources said that that preparatory work for the introduction of national classification code will be completed by December so that the budget exercise for the next financial year could be attuned to the code. They said that the real advantage of the common national classification code will come when all states adopt the value-added tax system (VAT) "" all commodities will have same code for both excise and sales tax. The new code will also make the excise tariff structure more commodity-specific as each commodity included in the list at present can be segmented further, said sources. They said that developed countries were using more than 10-digit codes for including more commodities in their tariff structures, and that India could also expand the eight-digit code later.