BUDGETARY CHANGES IN CUSTOMS

[DR.MARIAPPAN GOVINDARAJAN]

Finance Bill, 2022

The Finance Minister submitted her budget on 01.02.2022.  She narrates the improvements to be made for the development of Indian economy.  She also introduced the Finance Bill, 2022 (‘Bill’ for short) in which she has brought many amendments in direct tax as well as in indirect taxes such as GST, Customs.  In this article the changes that have been brought under the Bill to the Customs Act, 1962 (‘Act’ for short) are discussed in detail.  No major changes have been made to the Act in the Bill.

Classes of officers

Section 3 of the Act prescribes 9 classes of officers.  The Bill substitutes a new section for the present Section 3.  The newly substituted section provides that there shall be the following classes of officers of customs,-

• Principal Chief Commissioner of Customs or Principal Chief Commissioner of Customs (Preventive) or Principal Director General of Revenue Intelligence;
• Chief Commissioner of Customs or Chief Commissioner of Customs (Preventive) or Director General of Revenue Intelligence;
• Principal Commissioner of Customs or Principal Commissioner of Customs (Preventive) or Principal Additional Director General of Revenue Intelligence or Principal Commissioner of Customs (Audit);
• Commissioner of Customs or Commissioner of Customs (Preventive) or Additional Director General of Revenue Intelligence or Commissioner of Customs (Audit);
• Principal Commissioner of Customs (Appeals);
• Commissioner of Customs (Appeals);
• Additional Commissioner of Customs or Additional Commissioner of Customs (Preventive) or Additional Director of Revenue Intelligence or Additional Commissioner of Customs (Audit);
• Joint Commissioner of Customs or Joint Commissioner of Customs (Preventive) or Joint Director of Revenue Intelligence or Joint Commissioner of Customs (Audit);
• Deputy Commissioner of Customs or Deputy Commissioner of Customs (Preventive) or Deputy Director of Revenue Intelligence or Deputy Commissioner of Customs (Audit);
• Assistant Commissioner of Customs or Assistant Commissioner of Customs (Preventive) or Assistant Director of Revenue Intelligence or Assistant Commissioner of Customs (Audit);
• such other class of officers of customs as may be appointed for the purposes of this Act.

Proper Officer

Section 87 of the Bill proposes to insert a new sub-sections (1A) and (1B)  to Section 5.  The newly inserted sections will give powers to the Board and the Principal Commissioner/Commissioner to assign such functions to an officer who shall be proper officer in relation to such functions.

The Bill also proposes to insert a new sub-section 5(4).  This section specifies the conditions and limitations in assigning the functions of the proper officer by the Board/Principal Commissioner.  The following criteria to be considered in assigning the functions to the proper officer-

• territorial jurisdiction;
• persons or class of persons;
• goods or class of goods;
• cases or class of cases;
• computer assigned random assignment;
• any other criterion as the Board may, by notification, specify.

Concurrent powers

The newly inserted section 5(5) gives powers to the Board to give concurrent powers to more than one officer.  The said section provides that The Board may, by notification, wherever necessary or appropriate, require two or more officers of customs (whether or not of the same class) to have concurrent powers and functions to be performed under this Act.

Valuation

Section 14 deals with the valuation of goods.  This section gives powers to the Central Government to frame rules in this regard.  The proviso to section 14(1) provides to provide some matters to be included in the Rules.  Now three points as detailed below are there-

1. the circumstances in which the buyer and the seller shall be deemed to be related;
2. the manner of determination of value in respect of goods when there is no sale, or the buyer and the seller are related, or price is not the sole consideration for the sale or in any other case;
3.  the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section.

Section 88 of the Bill proposes to insert another aspect to be included in the rule.  The fourth clause to be inserted in this proviso provides that the rule may provide for additional obligations of the importer in respect of any class of imported goods and the checks to be exercised, including the circumstances and manner of exercising thereof, as the Board may specify, where, the Board has reason to believe that the value of such goods may not be declared truthfully or accurately, having regard to the trend of declared value of such goods or any other relevant criteria.

Amendment to definitions under section 28E

Section 28E(c) defines the term ‘applicant’.  The explanation given to this section defines the term ‘joint venture in India’.  The Bill proposes to omit this explanation.

The Bill also proposes to omit the definitions for ‘non-resident’, ‘ndian company’ and ‘foreign company’ under section 28E(h).

Advance Ruling

Section 28H (3) provides that the application for advance ruling shall be submitted in quadruplicate along with the fees of ₹ 10,000/-.   The Bill proposes to omit this section.  For this purpose the Bill proposes to amend section 28H(1) which will provide that the an applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and in such manner and accompanied by such fee as may be prescribed, stating the question on which the advance ruling is sought.  The Rule will prescribe the rate of fees to be payable for seeking advance ruling.

Withdrawal of application for advance ruling

Section 28H (4) provides for withdrawal of application for advance ruling within 30 days from the date of filing the application.  Now this section is proposed to be amended.  By this amendment the application for advance ruling may be withdrawn at any time before an advance ruling is pronounced.

Signing of Advance Ruling

Section 28I(7) after the proposed amendment will provide that the a copy of the advance ruling pronounced by the Authority and certified in the prescribed manner shall be sent to the applicant and to the Principal Commissioner of Customs or] Commissioner of Customs, as soon as may be, after such pronouncement.

Validity of advance ruling

Section 28J(2) provides that the advance ruling shall be binding as aforesaid unless there is a change in law or facts on the basis of which the advance ruling has been pronounced.  The Bill proposes to substitute a new section for the existing section 28J(2).  The newly substituted section 28J(2) will provide that the advance ruling shall remain valid for three years or till there is a change in law or facts on the basis of which the advance ruling has been pronounced, whichever is earlier.  Thus the validity period of advance ruling is restricted to three years. 

in respect of any advance ruling in force on the date on which the Finance Bill, 2022 receives the assent of the President, the said period of three years shall be reckoned from the date on which the said Finance Bill receives the assent of the President.

Action subsequent to inquiry

Section 93 of the Bill proposes to insert a new section 110AA in the Act.  The newly inserted section 110AA provides that, if an officer of customs has reasons to believe that-

• any duty has been short-levied, not levied, shortpaid or not paid in a case where assessment has already been made;
• any duty has been erroneously refunded;
• any drawback has been erroneously allowed; or
• any interest has been short-levied, not levied, short-paid or not paid, or erroneously refunded,

then such officer of customs shall, after causing inquiry, investigation, or as the case may be, audit, transfer the relevant documents, along with a report in writing–

• to the proper officer having jurisdiction, as assigned under section 5 in respect of assessment of such duty, or to the officer who allowed such refund or drawback; or
• in case of multiple jurisdictions, to an officer of customs to whom such matter is assigned by the Board, in exercise of the powers conferred under section 5,
• and thereupon, power exercisable under sections 28, 28AAA or Chapter X, shall be exercised by such proper officer or by an officer to whom the proper officer is subordinate in accordance with sub-section (2) of section 5.

Protection of data

Section 94 of the Bill proposes to insert a new section 135AA.  This section provides that If a person publishes any information relating to the value or classification or quantity of goods entered for export from India, or import into India, or the details of the exporter or importer of such goods under this Act, unless required so to do under any law for the time being in force, he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to fifty thousand rupees, or with both. 

Nothing contained in this section shall apply to any publication made by or on behalf of the Central Government.

The explanation to this section provides that, the expression ‘publishes’ includes reproducing the information in printed or electronic form and making it available for the public.

For this purposes section 135AA, section 137 (cognizance of offences) is also proposed to be amended.  According to the new amendment the section 137 will not be applicable to a person who has been allowed to compound once in respect of any offence under section 135AA.

Validation of certain acts taken under the Act

Section 96 of the Bill provides that notwithstanding anything contained in any judgment, decree or order of any court, tribunal, or other authority, or in the provisions of the Act-

• anything done or any duty performed or any action taken or purported to have been taken or done under Chapters V, VAA, VI, IX, X, XI, XII, XIIA, XIII, XIV, XVI and XVII of the Customs Act, as it stood prior to its amendment by this Act, shall be deemed to have been validly done or performed or taken;
• any notification issued under the Customs Act for appointing or assigning functions to any officer shall be deemed to have been validly issued for all purposes, including for the purposes of section 6;
• for the purposes of this section, sections 2, 3 and 5 of the Customs Act, as amended by this Act, shall have and shall always be deemed to have effect for all purposes as if the provisions of the Customs Act, as amended by this Act, had been in force at all material times.

The explanation to this section clarifies that any proceeding arising out of any action taken under this section and pending on the date of commencement of this Act shall be disposed of in accordance with the provisions of the Customs Act, as amended by this Act.