SCHEME OF ADVANCE RULINGS FOR NON-RESIDENTS UNDER THE INDIAN CUSTOMS AND CENTRAL EXCISE LAW - CBEC Manual (OLD) - Central Excise

CHAPTER 19 SCHEME OF ADVANCE RULINGS FOR NON-RESIDENTS UNDER THE INDIAN CUSTOMS AND CENTRAL EXCISE LAW 1. The Scheme of Advance Rulings With a view to facilitate the non-resident investor in ascertaining in terms of Customs duties, Central Excise duties and Service Tax, a scheme of Advance Rulings has been incorporated in the Customs Act, 1962 and the Central Excise Act,1944 by the Finance Act,1999. Chapter V-Bin the Customs Act, 1962 and chapter III A in the Central Excise act, 1944 are the relevant chapters under these two Acts. 1.3 An advance ruling under the scheme is with respect to:- • Classification of goods. • Principles of valuation. • applicability of exemption notifications which could arise in determining the duty liability in respect of an activity proposed to be undertaken by the joint venture parties. . Notification issued in respect of duty of excise under the Central Excise Tariff act and any duty chargeable under any other law for the time being in force in the same manner as duty of excise leviable. • Admissibility of credit of excise duty paid or deemed to have been paid on the goods used in or in relation to manufacture of the excisable goods. Knowledge of tax consequences would also assist them in determining the viability of the proposed activity. The rulings being final in nature, subject of course to Section 28J(2) of the Customs Act, 1962 and Section 23 E(2) of the Central Excise Act,1944 , would also leave the parties free of any time consuming and expensive litigation, subsequently. 1.4 Authority for Advance rulings (Procedure), 2002 details the procedure for obtaining advance rulings. 1.5Authority for Advance Ruling' has also been renamed as "Authority for Advance Ruling (Customs, Central Excise and Service Tax). 2. Activity on which advance rulings can be sought Activity means import or export of goods under the customs act, 1962 and production or manufacture of goods under the Central Excise Act, 1944. 3. Benefits of obtaining advance rulings Obtaining an advance ruling helps the applicant in planning their Customs Central Excise activities, well in advance. It would also bring certainty in determining the duty liability, as the ruling is binding. Further it helps in avoiding long drawn and expensive litigation at a later date. See advance ruling is inexpensive, and the procedure is simple expeditious. 4. Authority pronouncing advance rulings An advance ruling is pronounced by an authority known as Authority for Advance ruling, constituted under Section 28F of the Customs 4 1962. It consists of a Chairman, who is a retired Judge of the Supreme Court India and two members, one from the Indian Customs Central Excise Se who is qualified to be a Member of the Central Board of Excise Customs the other from the Indian legal Service who is or is qualified to be an A Secretary to the Government of India. 5. Who can seek an advance ruling? Any person, who is a non-resident and is setting up a joint ye India in collaboration with a non-resident or resident, or a resident who is s up a joint venture in India in collaboration with a non-resident. Vide finance Bill, 2005, section 23A of Central Excise Act, 1944 is being amended so as to an existing Joint venture in India to avail the benefit of Advance Ruling. Central Government is also being empowered to notify any class or persons as eligible for availing the benefit of Advance Ruling. 6. Who is a non-resident? Under the existing provisions of the Income Tax act, 1961 the taxable entities are broadly divided into three groups, viz., Individual, Company an( other persons such as Hindu Undivided Family, Firm, association of Persons, etc. These taxable entities are divided into three categories depending upon their resident status. These categories are: • Resident, • Resident but not ordinarily resident and • Non-resident The resident status of each group of the taxable entitles is, in brief, under: • Individual: An individual is a 'resident' in India in any previous year: 1. If he has been in India during the previous year for 182 days more, or 2. If the individual has been in India during the previous year for than 182 days but has been in India for an aggregate of 365 days more in the four years preceding the previous year and his stay -. India during the previous year is 60 days or more. • The criterion mentioned at (2) above does not apply if individual is - (i) a citizen of India who has left India during the previous year for the purpose of employment outside India; or (ii) a citizen of India or a person of Indian origin, who being outside India, has come to India on a visit during the previous year. •A person of Indian origin is one if he, or either of his parents of any of his grand -parents, was born in undivided India. Individuals, who are not 'resident' In accordance with the above, are treated as 'non-resident' under the Income Tax Act. Company: • Company is a non-resident in India in any previous year if, it is neither nor one the control and management of whose affairs during the previous year if , it is neither an Indian company nor one the control management of its affairs is situated wholly in India. Every other person: Every other person is a non resident in India in any previous year, if during that year the control management of its affairs is situated wholly outside India. 7. Questions on which advance rulings can be sought Advance ruling can be sought on any question in respect of:- . Classification of any goods under the customs tariff act, 1975 or the central excise act, 1985. . Applicability of exemption notifications issued under sub section(1) if section 25 of the custom act, 1962 or sub section (1) of section 5 A of the central excise act, having a bearing on the rate of duty. • notification issued in respect of duty of excise under the Central Excise Tariff act and any duty chargeable under any other law for tt time being in force in the same manner as duty of excise leviable. • Admissibility of credit of excise duty paid or deemed to have been 1 on the goods used in or in relation to manufacture of the excisable goods. However, an advance ruling cannot be sought where the question Is already pending, in applicant's case, before any officer of the Customs or Central Excise, the Appellate tribunal or any Court; or Is the same as in a matter already decided by the appellate Tribunal or any Court. 8. Procedure for seeking advance rulings 8.1The applicant may seek an advance ruling by filling an application to the authority in the prescribed form and manner. The following steps need to followed by an applicant 8.2 Filing of an application • An application, in quadruplicate, should be filed in the prescribed form either by the applicant in person or by an authorised representative of may be sent by registered post to the Authority. • Art application in Annexure-54 (See Part 7) may be neatly typed on one side of plain paper of A-4 size [mm] leaving a minimum margin of 30 mm on all the four sides and may be duly page numbered and indexed. • Only photocopies of the documents on A-4 size may be enclosed with the application except when a document cannot be le reduced to A-4 size on photocopier and, in the latter case, it s be folded to A-4 size. • The question of law or fact on which advance ruling is sought be stated clearly in the application. 8.3 Signing of an application An application including the documents annexed thereto should signed in the manner indicated in note 10 to the prescribed form. Where a person signing the application and other documents claims to have been dulyuthorized to do so, the application should include a power of attorney authorizing him to sign and an affidavit setting out the unavoidable reason which entitles him to sign it. 8.4 Authorised Representative An applicant is entitled to represent his case before the Authority either personally or through an authorized representative. If the applicant desires tote represented by an authorized representative, a document authorizing him b appear for the applicant should be enclosed in original, before the commencement of hearing. If the authorized representative is a relative of the applicant, the document shall state the nature of his relationship with I applicant, or if he is a person regularly employed by the applicant, the capa in which he is at the time employed. However, where the authorizrepresentative is a legal practitioner, such document of authorization shall be duly executed vakalatnama. 8.5 Payment of Fee An application should be accompanied by a fee of Rs. 2,500 (Ti. thousand five hundred Indian rupees) through a demand draft drawn in favourof the 'Authority for Advance rulings' payable at New Delhi. 8.6 Withdrawal of application An applicant may withdraw his application within 30 days from the date of filing the application. 9. Time limit for pronouncing an advance ruling An advance ruling is required to be pronounced by the Authority within 90 days of the receipt of a valid application. 10. Is an advance ruling binding? An advance ruling pronounced by the Authority shall be binding (subject to Section 28J (2) of the Customs Act, 1962 and Section 23E (2) of the Central Excise Act, 1944), only — • On the applicant who has sought it, and • On the Commissioner of Customs or Commissioner of Central Excise, as the case may be, and the Customs and Central Excise Authorities subordinate to him, in respect of the applicant. 11Confidentiality The contents of an application would not be disclosed to unauthorized persons. 12. Enquiry For Forms and any latest information, Additional/Joint Commissioner. Authority for Advance rulings, Customs and Central Excise, 4th Floor, Hotel Samrat, Kautilya.Marg, Chanakyapuri, New Delhi-110021 INDIA may be contact on any working day. The telephone numbers Web site address are given hereunder:- 0091-11-26876412 - 0091-11-26876729 Website :- www.cbec.gov.in/cae/aar.htm.