Since its last Trade Policy Review in 2011, the main changes in India's customs procedures have included the adoption in 2011 of self-assessment with a view to facilitating trade.1 In accordance with Sections 17, 18 and 50 of the Customs Act 1962 and the Bill of Entry (Electronic Declaration) Regulations 2011, and Shipping Bill (Electronic Declaration) Regulations 2011, importers/exporters are required to declare the correct description, value, classification, notification number (if any), and assess the Customs duty leviable (if any) on imports/exports themselves. The declaration may be reassessed or examined by Customs officers. Non-compliant importers/exporters may face penal action on account of wrong self‑assessment made with intent to evade duty or avoid compliance of conditions of relevant legal and administrative provisions.
With a few exceptions, importers- Indian or foreign nationals- must obtain an importer‑exporter code (IEC) number by registering with the Directorate General of Foreign Trade (DGFT) in order to be able to import commercially (Table A3.1). Online registration is available.2
Imports into India can be classified as: imports for home consumption, warehousing, transhipment, transit, re-importation, and imports for special economic zones (SEZs).3 All imports for home consumption require clearance of goods after payment of the duties and charges. Importers must file a bill of entry, which may be processed manually or through the electronic data interchange system. As at end October 2014, 126 customs offices out of the total of 377 offices had electronic data interchange (EDI) facilities; about 98% of declaration documents were processed electronically.4 The bill of entry may be filed prior to the arrival of the goods to allow for faster clearance, but no earlier than 30 days before the arrival date of the vessel or aircraft carrying the goods.
India uses a risk management system (RMS) as a trade facilitation measure to selectively screen only high and medium-risk cargo for customs examination. As at end October 2014, about 97.6% of India's imports was processed via RMS.5 The authorities indicate that RMS for processing imports is operational at almost all customs offices.
Importers with a good track record and complying with qualifying criteria are entitled to be accredited for special clearance procedures under the Accredited Client's Programme (ACP). As at 31 October 2014, 251 ACP importers were allowed to self-assess their consignments with no need for examination, with a view to meeting India's commitments to simplify and harmonize Customs' procedures under the revised Kyoto Convention.
To import specific goods, in certain instances, certificates of registration and import permits (e.g. certificates of origin and sanitary and phytosanitary certificates) issued by different agencies are required. These certificates must be submitted at the time of filing the bill of entry.
Regarding time required for customs clearance, the mean evacuation time for import consignments at Chennai Port was 8 days and 19 hours, according to a study conducted by the Central Board of Excise and Customs. The authorities consider that the introduction of EDI, RMS, e-Payment, the ACP as well as direct delivery of containers at the port rather than clearing them after being brought to the container freight stations, and a provision for self-assessment contributed to the reduction of customs clearance time.6
If the importer is not satisfied with the assessment (i.e. the classification, rate of duty or valuation) by the customs officer, the importer may appeal against a decision made in writing by an officer ("assessment order") to the Appeals Commissioner or the Customs, Excise, and Service Tax Appellate Tribunal (Customs Act 12962, Sections 128-129). In 2013-14, 11,649 and 1,992 appeals were submitted to the Commissioner and the Tribunal, respectively (compared with 8,286 and 2,518 appeals, respectively, in 2012-13).
In regard to the Agreement on Trade Facilitation, India has not yet submitted its Category A notification to the Secretariat.
Since 2011, there has been no change in India's preshipment inspection requirements for its imports. Preshipment inspection is required for shredded and unshredded metallic waste and scrap, second-hand and defective steel products, and certain textile and clothing articles.7
Since 2011, there has been no major change in customs valuation on imports adopted by India. Its main legislation regulating customs valuation includes the Customs Act 1962 (Section 14), as amended, and the Customs Valuation (Determination of Price of Imported Goods) Rules 2007. Under the Act, it is stipulated that determination of value of imports should be based on the transaction value, which is defined as the price actually paid or payable for the goods when sold for export to India, including any amount paid or payable for costs and services (e.g. commissions and brokerage, royalties and licence fees, transport and insurance costs, and handling charges)8. A landing charge (for loading, unloading, and handling) of 1% of the c.i.f. value is added to the c.i.f. value.9
Nonetheless, the Central Board of Excise and Customs is authorized by notification in the Gazette of India to fix reference prices ("tariff values") for any type of imported (exported) goods, in accordance with Section 14(2) of the Customs Act 1962. On 16 January 2012, a notification concerning the introduction of reference prices to imports of gold and silver was issued; the changes entered into force on 17 January 2012.10 On 25 June 2013, areca nuts were made subject to reference prices.11 The authorities state that tariff values are revised every two weeks and are adjusted to align with international market prices (Table 3.1).
Note: "Tariff values" for poppy seeds were introduced through Customs (non‑tariff) Notification No. 116/2007, 3 December 2007. Reference prices are for end-year.
Source: Customs (non‑tariff) Notifications Nos. 188/2009, 31 December 2009; 03/2010, 31 December 2010; 89/2011, 30 December 2011; 115/2012, 31 December 2012; 134/2013, 31 December 2013; and 117/2014, 31 December 2014.
The transaction value is not used if "reasonable doubt" arises on the accuracy of the declared value, or in the event, inter alia, where: (1) there are certain restrictions on disposition or use of the goods by the buyer; (2) the sale or price is subject to condition or consideration for which a value cannot be determined; (3) part of the proceeds of any resale, disposal or use of the goods by buyer will accrue directly or indirectly to seller; or (4) the buyer and seller are related.12 If the transaction value is not used, the value is determined according to other methods, in sequential order: transaction value of identical goods; transaction value of similar goods; deductive value; computed value; and residual method.
The transaction value is also generally used to assess the additional duty on imports. Nonetheless, for imports of some packaged goods, which, if produced domestically, would be subject to a maximum retail price (MRP), the value of the goods is determined using the MRP declared on the package minus an "abatement" for like domestic goods.13
India maintains, in the WTO, the special and differential treatment provisions invoked under the Tokyo Round Agreement14; it continues to maintain a reservation concerning the reversal of the sequential order of Articles 5 and 6, and a reservation to apply Article 5.2 whether or not the importer so requests.15
Importers may file an appeal against customs decisions on valuation matters to the Appeals Commissioner or the Customs, Excise, and Service Tax Appellate Tribunal (Customs Act 1962, Sections 128‑129).16
Rules of origin
Changes in India's rules of origin since 2011 include the adoption of preferential rules of origin with regard to imports from Malaysia and Japan under bilateral FTAs, which entered into force on 1 July 2011 and 1 August 2011, respectively. India does not apply non-preferential rules of origin. Preferential rules of origin are applied under regional and bilateral trade agreements (Table 3.2). Maximum foreign-content requirements range from 30% to 70%; other criteria to determine origin are sufficient transformation and change in tariff classification.
Table 3.12 General rules of origin under trade agreements, 2015a
35% of the f.o.b. value and change in tariff sub-heading
65% of the f.o.b. value and change in tariff sub-heading
35% of the f.o.b. value and change in tariff sub-heading
Other preferential areas
70% of the f.o.b. value and change in tariff heading
30% of the f.o.b. value and change in tariff heading
n.a. Not applicable.
a Applicable to goods not wholly originating and subject to compliance with other conditions specified in the rules of origin chapter.
b Product‑specific rules of origin apply.
c "Change in tariff heading" denotes change at the HS 4 digit level.
d "Change in tariff sub heading" denotes change at the HS 6 digit level.
Note: Rules of origin are not covered under the India‑Bhutan preferential trade agreement.
Source: Department of Commerce online information, "International Trade: Trade Agreements". Viewed at: http://www.commerce.nic.in/trade/international_ta.asp?id=2&trade=I; Customs General Exemption Nos. 70 and 71. Viewed at: http://www.cbec.gov.in/customs/cst-809/cs-gen66-90.pdf; and information provided by the Indian authorities.