Other Services

Apart from GST, prompt and personalized time-bound consultancy, compliance, advisory, audit and training in Customs and Exim Policy is required for those taxpayers involved in foreign trade. The fields are broadly classified as under:

Customs:

Customs Duty is a type of indirect tax levied on goods imported into India as well as on goods exported from India. Taxable event is import into or export from India. Import of goods means bringing of goods into India from a place outside India. India includes the territorial waters of India which extend up to 12 nautical miles into the sea to the coast of India. Export of goods means taking goods out of India to a place outside India. This Customs duty would be in addition to GST in lieu of CVD and SAD.

Foreign Trade:

The Foreign Trade Policy or the Exim Policy is a set of guidelines and instructions established by the Director General of Foreign Trade (DGFT) in matters related to the import and export of goods in/from India. It is regulated by the Foreign Trade Development and Regulation Act, 1992 and the DGFT is the main governing body in matters related to Exim Policy. The main objective of the FTDR Act is to provide the development and regulation of foreign trade by facilitating imports into, and augmenting exports from India. The Exim Policy contains various policy related decisions taken by the government in the sphere of Foreign Trade, i.e., with respect to imports and exports to/from the country and more especially export promotion measures, policies and procedures related thereto.

Services provided in Customs & Foreign Trade:

Besides, litigation would also arise from issues relating to the erstwhile laws of Central Excise, Service Tax, etc. which would require:

Drafting of

• replies to notices,
• appeals,
• reply to appeal,
• cross objections, and
• revision applications

Appearances before Adjudicating/Appellate Authorities, Tribunal and High Court.

 

 

Comprehensive Services in Customs and Foreign Trade Policy (Exim Policy)

Apart from the significant focus on GST compliance and advisory, businesses involved in foreign trade (import and export) require prompt and personalized consultancy, compliance, audit, and training in matters related to Customs and the Exim Policy. Given the dynamic nature of international trade, tax laws, and the complex regulatory environment, ensuring full compliance with both Customs laws and the Foreign Trade Policy is critical. Failure to comply can result in penalties, delays in clearances, or even disputes and litigation with regulatory authorities.

In this note, we will discuss the scope of services required in these areas, including an in-depth understanding of Customs laws, the Foreign Trade Policy (Exim Policy), and related litigation services, particularly for businesses dealing with the import and export of goods. These services are essential for avoiding non-compliance and mitigating legal risks.

1. Customs: Understanding Customs Duty

Customs Duty is a type of indirect tax levied on goods that are imported into or exported from India. The Customs laws play a crucial role in regulating international trade and ensuring that businesses comply with the tax and regulatory framework. Customs compliance involves navigating complex rules and processes, and businesses engaged in cross-border trade must be aware of their obligations, particularly with regard to Customs Duty and related legal aspects.

a. Definition and Scope of Customs Duty

• Customs Duty is levied on the import of goods into India as well as the export of goods from India. It is a form of indirect tax and applies to all goods crossing the Indian border, either coming into or leaving the country.
• Import of goods refers to bringing goods into India from any place outside India. Under Customs laws, India includes its territorial waters, which extend up to 12 nautical miles into the sea from the coastline.
• Export of goods refers to the movement of goods out of India to any place outside the country.

b. Components of Customs Duty

• Basic Customs Duty (BCD): Levied on all imports at rates specified in the Customs Tariff Act.
• Integrated GST (IGST): Applied on imports in lieu of the erstwhile Countervailing Duty (CVD) and Special Additional Duty (SAD). While GST is collected by the central government, it also applies to imported goods, as part of the tax reform post-GST.
• Additional duties, such as Anti-dumping Duty and Safeguard Duty, may be imposed to protect domestic industries from unfair competition.
• Customs Duty on Exports: Though less common, some goods, particularly natural resources, are subject to export duties to control the outflow of these goods from India.

c. Customs Advisory and Compliance Services

To avoid delays at the border, excessive duty charges, and legal disputes with customs authorities, businesses require expert Customs consultancy services. These services include:

• Determining tariff classification for goods, which determines the applicable rate of Customs Duty.
• Valuation of goods for customs purposes, ensuring that all applicable duties and taxes are calculated correctly.
• Compliance with import/export documentation requirements, including Bills of Entry, Shipping Bills, and other relevant forms.
• Advising on Customs exemptions, duty drawbacks, and refund claims available under various schemes, especially those meant to encourage exports.
• Handling audits and investigations by customs authorities, including responding to queries, submitting required documentation, and representing clients during customs assessments.

Proper guidance on these matters helps businesses remain compliant with customs laws, avoid penalties, and streamline their import/export processes.

2. Foreign Trade Policy (Exim Policy): Facilitating International Trade

The Foreign Trade Policy (FTP), commonly referred to as the Exim Policy, is a framework of rules and guidelines established by the Director General of Foreign Trade (DGFT) to regulate India’s imports and exports. The policy is formulated under the provisions of the Foreign Trade Development and Regulation (FTDR) Act, 1992.

a. Objectives of the Foreign Trade Policy

The Exim Policy has a dual objective:

• Facilitating Imports: The policy provides guidelines on the import of raw materials, machinery, technology, and other inputs necessary for production in India.
• Promoting Exports: A significant part of the FTP is geared toward promoting exports through various incentive schemes, regulatory relaxations, and policy initiatives. These include measures like duty drawbacks, export promotion capital goods (EPCG) schemes, and export-oriented units (EOUs).

b. Key Components of the Exim Policy

• Export Promotion: The policy contains provisions for Export Promotion Schemes, such as the Merchandise Exports from India Scheme (MEIS) and the Service Exports from India Scheme (SEIS). These schemes provide financial incentives and concessions for exporters to boost India’s foreign exchange earnings.
• Special Economic Zones (SEZs): The Exim Policy regulates the functioning of SEZs, where businesses can operate with fewer tax and regulatory constraints to promote exports.
• Import Restrictions: Certain goods may be subject to quantitative restrictions, import quotas, or licensing requirements. The policy provides clarity on which goods are freely importable and which require special permissions.
• Compliance Requirements: Businesses engaged in foreign trade must comply with various documentation requirements, such as Import Export Code (IEC) registration, submission of Advance Authorizations, and adherence to Export Obligation under specific schemes.

Foreign trade consultancy services are essential for businesses to understand these policies, ensure compliance with import/export regulations, and take advantage of the available schemes and incentives.

3. Litigation Services: Customs and Foreign Trade

In the course of conducting international trade, disputes may arise between businesses and regulatory authorities, such as the Customs Department or DGFT. These disputes can lead to litigation, which may involve:

• Issues related to incorrect customs valuations, misclassification of goods, or disputes over applicable duty rates.
• Violation of import/export laws or failing to meet export obligations under the FTP.
• Refund disputes, such as those involving claims for duty drawbacks or GST refunds on exports.
• Show cause notices (SCNs) issued by Customs authorities or DGFT for non-compliance with customs laws or FTP guidelines.

Litigation services involve not only representing businesses before adjudicating authorities but also providing the necessary legal support throughout the dispute resolution process. Key aspects of litigation services include:

a. Drafting of Legal Documents

• Replies to Notices: When a business receives a show cause notice from customs authorities or DGFT, it must file a reply explaining its position and responding to the allegations.
• Appeals: If the adjudicating authority issues an unfavorable order, the taxpayer may file an appeal with the Appellate Authority. This requires careful drafting of grounds of appeal and legal arguments.
• Reply to Appeals: If the government or another party appeals against a favorable order, the taxpayer must file a response to defend their position.
• Cross Objections: In some cases, taxpayers may need to file cross objections to challenge specific findings of fact or law while supporting other parts of the order.
• Revision Applications: If a significant error is made in an order, a revision application may be filed to request a higher authority to review and correct the decision.

b. Representation Before Authorities

Effective litigation management requires representation before various adjudicating and appellate bodies, including:

• Adjudicating Authorities: Initial disputes and show cause notices are resolved at this level, where businesses must present their case to customs or DGFT officials.
• Appellate Authorities: In the event of an unfavorable ruling, businesses can appeal the decision before Appellate Authorities within the Customs Department or DGFT.
• Tribunals: The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) is the forum for appeals on customs and excise matters. Representing businesses before this Tribunal requires strong legal arguments and an in-depth understanding of the law.
• High Courts: For matters involving substantial questions of law, businesses may need to escalate their dispute to the High Court. Representation at this level focuses on complex legal interpretations and challenges to the validity of administrative decisions.

By engaging experienced professionals for drafting and representation, businesses can ensure that their rights are protected and disputes are resolved in their favor.

4. Training and Knowledge Sharing

Given the dynamic nature of international trade laws, businesses must stay updated on changes to Customs laws and the Foreign Trade Policy. To this end, training services are crucial. These services help businesses:

• Understand the latest developments in customs regulations and import/export policies.
• Ensure that their staff is well-equipped to handle compliance requirements and avoid legal disputes.
• Familiarize themselves with the procedures for obtaining export incentives, duty exemptions, and refund claims.

Workshops, seminars, and personalized training sessions can be provided to ensure that companies remain compliant with international trade laws and take full advantage of available incentives.

Conclusion

Businesses engaged in foreign trade require a comprehensive approach to Customs compliance and Foreign Trade Policy (Exim Policy). From consultancy and compliance support to litigation management, these services are critical to navigating the complex regulatory environment governing imports and exports in India. By seeking expert advisory.