Scheme of Advance Rulings for non-residents under the Customs Act, 1962 and Central Excise Act, 1944 - reg. - Customs - 89/2003

OFFICE OF THE COMMISSIONER OF CUSTOMS (IMPORT) NEW CUSTOM HOUSE, BALLARD ESTATE, MUMBAI 400001 F. No. S/26-181/2003 A (G) Date: 18.07.2003 Public Notice No. 89/2003 SUB: Scheme of Advance Rulings for non-residents under the Customs Act, 1962 and Central Excise Act, 1944 - reg. With a view to facilitating the non-resident investor in ascertaining his tax liabilities in terms of Customs Central Excise duties 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-B in the Customs Act, 1962 and Chapter IIIA in the Central Excise Act, 1944 are the relevant chapters under these two Acts. The Schemes allows a non-resident investor, entering into a joint venture in India in collaboration with a non-resident or resident; or a resident setting up a joint venture in India in collaboration with a non-resident to obtain in advance, a binding ruling from the Authority for Advance Rulings. An advance ruling under the scheme is with respect to questions pertaining to classification of goods, principles of valuation and the 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. Such 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 23E(2) of the Central Excise Act, 1944, would also leave the parties free of any time-consuming and expensive litigation subsequently. The Authority for Advance Rulings (Procedure), 2002 details the procedure for obtaining advance rulings. ACTIVITY ON WHICH ADVANCE RULINGS CAN BE SOUGHT Activity means import or export under the Customs Act, 1962 and production or manufacture under the Central Excise Act, 1944. 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. Furthermore, it helps in avoiding long drawn and expensive litigation at a later date. Seeking an advance ruling is inexpensive, and the procedure is simple expeditious. AUTHORITY PRONOUNCING ADVANCE RULINGS An advance ruling is pronounced by an Authority known as the Authority for Advance Rulings, constituted under section 28F of the Customs Act, 1962. It consists of a Chairman, who is retired judge of the Supreme Court of India and two members, one from the Indian Customs Central Excise Service who is qualified to be a Member of the Central Board of Excise Customs and the other from the Indian Legal Service who is or is qualified to be Additional Secretary to the Government of India. WHO CAN APPLY/SEEK AN ADVANCE RULING ? Any person who is a non-resident and is setting up a joint venture in India in collaboration with a non-resident or resident, or a resident who is setting up a joint venture in India in collaboration with a non-resident. 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, and all 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 entities is, in brief, as 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 or more, or 2. If the individual has been in India during the previous year for less than 182 days but has been in India for an aggregate of 365 days or more in the four years preceding the previous year and his stay in India during the previous year is 60 days or more. The criterion mentioned at (2) above does not apply if the 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 India origin, who being outside India, has come to India on a visit during the previous year. A person of India origin is one if he, or either of his parents or any of his grandparents, was born in undivided India. Individuals, who are not 'resident' in accordance with the above, are treated as 'nonresident' under the Income-tax Act. Company : A company is a non-resident if it is neither an Indian company nor one the control and management of whose affairs during the previous year is situated wholly in India. Every other person : Every other person is a non-resident, if during a previous year the control and management of its affairs is situated wholly outside India. QUESTION ON WHICH ADVANCE RULINGS CAN BE SOUGHT An 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 Tariff Act, 1985. Applicability of notifications issued under sub-section (1) of section 25 of the Customs Act, 1962, or sub-section (1) of section 5A of the Central Excise Act, having a bearing on the rate of duty. Principles to be adopted for the purposes of determination of value of the goods under the provisions of the Customs Act, 1962 or the Central Excise Act, 1944. 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. Filing of an applicant An application, in quadruplicate, should be filed in the prescribed form either by the applicant in person or by an authorized representative or may be sent by registered post to the Authority. An application and the accompanying annexures may be neatly typed on one side of plain paper of A-4 size (210x297mm) leaving a minimum margin of 30mm 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 legibly reduced to A-4 size on photocopier and, in the latter case, it should be folded to A-4 size. The question of law or fact on which advance ruling is sought may be stated clearly in the application. Signing of an application An application including the documents annexed thereto should be 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 duly authorized to do so, the application should include a power of attorney, authorizing his to sign and an affidavit setting out the unavoidable reasons, which entitle his to sign it. Authorised Representative An applicant is entitle to represent his case before the Authority either personally or through an authorized representative. If the applicant desires to be represented by an authorized representative, a document authorizing him to 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 the applicant, or if he is a person regularly employed by the applicant, the capacity in which he is at the time employed. However, where the authorized representative is a legal practitioner, such document of authorization shall be duly executed vakalatnama. Payment of Fee An Application should be accompanied by a fee of ₹ 2,500 (Rs. Two Thousand Five Hundred Indian Rupees) through a bank draft drawn in favor of the Advance Rulings payable at New Delhi. Withdrawal of application An applicant may withdraw his application within 30 days from the date of filing the application. TIME LIMIT FOR PRONOUNCING AN ADVANCE RULING. An advance ruling is required to be pronounced by the Authority within three months of the receipt of a valid application. IS AN ADVANCE RULING BINDING ? An advance ruling is required to be 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 jurisdictional 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. CONFIDENTIALITY The contents of an application would not be disclosed to unauthorised persons. ENQUIRY For any 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 contacted on any working day. The telephone number are given hereunder : 0091-11-26876412 0091-11-26876729 Disclaimer : This Public Notice should not be construed as in exhaustive statement of law. In case of doubt, reference should always be made to the relevant statutory provisions of the Customs Act, 1962 and the Central Excise, 1944, and the rules made thereunder. All the Importers, CHAs and other members of Trade are hereby requested to give wide publicity to be aforesaid scheme and inform your member. Sd/- (A. HUSSAIN) COMMISSIONER OF CUSTOMS (IMPORT) Form - AAR (CUS) [Application for Advance Ruling (Customs)] [See Rule 3 of the Customs (Advance Ruling) Rules, 2002] BEFORE THE AUTHORITY FOR ADVANCE RULINGS (CUSTOMS CENTRAL EXCISE) NEW DELHI (Form of application for seeking Advance Ruling under Section 28H of the Customs Act, 1962) Application No. .. of 1. Full name and address along with telephone and fax number of the applicant 2. Names, addresses, telephone and fax numbers, of the resident(s)/non-resident (s) setting up the joint venture. 3. Status of the resident(s)/non-resident(s), setting up the joint venture. 4. Import-Export code no.(s) of the joint venture party(s) mentioned at serial number 2 (if any) 5. Permanent Account Number(s) of the joint venture party(s) mentioned at serial number 2 (if any) 6. Basis of claim that the person(s) referred to at serial number 2, as the case may be, are non-resident(s). (whenever applicable). 7. Question (s) of law and/or fact relating to an activity proposed to be undertaken on which the advance ruling is required. 8. Statement of any relevant facts having a bearing on the aforesaid question (s). 9. Statement containing the applicant's interpretation of law and/or fact, as the case may be, in respect of the aforesaid question(s). 10. Commissioner of Customs having jurisdiction in respect of the question referred at serial number seven above (if any). 11. List of documents/statements attached. 12. Particulars of account payee demand draft accompanying the applicant. (Applicant's Signature) VERIFICATION I, __________________________________ (name in full and in block letters), son/daughter/wife of ________________________________do hereby solemnly declare that to the best of my knowledge and belief what is stated above and in the annexure (s), including the documents are correct. I am making this application in my capacity as __________________ (designation) and that I am competent to make this application and verify it. 2. I also declare that the question(s) on which the advance ruling is sought is/are not pending in any case before any customs authority, Appellate Tribunal or any Court. 3. Verified this _______________day ______________of_________200____________ at ___________ (Applicant's signature) FORM -AAR (CE) [Application for Advance Ruling (Central Excise)] [See rule 3 of the Central Excise (Advance Ruling) Rules, 2002] BEFORE THE AUTHORITY FOR ADVANCE RULINGS (CUSTOMS CENTRAL EXCISE) NEW DELHI (for of application for seeking Advance Ruling under Section 23 C of the Central Excise Act,1944) Application No.---------------of--------------- 1. Full name and address along with telephone and fax number of the applicant. 2. Names, addresses, telephone and fax numbers, of the resident(s) non-reident(s), setting up the joint venture. 3. Status of the resident (s)/non-resident (s), setting up the joint venture. 4. Registration(s) of the joint venture party (s) mentioned at serial number 2 under Rule 174 of the Central Excuse Rules (if any) 5. Permanent Account Number (s) of the joint venture party (s) mentioned at serial number 2 (if any) 6. Basis of claim that the person (s) referred to as serial number 2, as the case may be are non resident(s). (whenever applicable). 7. Question (s) of law and/or fact relating to an activity proposed to be undertaken on which the advance ruling is required 8. Statement of any relevant facts having a bearing on the aforesaid question(s). 9. Statement containing the applicant's interpretation of law and/or fact, as the case may be, in respect of the aforesaid questions (s). 10 Commissioner of Central Excise having jurisdiction in respect of the question referred at serial number seven above (if any). 11. List of documents/statements attached. 12. Particulars of account payee demand draft accompanying the application. (Applicant's signature) VERIFICATION 1. I, -----------------------------------------------------------(Name in full and in block letters), son/daughter/wife of -------------------------------------- do hereby so lemnly declare that to the best of my mnowledge and belief what is stated above and in the annexure (s), including the documents are correct. I am making this application in my capacity as-----------------(designation) and that I am competent to made this application and verify it. 2. I also declare that the question(s0 on which the advance ruling is sought is/are not pending in nay case before any customs authority Appellate Tribunal or any Court. 3. Verified this-----------------day ------------------of-------------------200---------- at------------------- (Applicant's signature) ANNEXURE I Statement of the relevant facts having a bearing on the question (s) on which the advance ruling is required. Place . Date . (Applicant's Signature) ANNEXURE II Statement containing the applicant's interpretation of law and/or facts, as the case may be, in respect of the question (s) on which advance ruling is required. Place Date (Applicant's Signature) Notes : 1. The application must be filled in English or Hindi in quadruplicate. 2. The application must accompanied by an account payee demand draft of Rupees two thousand five hundred drawn in favour of Authority for Advance Rulings, payable at New Delhi. Particulars of the draft should be entered in the column pertaining to item number 12. 3. Please state whether individual, Hindu undivided family, Company, Firm or Association of Persons, etc. 4. The number and year of receipt of the application will be filled in the office of the Authority for Advance Rulings. 5. If the space provided for answering any item in the application is found insufficient, separate sheets may be used for this purpose. Each sheet must be signed at the bottom by the applicant. 6. In reply of item number 3 the applicant must state the status of party (s) in the joint venture, i.e. whether the party (s) is an individual, Hindu undivided family, Company, Firm or Association of Persons. The status should be given in respect of each party. 7. For item number 6, the reply must be given in the context of the provisions regarding 'residence' in India as per the Income Tax Act, 1961. 8. Regarding item number 7, the question(s) should be based on the activity proposed to be under taken, Hypothetical questions will not be entertained. 9. In respect of item number 8, the applicant must state in details the relevant facts and also disclose the number of his activity and the likely date and purpose of the proposed activity (s). Relevant facts reflected in document submitted along with the application must be included in the statement of facts and not merely incorporated by reference. 10. For item number 9, the application must clearly state his interpretation of law of facts in respect of the question(s) on which the advance ruling is being sought. 11. The application, the verification appended thereto, the annexures to the application and the statements and documents accompanying the Annexures 1 and 2, must be signed on each page