Importers face tougher scrutiny in Finance Bill, 2020
The Finance Bill, 2020, is set to levy stricter norms to tighten scrutiny over businesses claiming customs duty relief meant for imports from India’s free trade agreement (FTA) partner countries. With a new chapter being introduced in the Customs Act, 1962, importers will now have to declare the origin of goods and comply with value addition needed in the exporting country for the item to be eligible for duty benefits promised under the FTAs. The proposal permits “time-bound verification of the claims from the exporting country in case of doubt.”
“Pending verification, preferential tariff treatment shall be suspended and goods shall be cleared only on furnishing security equal to differential duty. In certain cases, the preferential tariff treatment may be denied without further verification,” as per the budget documents. According to the consultation firm, PwC, this places the legal onus of declarations being made in respect of certificate of origin of the goods on the importer of goods.
This comes at a time when India’s trade deficit with some FTA treaty partner countries in Asia such as South Korea and Japan.