The Central Board of Indirect Taxes and Customs (CBIC) has issued a Circular amending its previous guidelines on provisional assessment of duty under the Customs Act, 1962. This Circular was issued on 29th September 2020.
The said guidelines were issued originally by a Circular dated 22nd August 2016. However, the present Circular seeks to amend these guidelines to align them with Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020, popularly known as CAROTAR, 2020.
The present Circular stipulates for the following changes:
- Authorised Economic Operator (AEO)- T3 are required to furnish 0% of differential duty as security. This includes cases referred to Special Valuation Branch (SVB), those cases randomly selected for verification and where the importer is unable to make self-assessment and has sought provisional assessment.
- AEO – T1 and AEO – T2, are required to furnish:
- 0% of differential duty as security in terms of SI. No. 5 (b), 6(a) and 6(b)
- 50% (for AEO-T1) or 25% (for AEO-T2) of the applicable bank guarantee or cash deposit specified at SI. No. 4, 6(b)(1).
These duties are also applicable to imports by PSUs, Governments (Central/ State/ UT) or their undertakings.
- In cases related to the determination of origin under Free Trade Agreements (FTAs) based on the reasonable belief that the matter involves misdeclaration of origin, 100% of differential duty is required to be furnished as security.
- In cases related to verification of signatures and seals under FTAs, 100% of differential duty is required to be furnished as security.
- All class of importers, including AEOs, are required to furnish 100% of differential duty as security if provisional assessment is requested by the importer when an inquiry is initiated in terms of rule 5 or when verification is initiated in terms of rule 6(1)(a) or 6(1)(b) of CAROTAR, 2020.
Pertinently, rule 5 deals with the requisition of information from the importer. Rule 6 (1) (a) deals with verification requests made in cases where there is a doubt regarding genuineness or authenticity of the certificate of origin. Rule 6(1)(b) deals with verifications requests where there is reason to believe that the country of origin criterion stated in the certificate of origin has not been met or the claim of a preferential rate of duty made by the importer is invalid.
