Tariff Heading - DGFT Vs Customs
IN the monthly meeting of the Permanent Trade Facilitation Committee (PTFC) of JN Customs held on 28.10.2016, a point was raised:
In an Advance / EPCG license, exporter declares the HS code of each product sought to be imported duty free. These are declared as per the knowledge and understanding of the exporter while making an application to DGFT. Now when the goods arrive and Bill of Entry is filed for duty free clearance, authority for correct classification of the goods is Customs and not the DGFT. If assessing officer classifies the goods under import under a CTH other than the one declared in license, the exporter is asked to get the license amended. This is resulting into delays in clearance and increase in dwell time as well as transaction costs. This change however, does not make material change in the revenue involved or foregone.
And this was the clarification given:
Classification decided by assessing officer may vary from the HS code mentioned in Advanced License. In case, where Chapter or Heading No. varies or rate of duty is required to be changed based on classifications, the importers are asked to get the license amended from DGFT and the Bills of Entry are assessed provisionally on PD bonds. In case rate of duty applicable as per rented classification is more, the duty amount to that extent is increased which is required to be debited in EPCG bond for safeguarding duty. Even when the rate of duty is same under different C.T.H., then also goods are to be classified under proper C.T.H.
We may have this kind of problem in GST when the State and Central Authorities may differ on classification heading.