Importers still wait for clarity on expanded scope of IGCRS Rules

The finance ministry notified the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022, (IGCRS Rules) on September 9.
 

Six weeks later, many importers are still not clear on the expanded scope of the new rules.
 

The IGCRS Rules replace the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017, that were applicable only for import of goods under a notification that required the importer to follow the procedures mentioned in the Rules.
 

The new rules now say they come into play even in situations where the notifications prescribe end use of imported goods but do not specifically prescribe application of the new rules. Also, that they will apply where the end use is not only for manufacturing but also for providing services or for onward supply to recipients who will use imported goods for specified purposes.
 

The Central Board of Indirect Taxes and Customs (CBIC) issued Circular no.18/2022-Customs on September 10 clarifying various provisions of the new rules. The clarifications suggest that the main intent of the IGCRS Rules is to monitor the end use of imported goods cleared under various exemption notifications issued under Sections 11 and 25(1) of the Customs Act, 1962, that prescribe end use of the goods. The idea behind extending the scope to onward supply of such goods seems to be to cover import of gold by nominated agencies who supply imported gold to actual users.
 

Rule 2(m) of IGCRS Rules defines (relevant extracts) ‘specified end use’ as dealing with the goods imported in a manner specified in the notification. A number of exemption notifications specify the conditions to be fulfilled either at the time of clearance of imported goods or afterwards. For example, pharmaceutical exporters can import drugs, penicillin, and its salts from unregistered dealers under advance authorisations only for export production. For project imports, the importers have to fulfil the conditions and follow the procedures prescribed under Project Import Regulations, 1986.
 

The notifications relating to such imports prescribe many conditions, including end use. It is unclear whether such importers are required to follow the procedures prescribed under IGCRS Rules, in addition to the conditions prescribed in the notifications.

At present, such importers are not using the IGCRS Rules. Exporters wonder whether the government intends the new Rules to be a trial run for administering the duty exemption scheme in future through the Customs notifications/software/IGCRS Rules alone without the need for issue of advance authorisation.
 

The right to clear imported goods at concessional or nil rate of duty flows from the exemption notification. This right cannot be taken away where the importer fulfils the conditions mentioned in the notification.
 

So, when the exemption notification does not prescribe a condition regarding the use of IGCRS Rules, can the exemption be denied when the importer does not follow the IGCRS Rules? Can the IGCRS Rules mandate the procedures prescribed therein for availing the exemptions?    
 

The said CBEC Circular no.18/2022-Customs says that   the Directorate General of Systems and Data Management, CBIC, shall make necessary changes in the system. So, the importers are worried that if they do not follow the IGCRS Rules procedures, the consignments may be held up when the government amends the software for imports.
 

The government should issue necessary clarifications.  
 

email: tncrajagopalan@gmail.com