Customs Act, 1962 Section 28f — Authority for advance rulings

Type Section

Legislation Customs Act, 1962

Amendments 3

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Plain-English Explanation

Plain English Summary

Overview

Section 28F of the Customs Act, 1962 deals with the establishment and transition of applications concerning the Authority for Advance Rulings (AAR). It primarily addresses the transfer of pending cases from the old AAR to the new or restructured AAR following amendments and legislative changes. This ensures continuity and avoids disruption in the process of obtaining advance rulings.

Who Does This Apply To?

This section primarily affects:

Applicants seeking advance rulings on customs matters.
Customs Officers involved in the advance ruling process.
The Authority for Advance Rulings (AAR), both the previous and current incarnations.
Businesses involved in import and export activities who need clarity on customs duties and regulations.

How It Works

The section outlines the procedure for transferring pending applications and proceedings related to advance rulings:

Finance Bill, 2017 Assent: Upon the President's assent to the Finance Bill, 2017, all applications and proceedings pending before the then existing Authority for Advance Rulings (Central Excise, Customs and Service Tax) were transferred to the newly constituted Authority. The cases were transferred from the stage where they were at the time of the assent. This is applicable as per subsection (2).
Appointment of Customs AAR: Subsection (3) stipulates that upon the appointment of the Customs Authority for Advance Rulings, all applications and proceedings pending before the erstwhile Authority for Advance Rulings shall stand transferred to the new Authority. The transfer happens from the exact stage the application or proceeding was at on the date of the appointment.
Continuity of Proceedings: The transferred cases are continued by the new Authority from the stage where they were at the time of transfer, ensuring no loss of progress.

Important Conditions & Exceptions

Condition 1: The transfer of cases only occurs when there is a change in the structure or establishment of the AAR, either due to legislative changes or the appointment of a new authority.
Condition 2: The transfer applies to all pending applications and proceedings, regardless of their nature or complexity.
Exception: Section 28F primarily focuses on the transfer mechanism and does not override the basic process to apply for advance rulings in customs matters.

Practical Example

Imagine a company, "ImportCo," filed an application with the old Authority for Advance Rulings (Central Excise, Customs, and Service Tax) on January 15, 2017, seeking a ruling on the classification of a newly imported machine, resulting in a potential customs duty dispute. The application was at the stage of preliminary examination when the Finance Bill, 2017 received Presidential assent. Under Section 28F, this application of ImportCo was automatically transferred to the new Authority for Advance Rulings, and the new authority picks up the case at the preliminary examination stage, avoiding a fresh start to the entire process.

Key Amendments

No major amendments since enactment.

[ Section 28F. Authority for advance rulings. - [(1) ***²

(2)On and from the date on which the Finance Bill, 2017 receives the assent of the President, every application and proceeding pending before the erstwhile Authority for Advance Rulings (Central Excise, Customs and Service Tax) shall stand transferred to the Authority from the stage at which such application or proceeding stood as on the date of such assent.]

(3)On and from the date of appointment of the Customs Authority for Advance Rulings, every application and proceeding pending before the erstwhile Authority for Advance Rulings shall stand transferred to the Authority from the stage at which such application or proceeding stood as on the date of such appointment.³

123Superscript numbers in the text mark amended passages — click them to jump here. Click "↑ view in text" to jump back.

2017↑ view in text

Substituted by section 94 of the the Finance Act, 2017 (7 of 2017), for section 28F. Earlier section 28F was amended by Act 18 of 2005, sec. 66 (w.e.f. 13-5-2005) and by Act 33 of 2009, sec. 86 (w.e.f. 15-9-2009), vide G.S.R. 676 (E), dated 14th September, 2009). Section 28F, before substitution, stood as under: "28F. Authority for advance rulings. (1) The Central Government shall, by notification in the Official Gazette, constitute an Authority for giving advance rulings, to be called as the Authority for Advance Rulings (Central Excise, Customs and Service Tax).

2021↑ view in text

Omitted (w.e.f. 4-4-2021) s. 5 (c) of The Tribunals Reforms (Rationalization and Conditions of Service) Ordinance, 2021 (2 of 2021)

2018↑ view in text

Inserted by Finance Act, 2018 (13of 2018), section 66 ( w.e.f. 29.03.2018)

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Frequently Asked Questions

What is the purpose of Section 28F of the Customs Act, 1962 regarding the Authority for Advance Rulings?

Section 28F establishes the legal framework for the Authority for Advance Rulings (AAR) under the Customs Act, 1962. It provides a mechanism for importers and exporters to obtain binding rulings on customs matters before undertaking transactions, promoting certainty and reducing disputes. This helps businesses plan their operations with clarity on customs duties and procedures, minimizing potential risks.

When did the amendments introduced by the Finance Bill, 2017 regarding the Authority for Advance Rulings take effect under Section 28F of the Customs Act, 1962?

According to Section 28F(2), the amendments introduced by the Finance Bill, 2017 took effect on the date the Finance Bill, 2017 received the President's assent. Any application or proceeding pending before the erstwhile Authority for Advance Rulings (Central Excise, Customs and Service Tax) stood transferred to the newly constituted Authority from the stage it was at on the date of the assent.

What happened to applications and proceedings pending before the previous Authority for Advance Rulings when the new Customs Authority for Advance Rulings was appointed, according to Section 28F(3)?

As per Section 28F(3) of the Customs Act, 1962, on the date the Customs Authority for Advance Rulings was appointed, all applications and proceedings pending before the previous Authority for Advance Rulings were transferred to the new Authority. The transfer occurred from the stage at which each application or proceeding stood on the date of the new Authority's appointment.

Does Section 28F specify any penalties for non-compliance with advance rulings issued by the Authority for Advance Rulings?

Section 28F itself doesn't explicitly outline penalties for non-compliance with advance rulings. However, failure to adhere to the ruling may lead to reassessment of duties, potential penalties under other sections of the Customs Act, 1962, such as Section 112 (Penalties for improper importation of goods, etc.) and Section 114A (Penalty for use of false or incorrect material). Refer to relevant sections addressing penalties and enforcement within the Customs Act for detailed provisions.

Who can apply for an advance ruling under the Customs Act, 1962, and what kind of questions can they ask?

Any person involved in import or export can apply for an advance ruling. The questions must pertain to the determination of customs duties, classification of goods, valuation of goods for customs purposes, applicability of notifications, or interpretation of provisions of the Customs Act, 1962 or any rules/regulations made thereunder concerning import or export.

Are there any time limits associated with the issuance of advance rulings under Section 28F and related regulations?

While Section 28F doesn't explicitly state a time limit for the issuance of a ruling, related regulations and guidelines generally prescribe a timeline for the Authority to pronounce its ruling. The Customs Authority for Advance Rulings Rules, 2021, outlines the procedure and specifies the time frame for the Authority to provide its ruling, aiming for a prompt resolution of the application. Specific timelines may vary based on complexity of the case.

How can Section 28F impact customs planning and compliance strategies for businesses involved in international trade?

Section 28F empowers businesses to obtain clarity on complex customs matters *before* engaging in import or export transactions. This allows for informed decision-making, accurate duty calculations, and reduced risk of disputes with customs authorities. Using the advance ruling mechanism promotes compliance, optimizes customs planning, and contributes to a more predictable and efficient international trade operation.

Key Conditions & Requirements

Condition	Details
Transfer of pending applications (Finance Bill 2017)	Applications pending before the old Authority transfer to the new Authority upon Presidential assent to the Finance Bill, 2017, at their existing stage.
Transfer of pending applications (Appointment Date)	Applications pending before the old Authority transfer to the new Customs Authority upon its appointment, at their existing stage.

Amendment History