Customs Act, 1962 Section 28i — Procedure on receipt of application
Customs Act, 1962 · Procedure on receipt of application
Plain-English Explanation
Overview
Section 28I of the Customs Act, 1962, outlines the procedure the Authority for Advance Ruling (AAR) must follow upon receiving an application for an advance ruling. This section ensures transparency and due process in the AAR's handling of applications and sets timelines for pronouncements. Its proper implementation is crucial for businesses seeking clarity on customs duties and interpretations.
Who Does This Apply To?
This section primarily applies to:
- Applicants who have filed an application with the Authority for Advance Ruling (AAR) seeking a ruling on a matter concerning customs duties.
- The Authority for Advance Ruling (AAR) itself.
- The Principal Commissioner of Customs or Commissioner of Customs, who is involved in providing records and receiving copies of the AAR's orders and rulings.
How It Works
The process unfolds as follows:
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Application Forwarding: Upon receiving an application, the AAR must send a copy to the Principal Commissioner of Customs or Commissioner of Customs.
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Record Request: If deemed necessary, the AAR can request the Principal Commissioner of Customs or Commissioner of Customs to furnish relevant records. Note: The records must be returned as soon as possible after use.
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Application Review and Order: The AAR, after reviewing the application and any records obtained, must either allow or reject the application through a formal order.
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Pronouncing Advance Ruling: If the application is allowed, the AAR will examine additional materials (if any) and pronounce its advance ruling on the question specified in the application.
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Opportunity of Being Heard: Before pronouncing an advance ruling (if the application is allowed), the AAR must provide the applicant an opportunity to be heard, either in person or through an authorized representative, if requested by the applicant. The definition of "authorized representative" is defined in section 146A(2).
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Timeline for Ruling: The AAR must pronounce its advance ruling within three months of receiving the application.
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Communication of Order/Ruling: A copy of every order (allowing or rejecting the application) and every advance ruling must be sent to both the applicant and the Principal Commissioner of Customs or Commissioner of Customs.
Important Conditions & Exceptions
- Condition 1: The AAR must provide the applicant an opportunity to be heard before rejecting an application.
- Condition 2: If an application is rejected, the AAR must provide reasons for the rejection in the order.
- Exception: The AAR cannot allow an application where the question raised is already pending before any customs officer, the Appellate Tribunal, or any court in the applicant's case; or the question is the same as a matter already decided by the Appellate Tribunal or any court.
Practical Example
XYZ Imports, based in Mumbai, plans to import specialized machinery from Germany. They are unsure about the correct classification of the machinery under the Customs Tariff Act, which could significantly impact the applicable duty rates. To gain certainty, XYZ Imports files an application with the AAR seeking an advance ruling on the classification.
Upon receiving the application, the AAR forwards a copy to the Principal Commissioner of Customs, Mumbai. The AAR requests certain technical specifications of the machinery from the Commissioner, which XYZ Imports provides. After examining the application and the technical data, the AAR provides XYZ Imports an opportunity to be heard.
The AAR then analyzes the matter. Assume the AAR allows the application and rules that the machinery falls under a specific tariff heading attracting a 5% basic customs duty. This ruling is communicated to both XYZ Imports and the Principal Commissioner of Customs, Mumbai, within three months. This clarity allows XYZ Imports to accurately estimate their import costs and avoid potential disputes with customs authorities.
Key Amendments
No major amendments since enactment.
No case laws found for this provision yet.
Browse all case laws →Frequently Asked Questions
What is the procedure followed by the Authority for Advance Ruling (AAR) upon receiving an application under Section 28I of the Customs Act, 1962?
Upon receiving an application for advance ruling, the AAR, as per Section 28I(1), forwards a copy to the Principal Commissioner or Commissioner of Customs and may request relevant records. The AAR then examines the application and records and either allows or rejects it (Section 28I(2)). If allowed, further material is examined before pronouncing the advance ruling (Section 28I(4)).
Under what circumstances will the Authority for Advance Ruling (AAR) reject an application filed under Section 28I of the Customs Act, 1962?
The AAR cannot allow an application if the question raised is already pending before any customs officer, the Appellate Tribunal, or any court, or if the question is the same as in a matter already decided by the Appellate Tribunal or any court (Section 28I(2) Proviso). Before rejecting the application, the applicant must be given an opportunity to be heard, and reasons for rejection must be provided in the order (Section 28I(2) Second Proviso).
What is the timeline for the Authority for Advance Ruling (AAR) to pronounce its advance ruling after receiving an application under Section 28I of the Customs Act, 1962?
The Authority for Advance Ruling (AAR) is mandated to pronounce its advance ruling in writing within three months from the date of receipt of the application, as specified under Section 28I(6) of the Customs Act, 1962.
What happens after the Authority for Advance Ruling (AAR) allows an application under Section 28I(2) of the Customs Act, 1962?
If the AAR allows the application under Section 28I(2), it proceeds to examine further materials presented by the applicant or obtained by the AAR itself (Section 28I(4)). The applicant also gets an opportunity to be heard, either in person or through an authorized representative, before the advance ruling is pronounced (Section 28I(5)).
To whom is a copy of the order passed by the Authority for Advance Ruling (AAR) under Section 28I(2) of the Customs Act, 1962, sent?
As per Section 28I(3), a copy of every order made by the AAR under sub-section (2), whether allowing or rejecting the application, must be sent to both the applicant and the Principal Commissioner of Customs or Commissioner of Customs.
After the Authority for Advance Ruling (AAR) pronounces its advance ruling, who receives a copy, and what form does it take?
Following the pronouncement of an advance ruling, Section 28I(7) mandates that a duly signed and certified copy, in the prescribed manner, is sent to the applicant and the Principal Commissioner of Customs or Commissioner of Customs. This copy must be sent as soon as possible after the pronouncement.
Can an applicant request a personal hearing before the Authority for Advance Ruling (AAR) pronounces its ruling under Section 28I of the Customs Act, 1962, and who can represent them?
Yes, under Section 28I(5), the applicant can request a hearing before the AAR pronounces its advance ruling. They can attend the hearing in person or be represented by a duly authorized representative, as defined in Section 146A(2) of the Customs Act, 1962.
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Application copy to Customs Officer | Upon receipt of application, Authority forwards copy to the Principal Commissioner/Commissioner of Customs, potentially requesting records. |
| Authority decision to allow or reject | Authority, after examining application and records, may allow or reject the application by order. |
| Application rejection conditions | Application is not allowed if the question is pending before a customs officer, Tribunal, Court, or already decided by Tribunal/Court. |
| Opportunity to be heard before rejection | The applicant must be given an opportunity to be heard before their application is rejected. |
| Reasons for rejection required | If the application is rejected, the order must state the reasons for the rejection. |
| Advance ruling issuance timeframe | The Authority is required to pronounce its advance ruling within three months of the application's receipt. |
| Hearing Opportunity Before Ruling | Applicant gets opportunity to be heard (personally/authorized rep) before advance ruling is pronounced, if requested. |
| Order copies to Applicant and Officer | A copy of every order (allowing or rejecting) and advance ruling must be sent to the applicant and the Principal Commissioner/Commissioner of Customs. |
Amendment History
Substituted (w.e.f. 6-8-2014) by section 78 of the Finance (No.2) Act, 2014 (25 of 2014), for "Commissioner of Customs".
Substituted (w.e.f. 6-8-2014) by section 78 of the Finance (No.2) Act, 2014 (25 of 2014), for "Commissioner of Customs".
The words "except in the case of a resident applicant" omitted (w.e.f. 11-5-2002) by section 122 of the Finance Act, 2002 (20 of 2002).
Substituted (w.e.f. 6-8-2014) by section 78 of the Finance (No.2) Act, 2014 (25 of 2014), for "Commissioner of Customs".
Substituted by the Finance Act, 2018 (13 of 2018), section 68( w.e.f. 29.03.2018) for "six months". Earlier this was substituted by section 97 of the Finance Act, 2017, for "ninety days".
Omitted by s. 92 of Finance Act 2022 (6 of 2022).
Substituted (w.e.f. 6-8-2014) by section 78 of the Finance (No.2) Act, 2014 (25 of 2014)., for "Commissioner of Customs"