CBIC has notified the “Customs (Assistance in Value Declaration of Identified Imported Goods) Rules, 2023 (CAVR 2023)” to address the threat of undervalued imports.
These Rules prescribes the manner and procedure with regard to constitution of the Screening and Evaluation Committee, procedure for specification of identified goods, sources for examining cases for identified goods, preliminary and detailed examination by Screening/ Evaluation Committee, confirmation of report with recommendations by screening committee, CBIC to issue Order after considering recommendations, mid-term review, and so on, effective February 11, 2023.
However, the “CAVR 2023” shall not be applicable in respect of the following goods:
(a) goods not involving import duty;
(b) goods for which tariff value has been fixed by CBIC in terms of section 14(2) of the Customs Act;
(c) goods which attract import duty on specific rate basis;
d) imports made in terms of authorization or license issued under duty exemption scheme of the Foreign Trade (Development and Regulation) Act, 1992 in which the inputs imported prior to export are physically contained in the export product;
(e) imports where buyer and seller are related and an investigation on relationship has already been contemplated or finalized;
(f) Project imports;
(g) imports by Government, Public Sector Undertakings;
(h) imports made in non-commercial quantities;
(i) goods imported for the purpose of re-export; or
(j) imports specified by the CBIC in this regard.
It may be noted that Section 14(1) has been amended by the Finance Act 2022, as a measure to address the issue of undervaluation in imports. Also this amendment provides for farming of rules by the Central Government/ CBIC to specify the additional obligations of the importer in respect of a class of imported goods whose value is not being declared correctly, the criteria of selection of such goods, and the checks in respect of such goods. As a result, these Rules have been notified by the CBIC.
CBIC Customs (NT) Notification 3/2023 dt. 11/01/2023: Customs (Assistance in Value Declaration of Identified Imported Goods) Rules, 2023
CBIC Customs Circular 1/2023 dt. 11/01/2023: Customs (Assistance in Value Declaration of Identified Imported Goods) Rules, 2023 (CAVR 2023)
According to the new customs regulations and guidelines announced by the CBIC, importers of goods that have a history of evading customs duty through undervaluation will be subjected to more scrutiny and stronger disclosure norms.
The new rules offer the officials the authority to mandate additional disclosure and certification requirements to be followed by importers of goods with a history of duty evasion, i.e., where the authorities suspect systematic undervaluation of imports, which significantly robs the government of customs duty revenue.
The formation of two distinct kinds of committees has been mandated by CBIC. A screening committee consisting of high-ranking officials who handle revenue intelligence, valuation, analytics, and risk management will be established, and an evaluation committee that will consist of officials and conduct investigations into the cases will also be established. The screening committee will conduct a preliminary examination of the cases.
The CBIC will issue orders for additional requirements on disclosure and compliance to be made by the importer of such a category of goods based on the findings of these committees. These requirements will apply to the category of goods in question. This order’s validity will range from one to two years, and it will also be subject to a review at the halfway point in its tenure.
The CBIC Order may stipulate that certain technical particulars must be provided in the import paperwork, along with other possible requirements of the importer to demonstrate that the cargo is not undervalued and further checks that must be carried out by the customs officers.
According to recent reports in the news, the CBIC has just issued these guidelines in an effort to restrict the systematic practises of under-invoicing imports coming from a number of nations, most notably China.