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THE INSIGHT

Is DGFT overstepping its jurisdiction?
By Netizen
Feb 12, 2020

DGFT Prohibits import of "gifts" through Post or Courier.

This has reference to DGFT Notification No. 35/2015-20 dated 12.12.2019 amended para 2.25 of Foreign Trade Policy 2015-20 which now reads as "Import of goods, including those purchased from e-commerce portal, through post or courier, where customs clearance is sought as gifts, is prohibited except, life saving drugs/medicines and Rakhi (but not gifts related to rakhi)". An explanation 2 was added which clarified that import of gifts with payment of full applicable duties is allowed.

A plain and simple reading indicates that the intention of DGFT Notification is that import of gifts shall not be allowed to be cleared duty free. Thus, the DGFT Notification took away the exemption of duty granted in Customs Notification No. 50/2017 Sl. No.608A in as much as the said Notification granted exemption of duty in respect of gifts upto a value of Rs. 5000/-. It is the opinion of the author that an exemption of duty is administered by Customs while a policy condition is administered by DGFT through FTP. DGFT by making import of goods which are claimed as gift as prohibited and in the same breath clarifying that import of gifts on full payment of duty is allowed has in fact just took away the customs duty exemption. The better way would have been that CBIC rescinding the exemptions relating to CTH9803. Unfortunately, these exemptions given by CBIC are still in force and not rescinded even during the budget 2020.

Indeed, by coming out with this Notification, the DGFT caused resentment among diaspora making their export of Gifts to India as a "prohibited" activity. The mandate for DGFT in FT(D&R) Act, 1992 is "to provide for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from, India and for matters connected therewith or incidental thereto." DGFT's intervention into a import of "gift" which is not even a stream of trade in the way taking away the exemption given under the Customs Act, 1962 is uncalled for and definitely not in tune with the mandate given to DGFT.

DGFT Prohibits import of "stock lots" of Paper and paper Products under Chapter 48

This has reference to DGFT Notification No.45/2015-20 dated 31.1.2020 wherein DGFT amended Policy Condition for goods falling under Chapter Heading 4810. The Policy is changed from Free to Free with a Policy Condition that Import of Stock Lot is prohibited. Stock Lots are large quantities of products offered by liquidation s tock wholesalers. The word stocklot is used in reference to the type of sale which involves large discounts. It has no relation to quality of the goods. The difference in respect of stock lots as opposed to normal sale goods is the value at which they are sold. Hence, the issue is in relation to Valuation which is the domain of Customs. It is not the case of the DGFT that the goods are given a policy condition of Minimum Import Price. The author is of the opinion that DGFT is overstepping into the functions of customs in as much as the 'valuation' is the domain of assessing officers of customs. The better way to approach the issue would be that CBIC giving a directive to its officers to look into valuation of goods declared as stock lots under the Chapter Heading 4810.

By coming out with the notification, the DGFT has sent a message to Importers that they may not use the words 'stock lots' in relation to their import of goods under CTH4810.

DGFT warns the importers against claim of classification under "others".

This has reference to DGFT Trade Notice No. 37/2019-20 dated 22.10.2019 and Trade Notice No. 46/2019-20 dated 17.01.2020. Vide the above Trade Notices, DGFT warned the importers against mis-classification under Others category under residual headings under various Chapter Headings.

While the Trade Notice 37/2019-20 dated 22.10.2019 cited that it mentioning of residual entries under ITC HS causes avoidable incorrect import data, it warns against action under Foreign Trade (Development & Regulation) Act, 1992. It is another thing that the author is still searching the provisions of FT(D&R) Act, 1992 for any penal action for claim of a particular classification in Bill of Entry. The second such Trade Notice threatens to bring such residual entries as restricted goods. This is really activism by DGFT.

Classification is the domain of assessing officers. Even in the era of self-assessment, the customs does not look at the claim of particular classification, per se, as a violation. The ITC HS (and Customs Tariff) itself recognises others category and various chapter notes clearly indicate that parts and composite goods to be classified in the residual headings. Further, none of the residual headings carry lower duty or import policy as free. Import Policy is always based on a combination of Tariff Heading and Description. The author is of the opinion that instead of consulting the Trade for broadening the ITC HS and Customs Tariff, Trade Notices threatening to impose restrictions on the grounds of data quality do not go well with the concept of Ease of Doing Business being boasted about.

Government has been taking many measures in the ease of doing business through Customs Department which has been a major contributor in promoting the Index under the category of Trading Across Borders and the overstepping of DGFT into customs domain with such retrograde steps does not augur well for the image of India in global trade.