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In recent times, Indian experts witnessed a gap between the trade data from India and from other countries like China. It was due to the under-invoicing of shipments by Indian importers to avoid their import tax liability. Under-valuation of imports was an issue for the exchequers and domestic industry. Under-valuation also affects the long-term growth of the Indian economy. To resolve these issues, the Government of India introduced the Customs (Assistance in Value Declaration of Identified Imported Goods) Rules, 2023 (hereinafter referred to as “CAVR, 2023”). The CAVR, 2023 was issued vide Notification No. 03/2023-Customs dated 11th January 2023 and is to be read with Circular No. 01/2023-Customs dated 11th January 2023. The CAVR, 2023 came into effect on 11th February 2023.
The CAVR, 2023 was enacted under the second proviso to sub-section (1) of section 14 of the Customs Act, 1962 which was inserted by the Finance Act, 2022. This proviso to section 14 of the Customs Act was inserted to empower the Central Board of Indirect Taxes & Customs (hereinafter referred to as “CBIC”) to make laws imposing additional obligations on importers against whom the CBIC has reasons to believe that they are not disclosing the value of goods truthfully or accurately as per the prescribed criteria.
The CAVR, 2023 is a framework that deals with systematic under-valuation of imports which leads to evasion of custom duty. The new rules come in the wake of recent instances of systematic undervaluation of imports from China. It empowers CBIC to mandate additional disclosure and certification requirements to be followed by importers of goods. The new rules will allow CBIC to identify the class of imports where undervaluation is rampant and prescribe additional declarations from importers of such goods in order to prevent under-valuation of imports. For specifying identified goods, CBIC has to formulate the following two committees:
The Evaluation Committee should comprise the following members:
For efficient conduct and timely discharge of their functions, both the Screening Committee as well as the Evaluation Committee shall hold regular meetings whenever necessary.
Table of Contents
The CAVR, 2023 has been introduced to address the concerns of under-valuation of imports which adversely affects the customs duty. These rules impose additional obligations and compliance requirements on importers who do not correctly declare their value. These additional obligations require the importer to justify the value declared by him in the case of their imports. Thus, this new rule ensures a check on evasion of duties and aids the authorities to collect customs duty properly.
Also Read: Special Valuation Branch (SVB) & Its Investigation Procedure
Ankita is an Advocate and has joined Enterslice as a Legal Researcher. Her work focuses on General Civil and Commercial laws, Corporate Taxation Laws, Labour and Employment Laws and Dispute Resolution. She is a law graduate from School of Law, University of Petroleum and Energy Studies. Prior to joining Enterslice, Ankita has the experience of practicing law in Delhi and Odisha.
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