Industry demand amnesty scheme for customs settlement

NEW DELHI : Industry players have urged the government to introduce an amnesty scheme to resolve long-standing disputes under the Customs laws in the upcoming interim Budget.

“We have received proposals for introducing an amnesty scheme…but the Budget is unlikely to address this issue (given that it is just an vote on account and not the full Budget,” an official told.

Experts say that an amnesty scheme, along the lines of ‘Sabka Vishwas’ and ‘Vivaad se Vishwas’, would help in ending long-drawn litigation under the Customs laws, and will particularly help small businesses to get rid of their past baggage of disputes.

The government had introduced ‘Sabka Vishwas’ and ‘Vivaad se Vishwas’ schemes in 2019 and 2020, respectively to reduce the long-pending litigation in central excise, service tax and direct tax disputes. The two schemes have fetched revenues over Rs 90,000 crore for the government.

With regards to customs, an estimated 30,000 cases are pending in various courts, involving an amount of more than Rs 40,000 crore, which may reduce substantially with the operationalisation of an amnesty scheme, thereby increasing revenue for the government and providing much-needed relief to businesses.

AQUILAW’s Executive Director Mr. Rajarshi Dasgupta said that the amnesty scheme will settle legacy disputes pertaining to customs classification, disagreement over valuation and rules of origin, among others.

“The taxpayers will gain significantly from the waiver of interest and penalty generally provided under any amnesty scheme and also by cleansing their financial statement by reducing the contingent liability,” he said.

Mr. Manish Mishra, partner, JSA Advocates and Solicitors, noted that customs regulations have gone through various changes over the last few years, including HSN (Harmonised System of Nomenclature) reorganisation and introduction of new FTAs (Free Trade Agreements).

“Thus, an amnesty scheme is much needed wherein businesses can pay past customs dues and settle disputes. In addition to revenue augmentation, it would significantly reduce the burden on the judiciary,” Mishra said.

In May, the finance ministry had introduced an amnesty scheme for traders who defaulted in export obligation under the Advance Authorisation (AA) and EPCG (Export Promotion Capital Goods) schemes. The last date for availing the benefits of the scheme was extended till December 31 from June 30, earlier.

Under the scheme, all pending cases of the default in meeting export obligation (EO) of certain authorisations can be regularised by the authorisation holder on payment of all customs duties that were exempted in proportion to unfulfilled EO, with an interest capped at 100%.

To be sure, the amnesty scheme from AA and EPCG caters to disputes under the Foreign Trade Policy. But the industry expects an amnesty scheme issued under the Customs Act which will help in resolving various disputes related to Customs duty payment.