APRIL 17, 2018

By Ashwani Kumar

WITH effect from 26th May, 1995, when the President gave his assent to the Finance Bill, 1995, the Customs Tariff Act stood amended and as a result thereof, goods imported through courier services were exempted from the operation of Chapter 98. A circular dated 30th May, 1995 issued by the Ministry of Finance, Govt. of India specifically provided that henceforth imports by couriers shall not be classified as baggage under Heading No. 98.03. The practice of charging a uniform duty at the rate of 80 per cent ad valorem on articles imported through couriers was discontinued. Couriers Imports (Clearance) Regulations, 1995, as amended by Courier Imports and Exports (Regulations) 1998, provide that imports through courier were to be classified as imports falling under the respective customs tariffs and headings.

Since the enactment of the Finance Act, 2017, there is ambiguity in connection with the classification of books and other duty exempted goods imported for personal use through courier. The description for heading 9804 has been substituted by the entry "All dutiable goods imported for personal use" vide third Schedule of the Finance Act 2017. Prior to the amendment, Heading 9804 (Chapter Notes S. No. 4) did not apply to "goods imported through courier service". This clause was in tune with the Courier Regulations to the extent that courier clearances will be on the basis of classification of goods under respective CTH. However, with the amendment introduced in Chapter 98 by virtue of Finance Act, 2017, customs duty is levied on books intended for personal use due to arbitrary classification.

Printed books intended for personal use are classified under two headings of the Customs tariff:-

1. CTH 4901 Printed books

and

2. CTH 9804 All dutiable articles, intended for personal use

Since the enactment of the Courier Regulations, for the past more than two decades, books imported for personal use or otherwise, were being classified under CTH 49011010 attracting NIL duty (Notification No. 50/2017 S. No. 302, earlier Not. No. 12/2012 S. No. 272). Books imported for personal use through the courier mode after the enactment of Finance Act, 2017 are subjected to classification under CTH 9804 9000attracting aggregate duty @ 42.080% which is inclusive of BCD 10% [Not. No. 50/2017 S. No. 608] and IGST 28% as per the prevailing tariff rates.

It is worth appreciating that in order to speed up delivery of cargo to importers to check extra cost and time involved in clearance, CBEC (now CBIC) introduced several procedural changes like Direct Port Delivery (DPD) in some major ports. However, the applicability of duty on books delays the clearance process leading to increase in dwell time. The import duty on books appears unjustified. Books are an important source of information and education. Education fuels economic growth. Such high rates of duties on books can become an impediment to the Government of India's scheme of promoting literacy, education, e-commerce and digital online business.

It is also pertinent to mention that with the advancement of technology and internet facility, information on any topic through electronic media has no global barriers. However, people fond of reading books prefer to import books and in the recent times e-commerce online purchase is becoming very popular. Therefore, duty on books should be exempted as before since there should be no distinction between electronic and printed material.

Divergent practices are followed in connection with classification of books and other non-dutiable goods in Customs Commissionerates. If every item imported for personal use is to be classified under 9804, then everything becomes dutiable at a uniform rate. Significantly, books imported by air through post or courier for personal use by an individual possessing IEC No. are invariably classified under 49011010. Thus no duty charged. Any item, whether dutiable or non-dutiable from Chapter 1 to 97 imported for personal use by a person holding IEC is classified under the respective Chapter heading. No duty is charged on books brought as baggage, accompanied or un-accompanied. Significantly, CTH 4901 covers printed books irrespective of the fact as to who is going to use it – whether it is for trading or personal use. There are no conditions attached to S. No. 302 of Not. 50/2017.

Indian consumers are more demanding and price conscious. The price of book, freight charges, customs duty, courier/postal handling charges contribute to hike in cost and the customer may end up paying around Rs. 2000/- by conservative estimates. Amazingly, the same book (pirated copy) may be offered for Rs. 300/- at traffic signal junctions.

It is also worth mentioning that the best part of 9804 9000 is that there are no regulatory requirements attached. With goods imported for personal use in small quantities by air (post or courier) and classified under 98049000, one pays duty but saves the hassles of seeking NOCs from statutory authorities like FSSAI, ADC, PQ, AQ, TC, BIS, CPCB, etc. Small quantities referred to, is however subjective – depends upon the discretion, mood and to the satisfaction of the proper officer.

Legal aspects : CTH 9804 covers all dutiable goods intended for personal use. This means that non-dutiable goods are outside the purview of Chapter 9804. Printed books classified under CTH 49011010 read with Not. 50/2017 S. No. 302 are not chargeable to duty at all. Courts have held that if no customs duty is chargeable either by reason of tariff not providing for it or because of the exemption notification, those goods will not be regarded as dutiable goods. Therefore, printed books being non-dutiable goods do not merit classification under 9804 9000.

In Pearl Engineering Polymers V/s Commissioner of Customs New Delhi, Tribunal had held that printed materials imported as books come under tariff heading 49.01 and are entitled to complete exemption of duty.

Conclusion: In view of above, it is felt that printed books imported for personal use should be classified under 4901 1010 and exempted from payment of duty irrespective of whether a person is holding IEC or not. Similarly, dutiable or non-dutiable goods intended for personal use qualify for classification under the respective Chapter heading. An early resolution of the ambiguity would go a long way towards Government of India's initiative of 'ease of doing business'.

(The views expressed are strictly personal)