Background
The Central Government, under powers conferred by Section 156 of the Customs Act, 1962, introduced these rules through G.S.R. 803(E) dated 30th June, 2017. These rules superseded the earlier Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016. The primary objective was to streamline procedures for availing concessional duty exemptions, ensuring transparency, accountability, and compliance in the utilization of imported goods. The rules came into force with effect from 1st July, 2017, coinciding with the rollout of GST, and broadened the scope to include both manufacture of goods and provision of output services.
Rule 1 – Short Title and Commencement
Explanation: This rule gives statutory identity to the notification and aligns commencement with GST implementation to ensure a harmonized indirect tax regime.
Rule 2 – Application
Explanation: This restricts the scope only to those cases where notifications mandate observance of IGCR (Import of Goods at Concessional Rate) procedures, thus preventing misuse.
Rule 4 – Information on Intent
Explanation: Ensures prior intimation, enabling Customs to track end-use of concessional duty goods.
Rule 5 – Procedure
1. Submission of Information:
2. Bond Requirement:
3. Forwarding of Information:
4. Grant of Benefit:
Explanation: This rule operationalizes the concessional duty scheme with dual-level checks—both at factory and port. The bond ensures revenue safeguard in case of default.
Rule 6 – Receipt & Record Maintenance
Explanation: This provision enforces strict record-keeping, ensuring traceability and preventing diversion of concessional goods.
Rule 7 – Re-export or Clearance of Unutilised/Defective Goods
1. Importer may re-export unused/defective goods within 6 months with Customs permission.
2. Alternatively, importer may clear such goods for home consumption, by paying differential duty plus interest u/s 28AA.
Explanation: Provides flexibility to businesses while safeguarding government revenue by either return of goods or recovery of forgone duty.
Rule 8 – Recovery of Duty
If importer fails to use goods as per exemption or does not re-export/clear under Rule 7, the Customs officer may invoke the bond to recover differential duty with interest.
Explanation: Acts as a deterrent against non-compliance, ensuring imported goods are used strictly for authorized purposes.
Rule 9 – References to Earlier Rules
Any references to 1996 or 2016 Rules will be deemed as reference to 2017 Rules.
Explanation: Ensures smooth legal continuity and avoids interpretational disputes.
Conclusion
The Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 mark a significant step in aligning customs procedures with the GST regime. They simplify compliance while tightening monitoring of duty concessions. By introducing provisions for services sector usage, record maintenance, quarterly returns, and bond execution, the rules create a balance between ease of doing business and safeguarding revenue interests.
These rules continue to be relevant for importers availing concessional duty benefits, requiring them to exercise due diligence in declarations, record keeping, and reporting, while providing Customs authorities with adequate enforcement mechanisms.
Form [See rule 6(3)]
QUARTERLY RETURN
Return for the quarter ending_____
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