Import Management - R R Padmanabhan

Import Management

India is a consuming nation.  By its very nature, Indian economy is structured in such a way that it would import more than its export.  At least, in the short run of about 5 to 10 years, the situation would continue to be so. Perhaps, scheme like AtmaNirbhaan succeed, the situation might change. Further, as India continues to integrate itself in the global supply chain, imports would constitute significant part of the Indian economy.  Therefore, it goes without saying that business enterprises would have to know not only the sources of import of goods but also the procedural aspects of imports.

So, what do we import mostly?




Import Management has to take cognizance of three important aspects namely, procedural compliance, amount of duty to be paid and how to save on duty.  Of course, it comes by practice and by adding knowledge over a period of time.  Let us take procedural compliance first.

The first and foremost in import management is finding out Importability of the product.  The importability or otherwise of the import product can be found in schedule I of the Exim Policy.  The Policy fixes the import products in 3 categories namely: 

  1. Prohibited
  2. Restricted
  3. Open General Licence (OGL) or Freely importable 

The import policy can be seen chronologically as ‘before 1992’ and ‘post 1992’.  The period subsequent to 1992 can be termed as path breaking.  It is hailed as era of liberalization.  As I am writing this article in my office room, all the things that I see, lights, furniture, laptop, coffee mug, books, stationary, almost all of them were not permitted to be imported in to India before 1992. Yes, they were draconian days to do business.  Much water had flown post 1992.  One can import almost everything freely.  Yet, we cannot, as import policy practitioners assume such blanket view as far as the policy is concerned. 

First let us see what are Prohibited Items?

There are about 60 items that are prohibited for imports.  They range from Ivory to Nuclear reactors. 

The Next one is restricted category.

By virtue of this category, Government restricts the import of these goods into country.  It means that the Government allows import subject to the permission/ approval.  In India, Director General of Foreign Trade coming under the control of Ministry of Commerce and Industry issues this license subject to certain rules and regulations.  It is very important to keep watching the list of restricted category whenever one imports for the first time or after a long pause because one may be in trouble at the time of custom clearance.  Customs would never allow clearance if the item is under restricted category. 

One question that would be pertinent to ask: what if the item is restricted on the date of arrival in India but was free at the time of shipment from abroad?  Such cases are covered under transitional provisions in terms of para 1.05(b) of Foreign Trade Policy 2015-20.

1.05 Transitional Arrangements

(b) Item wise Import/Export Policy is delineated in the ITC (HS) Schedule I and Schedule II respectively. The importability/ exportability of a particular item is governed by the policy as on the date of import/export. The date of import/ export is defined in para 2.17 of HBP, 2015-20. Bill of Lading and Shipping Bill are the key documents for deciding the date of import and export respectively. In case of change of policy from ‘free' to 'restricted/prohibited/state trading' or 'otherwise regulated', the import/export already made before the date of such regulation/restriction will not be affected

Take the case of Power tillers.  Import of Power tillers was brought under Restricted category by a notification dated 15th July 2020.  But a client of mine brought Power


 

tillers and bonded them much before this date.  After much deliberation and after citing the above provision on the Foreign Trade Policy, the clearance was allowed. 

The concept of Promissory Estoppel works here in these cases.  But the same cannot be said in case of revenue laws like Income tax or customs or GST for Promissory Estoppel does not apply. 

The third category is Open General License or (OGL).  It is residual clause.  It means that whatever the goods uncovered by Prohibited and restricted categories fall under this category. 

So, better be aware!


R R Padmanabhan
Director
Exim Academy

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