EXIM VIDYA: Advance Ruling – A canon of certainty

exim vidya

“The Wealth of Nation” by the Scottish economist Adam Smith changed the world in 1776. More than two hundred forty years after its publication Adam Smith’s practical truths are yet to be absorbed fully. He has elaborated guiding rules and principle to make tax collection system effective and functional known as Adam Smith’s four “Canons of Taxation”. Canon of Equality, Canon of Certainty , Canon of Convenience and Canon of Economy. In India now we are looking at Advance Ruling as part of Canon of Certainty.

Advance Ruling is based on mainly two International Conventions and Agreements

The revised Kyoto Convention entered into force on February 3, 2006, outlaying the simplification and harmonization of Customs procedures as the blueprint for modern and efficient Customs procedures. As per revise Kyoto Convention General annex chapter 9 has recommended Advance Ruling.

During Bali WTO Ministerial Meeting held in December 2013, WTO Under the provisions of Article 3 of Agreement on Trade Facilitation has recommended Advance Ruling to enhances predictability and transparency of cross-border trade transactions. WCO has developed a single document covering procedures for issuing advance rulings on the classification of goods, rules of origin and Customs valuation.

What is Advance Ruling?

An advance ruling is defined as a written decision provided by the authorities to traders (upon request) prior to the transaction, which sets forth a transparent and formal process for treatment of goods with regards to the 1) goods’ tariff classification, 2) rules of origin, and 3) valuation.

Advance Ruling – India story


Indian story of Advance Ruling really started in 2017 and took some speed form 2020. Chart no -1 shows long way from where we have now reached today’s status. After establishment of Customs Authority for Advance Rulings (CAAR) at New Delhi and Mumbai each handling applicants from allocated areas.


Advance Ruling is Trade Facilitation Measure and success depend upon how well structured. When analysing scheme you need to consider various points such as Statutory Provisions, Definitions, Authority, Jurisdiction, scope, eligibility criteria, application rejection criteria and process, timelines, how process of natural justice is incorporated, binding of outcome, validity of outcome, modification and Rectification and finally provision process of appeal. Advance Ruling meets these criteria which can be seen from the below chart no 2.

Definition- Section 28E (b) of Customs Act, 1962:

Advance ruling means a written decision on any of the questions referred to in section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation.

This is an abridged version of the EXIM Vidya segment that was published in the April issue of Logistics Insider magazine. To read the complete version, please click here.

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