Customs authorities have started closely looking at such imports and have withheld consignments over concerns that FTA provisions are being abused – goods routed through countries with which India has a trade agreement and therefore eligible for lower import duty. They have denied clearance or FTA duty benefits at several ports including Nhava Sheva, India’s second-largest container port located in Navi Mumbai.
“Clearances have been blocked… it could lead to supply issues,” said a person familiar with the development.
A mail sent to the finance ministry spokesperson and the Central Board of Indirect Taxes and Customs did not elicit any response till the time of going to press.
Authorities have sought payment of differential customs duty with interest in the case of third-party invoice or the full duty, another person said, adding that no reason had been provided for the rejection of re-assessment requests.
Abuse of rules or origin is a key concern for revenue authorities.
To address this, India had in 2020 introduced the Customs (Administration of Rules of Origin under Trade Agreements) Rules that provides for verification of exports from the exporting country on certain grounds.
Invoking these rules, as per a public notice issued at the end of March, customs authorities said information can be sought in cases where there is a reasonable duty evasion concern through third-party invoicng.
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