Question 1

Who can apply for an advance ruling before the CAAR and what is the application fee?

Accepted Answer

Under Section 28H of the Customs Act 1962, any importer, exporter, or resident firm intending to import or export goods may apply to the Customs Authority for Advance Rulings in Form CAAR-1. The application fee prescribed under Rule 3 of the Customs (Advance Rulings) Rules 2002 is Rs 10,000 per application, payable online through the ICEGATE portal.

Question 2

What questions can the CAAR actually answer, and what falls outside its jurisdiction?

Accepted Answer

Section 28-I of the Customs Act 1962 limits CAAR jurisdiction to: classification of goods under the Customs Tariff Act 1975, the applicable rate of duty or exemption under a notification issued under Section 25, and rules of origin under a free trade agreement. The CAAR cannot rule on matters already pending before a court, tribunal, or departmental audit officer, or on transactions that are not genuine.

Question 3

How long does the CAAR take to issue a ruling, and is it legally binding?

Accepted Answer

Section 28-I(6) of the Customs Act 1962 requires the CAAR to pronounce its ruling within 90 days of receiving a complete application. Under Section 28J(1), the ruling is binding on the applicant and on the customs officer in respect of the specific transaction described in the application. The binding effect lapses if there is a change in law, the facts stated are found to be false, or a change in any of the conditions based on which the ruling was made.

Question 4

Can the ruling be challenged, and by whom?

Accepted Answer

Yes. Under Section 28KA of the Customs Act 1962 (inserted by Finance Act 2021), both the applicant and the jurisdictional Commissioner of Customs may appeal to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) within 60 days of the ruling date. No further appeal on a question of fact lies beyond CESTAT.

Question 5

What documents and technical inputs are needed to file a strong CAAR-1 application?

Accepted Answer

A complete CAAR-1 package under Rule 4 of the Customs (Advance Rulings) Rules 2002 requires: a detailed product description with HSN analysis mapped to the First Schedule of the Customs Tariff Act 1975, technical specifications or independent test reports, a draft commercial invoice, and — where a concessional rate is sought — a certificate of origin under the relevant FTA notification issued under Section 25(1) of the Customs Act 1962. Weak product characterisation is the single most common reason for adverse rulings.

Customs Advance Ruling Caar

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