New customs classifications from New Year

the customs is introducing a revised classification system — hs (harmonised system) 2002 of the world customs organisation (wco) — will come into effect from january 1, 2002. the customs had notified the new system in budget 2001, however, the implementation will be on the wco date as the new hs comes online the world over. the duty rates will be maintained in the revised classification. the description will be changed in nearly 400 cases. about eight percent tariff headings and sub headings in the 5,400 groupings in hs 1996 have been affected. chapter notes and section notes too have been amended with new definitions for software and smart cards. as many as 91 new subheadings for hazardous wastes, cites and narcotics are in place. a number of subheadings of items of interest to india — like onions, sugarcane, cryolite, fur skins and motorised hand tools — are out of hs proper as the share of these goods in world trade has become relatively small. besides, the wco technical officers had to make place for new sub headings. india seems to done little homework to prepare other hs based systems for the change. the excise schedule continues on a modified form of the 1996 hs. the statistical system of the dgcis too is on the 1996 hs. the import policy is derived from the eight digit dgcis classification which was meant for export purposes. a sub group in the department of revenue has formulated a new eight digit system based on the old system but this too is oriented to the needs of tax collection. the blind adoption of the hs code for national policies does not make sense. the country needs a national classification and coding system based on statistically significant commodities and products. links of equivalence to the international hs system will provide the necessary connectivity to the rest of the world. indigenous system with words used in local parlance (why should mithai be called sweetmeat, the product should called by its popular name) should be used for tagging polices. for example, there is no code for indian sarees in the excise, customs and exim policies because nobody has tried to classify and code commercially significant products in india. terminal handling charges: service agencies under various guises like freight forwarder and cargo consolidator have managed to squeeze into the export chain. the exporters are made to route deliveries through these bodies by their buyers. after taking charge of the front end, the agencies slap a terminal handling charge (thc) on the exporters for handling the cargo to the ship's deck. the thc can go up to even $200 per 20 ft fcl container. for lcl cargo, the charges are even more steep. exporters say that the agencies should take their commissions from concor, trucker or the steam ship company. instead, the exporter has to bear the double burden of the thc which is otherwise included in the freight. as a measure of trade facilitation, the government should devise a system to regulate the services of the new animal on the scene on the lines of the rules for chas who are accountable for their actions and charges to the customs commissioner. exporters also complain that even standard rules of documentation and banking are being violated by the agencies. goods are released to foreign buyers under subsidiary or parallel shipping bills while the original bill is with the banker awaiting retirement. many an exporter is holding dud documents with no payment in sight. the buyer has disappeared from the scene with the goods after taking the title on the strength of subsidiary documents. the reserve bank and its exchange control officers should devise a way to ensure a fair deal to the exporters. chennai port congestion: a leading exporter has written to us that he may have to suspend his exports since he cannot absorb the port congestion surcharge of $200 per container at the chennai port. ships are unable to discharge or load in time and the feeder vessels have passed on the cost of the delay to the exporters. apparently, the port trust is not able to manage the labour unions. the congestion surcharge started at $75 per container progressively moved up to $200 per container with increase in delay. the exporter has entered into long term contracts with far east and middle east buyers but the problems in chennai port are leading to default in both delivery schedules as well as export obligation bonds with the dgft and customs. the port problems have affected both imports and exports. one wonders whether the scope shipping mechanism set up in the ministry of commerce during the enthusiastic 1970s and 1980s is still functioning. (even if the body is alive, it is unlikely to take any worthwhile action. the government machinery is on unofficial holiday. the current priority is not to waste casual leave credits which lapse at the end of the calendar year.) depb cuts: the expected year end bad news has arrived. the trade has complained to us that the customs at delhi air cargo is not accepting the depb for payment of customs duty. importers have to pay the duty in cash and also suffer the four percent sadd to get their goods out of the customs custody. it is rumoured that the disease is expected to surface at chennai too. other ports will follow suit, depending upon how wide is the gap between revenue targets and actual realisation. fortunately, drawback, eous and licences like dfrc are not, as yet, on the hit list. the depb licence is in for a difficult time as the government itself is not interested in it, at least for the three months till april 2002 when the new financial year begins. besides, the exim policy declares that the scrip will not be issued after april when a reformulated drawback scheme compatible with wto is to take over from depb. it is also feared that the finance minister may call back the sadd exemption on depb in the new budget to get few hundred crores of additional revenue. the trade hopes that the export collapse with the official export growth target down to just three percent in the current fiscal will guide the finance minister in coming budget. academy of business studies

New customs classifications from New Year

THE CUSTOMS is introducing a revised classification system — HS (harmonised system) 2002 of the World Customs Organisation (WCO) — will come into effect from January 1, 2002.

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