JANUARY 23, 2015

By E Ramesh

BYGONE were the periods when collection of revenue was the primary concern of the tax authorities. This is more so with regard to the Customs Department whose primary duty as collector of custom duty has been relegated to enforcement of provisions relating to Allied Acts. Notable among the Allied Acts are Drugs and Cosmetics Act, 1940, The Prevention of Food Adulteration Act, 1954, Legal Metrology Act, 2009, The Environment Protection Act, 1986, and compliance of standards set by the Bureau of Indian Standards in the import of various products, to name a few. The compliance of the provisions relating to allied Acts are either governed directly by the respective Acts or through the Import Policy issued by the Directorate General of Foreign Trade, Ministry of Commerce from time to time.

It is the fact that the international trade grows at a rate faster than ever before and the Customs Department acts as an interface between the member countries. Growing competition among the world nations to bridge their trade deficit prompts them to use tools provided by their national legislations as well as international covenants for curtailing entry of goods from their counterparts. Notable among them are the Safeguard Duty and the Anti-Dumping Duty. Apart from these, executive organs of the state notify certain goods as restricted or prohibited and impose certain conditions to be fulfilled for their import. Restriction in the import of gold and fixing the tariff value below which certain items cannot be imported are few instances to mention.

The Directorate General of Foreign Trade (DGFT), an organ of Commerce Ministry is instrumental in implanting provisions relating to importability. Through its policy which is based on several inputs from other ministries and government departments, it prescribes whether a particular item is freely importable, restricted or prohibited. In recent times, one such governmental organization which suddenly woke up to the occasion is the Bureau of Indian Standards (BIS). BIS sets standards for everything on (& under) the earth and the importance for the same cannot be undermined. Taking clue from the BIS Act, Rules and Regulations, various Ministries, especially that deal with tangible goods started issuing quality control orders which mandates the manufacturers/importers to compulsorily register with BIS. Few such examples are the Ministry of Steel issuing quality control order specifying certain steel rod/sheet to comply with BIS provisions. Similarly, Department of Electronics and Information Technology issued several quality control orders for consumer electronic items such as TV, printer, scanner and ADP Machines to comply with the provisions of BIS, to name a few.It is to be noted that though BI Standards are there for all the steel and electronic products, and few consumer products of public importance are brought under the compulsory registration regime the logic and reason behind the same need not be questioned. Still what evokes concern is the way the products requiring BIS Registration are notified in the official gazette and the procedure for obtaining registration by the foreign manufacturers.

For example, Steel and Steel Products (Quality Control) Second Order, 2008 issued by the Ministry of Steel is so vague that import of any steel product appears to fall within the ambit of this Order. The description given in the Order is too general that even an expert would find it difficult to distinguish the product and such descriptions are indiscreetly aligned with ITC HS CODE that makes the issue further complicated. As per this Order, Hot rolled medium and High tensile structural steel (excluding rods and bars of diameter or thickness less than 6 mm and structurals below 50mm x 50mm x 6mm) require compulsory registration with BIS. The term structural steel which is the key word to decide whether particular product requires BIS registration has not been defined in the Order. In the absence of any definition regarding structural steel and when the general description covers steel products of various kinds like sheets, bars, rods angles etc., it becomes all the more difficult to decide whether particular item requires BIS Registration or not. Similarly, in the case of Electronics and Information Technology (Requirement for Compulsory Registration) Order, 2012 many of the descriptions are too general that it is very difficult for a prudent man also to decipher what item requires registration with BIS. In a clarification regarding includibility of projectors within the Order, it was clarified by the Ministry that projectors are to be included within the fold of automatic data processing machine and hence the import of the same requires BIS Registration. This conclusion is basically flawed since there is a clear-cut distinction between ADB Machines classifiable under Customs Tariff Heading 8471 and the projectors classifiable under CTH 8528. Hence, treating projectors as part of ADP Machine is incorrect and this incompatibility is due to uninformed decisions taken by the concerned Ministries with Customs. Still, the implementation of this Order lies with Customs.

Leaving the understanding part of the BIS apart, the procedure for registration by the foreign manufacturer makes everyone wonder about the myth surrounding BIS. In order to get themselves registered with BIS, the manufacturers of the product should have a liaison office in India on their own or through their agents. The pre-requisite for granting registration is to make a factory visit of the manufacturer's premises abroad by the BIS officials and to satisfy themselves with the standards as per Indian Standards. All this at the cost of the manufacturer and every new product and model needs to undergo the same procedure. In this context, certain basic questions linger in one's mind that require answer. The very first of that includes, is Indian Standard unique only to India that necessitates every other manufacturer abroad to get themselves registered with BIS? The answer to this question is a definite ‘no' as for every Indian Standards, equivalent standards are available in other countries which can be easily correlated and codified. This being the case, the need for factory inspection abroad appears to be a motivated move to gain undue hold on the supplier's abroad. Given the strength of the BIS officials, formulating a procedure of this sort and subjecting every foreign manufacturer including the one from most developed countries appears not only unreasonable but also illogical. In a time when facilitation with reasonable control is seen as a need of the hour, setting some procedures which are hard to comply surely hampers development. Needless to say, internal control on safety and other standards are virtually non-existent in India which is evident from rampant availability of sub-standard domestic electronic goods including electric wires and fittings. Continuous addition of new products requiring compulsory registration in the name of public interest brews fear in one's mind whether we are moving towards neo redtapism as many of such products do not appear to have public interest.

The economic burden as a result of putting these unreasonable procedures is huge as many consignments are held up due to ambiguity in interpreting these Orders. Added to this, offices of BIS are not approachable by the importers for clarification as matters of knowledge cannot be shared as a matter of right (presumed). It is high time for the government to think about ensuring standards in an equitable way in the interest of public as well of economy. Attempts by any organ of the government to exercise excess control in the name of expertise needs to discouraged and a viable alternate process should be envisaged in its place.