To facilitate foreign investment into the country a number of steps has been taken by Government of India in recent period. Setting up an Authority for Advance Rulings, Customs & Central Excise to give binding Rulings, in advance, on Customs, Central Excise and Service Tax matters pertaining to an investment venture in India is one such measure. The legal provisions relating to Advance Rulings have been introduced in the respective Statutes through the Finance Acts of 1998, 1999 and 2003. The scheme of Advance Rulings has assumed special significance in the context of greater emphasis on FDI.

• The scheme of Advance Rulings allows a non-resident investor setting up a joint venture in India in collaboration with a non-resident or a resident; or a resident setting up a joint venture in India in collaboration with a non-resident, who proposes to undertake any ‘business activity’ in India to seek, in advance, a ruling from the Authority for Advance Rulings. A wholly owned subsidiary Indian company, of which the holding company is a foreign company, can also seek such rulings. The rulings can be sought in respect of –
  
  (a) Classification of goods under the Customs Tariff Act, 1975, and Central Excise Tariff Act, 1985, and of taxable services under Chapter V of the Finance Act, 1994 (Service Tax);
  
  (b) Principles of valuation under the Customs Act, 1962, and the Central Excise Act, 1944;
  
  (c) Applicability, of notifications issued under the Customs Act, 1962, Customs Tariff Act,1975, Central Excise Act, 1944 and Central Excise Tariff Act, 1985 having a bearing on the rate of duty and of notifications issued under Chapter V of Finance Act 1994;
  
  (d) Admissibility of input-tax credit under Central Excise law (CENVAT);
  
  (e) Admissibility of credit of Service Tax under Chapter VA of the Finance Act, 1994;
  
  (f) Valuation of taxable services for charging Service Tax under the Finance Act, 1994;
• These rulings would indicate, in advance, the duty liability in respect of an ‘activity’, viz. ‘import’ or ‘export’ under the Customs Act, ‘production’ or ‘manufacture’ of goods, under the Central Excise Act and ‘taxable services’ under the Service Tax law, proposed to be undertaken by an applicant. Advance Rulings provide certainty to foreign investors in respect of their prospective indirect tax liabilities.
• The process of obtaining a ruling is simple, inexpensive and transparent (only Rs. 2500/- have to be deposited through a Demand Draft with each application). The process of obtaining a ruling is expeditious as the Authority is statutorily required to deliver the ruling within 3 months of receipt of an application. Rulings are pronounced by the Authority after providing an opportunity of being heard by the Authority and by strictly observing other accepted judicial norms. Advance Rulings pronounced by the Authority are binding on the applicant and the concerned departmental officers engaged in assessment of goods and services. An Advance Ruling is not appealable by the department or the applicant, under the Customs, Central Excise or Service tax law. An Advance Ruling thus has a finality leaving almost no scope of litigation once the proposed activity is undertaken by the applicant.
• Authority for Advance Rulings, Customs & Central Excise, is a high level quasi-judicial body comprising of a retired judge of the Supreme Court of India and two Members (of Additional Secretary rank) – who have wide experience in technical and legal matters. At present Mr. Justice Shri P.V. Reddy is the Chairman and Ms. Chitra Saha is the Member.
• Office of the Authority is located on 4th Floor, Hotel Samrat, Kautilya Marg, Chanakyapuri, New Delhi – 110 021. Full details relating to the Authority’s functioning may be accessed on the web site-www.cbec.gov.in/cae/aar.htm
• 7. The following officers can be contacted for any further information: