Misuse of gift route to import goods on customs dept radar2 min read . Updated: 04 Jan 2019, 07:15 AM IST
Chinese goods entering India in guise of 'gifts' via couriers by misusing e-commerce norms, say officials
New Delhi: Customs authorities have clamped down on the import of Chinese goods entering India in the guise of ‘gifts’ by misusing the existing e-commerce rules. The Mumbai Customs office told its officers at the Airport Special Cargo Commissionerate to check such “misdeclaration and smuggling of goods imported through couriers".
Indian customs regulations currently allows tax exemptions on gifts sent to relatives from Indians living abroad for up to ₹ 5,000. However, China-based online e-commerce platforms, such as Club Factory, Shein and AliExpress, have been misusing the rules and shipping cheaper products to Indian customers as gifts, thus avoiding customs duty and goods and services tax.
Following complaints from several quarters, including online local communities platform LocalCircles and Rashtriya Swayamsevak Sangh (RSS)-affiliated Swadeshi Jagran Manch, Union trade and commerce minister Suresh Prabhu had assured to take prompt action.
China Post, the state-owned official postal service of China, is also heavily subsidizing packages shipped to India keeping overall costs lower. Many Chinese entities are not registered as businesses in India, ruling out scope for grievance redressal or returns by Indian customers.
“Assessment and clearance of goods at the courier cell/terminal, APSC is allowed only if the goods and documents are actually transported by air, by a person engaged in the international transportation of goods or documents on door-to-door delivery basis. Persons engaged in the work merely of customs agents/brokers or clearing agents are neither eligible to be registered as authorized courier nor are the CEDPR, 2010, applicable to goods cleared by such customs agents/brokers," an order by the Office of the Commissioner of Customs reviewed by Mint showed.
CEDPR stands for Courier Imports and Exports (Electronic Declaration and Processing) Regulations.
A Mumbai-based customs official, requesting anonymity, said if imported goods are not bona fide gifts, customs officials will seize the consignments. “It should be essentially coming from a person as a gift for personal use. There should not be any cost to the person in India. All of us have relatives abroad who would send gifts on special occasions like Diwali or birthdays, which are exempted from customs duties up to ₹ 5,000."
“The misuse of the gift channel by Chinese e-commerce apps was creating an unfair playing field, risking to wipe out the small and medium enterprises sector in India. We are glad that Mumbai customs authorities have decided to rein in such misuse," said Sachin Taparia, founder and chairman, LocalCircles.
The customs official cited above said such Chinese companies are free to get genuine licences to ship goods to India as commercial consignments. “Commercial trade is not allowed in the guise of gifts. We will not allow anybody to bring commercial goods in the name of gifts or samples. Other companies are anyway paying duties. Why should they not pay taxes in India."
He added that the order is for immediate implementation and Delhi customs may also issue similar instructions.
While countries do not impose customs duties on electronic transfer of services under a World Trade Organization moratorium, they impose taxes on physical transfer of goods bought on e-commerce platforms. India and South Africa have now been insisting on ending the moratorium on electronic transfer of services with shrinking distinctions between goods and services, such as e-books, which leads to revenue loss.