A risk averse businessman would like to have clarity as to application of various aspects of indirect taxation such as classification of goods, applicability of the exemption notification, principles of determining value of goods etc before he ventures into new business activity in India.

Advance ruling brings certainty in determining duty liability and facilitates to avoid costly litigations at a later stage. The provisions relating to Advance ruling are contained in Sections 28E to 28L of the Customs Act, 1962.

The authority for Advance Ruling will give a decision on question referred before it. Such ruling will be binding on the applicant and the department. Procedural aspects in this regard are made in Customs (advance Ruling) Rules, 2002.

The status of the applicant who can apply to the authority is contained in Section 28E(c) of the Customs Act, 1962.