Advance rulings are binding decisions issued by Directorate General of Customs at the request of an importer or exporter on specific particulars in relation to the intended importation or exportation of goods. Advance rulings can be requested with regard to the classification, the origin or the Customs value of the goods in preparation for importation or exportation. Advance rulings facilitate the declaration and consequently the release and clearance process, as critical decisions in relation to the treatment of the goods have already been made in the advance ruling. Advance rulings are binding throughout the Customs territory at all Customs offices and valid for a specific period of time, e.g. 6 months or 1 year.
Directorate General of Customs is implementing advance ruling programme to align with the best internationally recognized practices. It forms part of the Sultanate’s compliance to its obligations under the World Trade Organization (WTO) Trade Facilitation Agreement and conventions such as the Revised Kyoto Convention and free trade agreements between the Sultanate of Oman and United States of America and the Free Trade Agreement signed by the GCC countries with the Republic of Singapore.
a. Classification of Goods According to Customs Tariff
Classification of goods is important in determining the customs duty imposed on such goods. In this framework, Coding and Categorization System for commodities is used for approved customs purposes on the basis of the Harmonized System put in place by the World Customs Organization. The classification of tariff has considerable bearing on the revenue of business community. Tax rates imposed on the imported goods relates to the type of customs classification of commodities. Therefore, most of the requests relating to advance rulings are associated with the classification of tariff.
b. Rules of Origin
Rules of origin include approved standards for determining the origin country of commodities and are of prime importance, particularly when it comes to the application of the provisions of the preferential treatment agreements between nations. Rules of origin relate to the particular standards that determine the country of origin on basis of its entire production, by adding components that alter the origin of commodities, by introducing an industrial transformation that modifies their classification or other approved standards. The advance ruling including rules of origin lies in that furnishing the Customs with the certificate of origin does not suffice for classification of commodities. The responsibility for the decision on their final classification rests with the importing country. Advance rulings made under the rules of origin constitute an appropriate tool for giving clarity and certainty with regard to the treatment by the importing country in determining the origin of commodities prior to carrying out the importation and exportation process.
c. Valuation of Goods for Customs Purposes
Valuation of commodities for customs purposes constitutes an important stage in determining their due customs duties upon importation and exportation. In determining the value of commodities for customs purposes, the Directorate General of Customs depends on several methods pursuant to the provisions of the WTO Agreement on Valuation. With the potential difficulties in this field, advance rulings pertinent to customs valuation constitutes an effective method in facilitating trade by assisting in clarifying the standards of customs valuation of a particular commodity and preparing necessary documents in proof of the validity of the value of such commodity.
Existence of advance rulings as part of the customs procedures is an important factor which strengthens partnership between Customs and private sector organizations through the creation of agreements on the customs treatment of specific goods. Advance rulings facilitate the importation and exportation and the release and clearance processes by providing binding information concerning the treatment of goods intended to be imported or exported. Advance rulings also assist in reducing disputes with the customs authorities about customs tariff clauses, origin of commodities and customs valuation methods. In general, advance rulings are very important for companies while preparing for cross-border business operations by providing clarity on terms and conditions in sale and purchase contracts on the basis of the information contained in the advance rulings. In a recent study on the impact of trade facilitation measures on trade costs, the Organization of Economic Cooperation and Development (OECD) identified that the advance rulings system was the most impactful single trade facilitation measure. The OECD had identified 12 trade facilitation indicators, which, when applied in total, could potentially lead to a total reduction of trade costs of 10%. For advance rulings alone, the impact on trade cost was estimated to be a reduction of around 5,4%. Advance rulings are essential for the achievement of predictability and consistency of trade process, which are two very important goals for trustful partnership and facilitated trade. Advance rulings depend upon the reliability that the trader would import the commodity on which an advance ruling was issued during its validity (which may be up to one year). Here, it is possible through the check process after clearance to assist the Customs in its verification. It is also possible to reduce the total time necessary for the release by increasing coordination between the border authorities concerning physical inspection.
The undermentioned can request advance rulings:
3. clearing companies.
1. The advance rulings shall be valid for not less than six (6) months with effect from the date of their issue at all entry points and customs authorities.
2. The Directorate General of Customs shall issue advance rulings within a period of sixty (60) days with effect from the date of receipt of duly correct application enclosing all necessary documents.
3. The advance rulings shall expire either upon expiry of their validity or by their cancellation by the Directorate General of Customs.
1. The use of advance rulings upon submission of customs declaration (in case of importation or exportation) at the first entry or exit points and all customs departments shall remain an existing right of the applicant during their validity period.
2. Commodities must be declared in the customs declaration (in case of importation or exportation) in accordance with the particulars contained in the advance rulings issued by the Directorate General of Customs. Advance rulings shall be relied upon during the importation and exportation process for verification of the customs classification.
3. Reliance by the importer upon the advance ruling relating to customs classification while submitting customs declaration (in case of importation or exportation) does not prevent the commodities from being examined by the customs officer to ensure that the authorized commodities correspond to the commodities referred to in the advance ruling.
Request of advance rulings may be rejected by the Directorate General of Customs for any of the following non-exhaustive reasons:
1. If the concerned commodity or the one corresponding to it is under administrative or judicial review process or is the subject matter of a court judgment.
2. If a customs declaration has been submitted for the concerned commodity.
3. In case there is a previous application under consideration for the same importer and the same commodity.
4. In case of failure to satisfy requirements for submission of additional documents required to complete the application file within twenty one (21) days from the date of request by the Directorate General of Customs.
5. In case of submission of incomplete or incorrect particulars or documents.
(a) Directorate General of Customs has the right to cancel advance rulings for any of the following non-exhaustive reasons:
1. in case administrative or legal measures are made resulting in change of commodity classification clauses or fee categories.
2. in case incomplete disclosure was made of the particulars by the applicant.
3. in case of providing Directorate General of Customs with inadequate, incorrect or false information to mislead the customs authorities.
4. in case of issuing contradictory advance rulings issued in respect of commodities of the same category or type.
5. in case of revision of advance rulings in the context of Customs internal procedures or judicial review procedures.
(b) In case of cancelation of advance ruling, the applicant will be notified in writing explaining the circumstances and reasons for the decision taken.
1. Advance ruling application is submitted to the Directorate General of Customs by completing the prescribed application form providing full description of the goods. The Directorate General of Customs will consider the application and issue the advance ruling within a specific timeframe subject to the requirement that the importer submits the application to the Customs before the importation or exportation process. The Directorate General of Customs may request the importer to provide a sample of the commodities, producer’s catalogue, photos or any other supporting materials.
2. Advance ruling application shall be restricted to the following:
(a) classification of goods according to customs tariff and possibility of applying the customs discounts or exemptions, if any.
3. One application shall be submitted for each commodity and each subject of advance rulings requested. In case of multiple commodities or subjects, separate applications must be submitted for each commodity and each subject.
4. The Directorate General of Customs can request additional particulars or documents within twenty one (21) days of submission of the request. Failure to provide the concerned authorities with the sufficient documents and particulars during the specified period of time relieves these authorities from issuing the advance ruling.