Analysis of CBIC Instruction No. 07/2026-Customs dated 02 June 2026. Streamlining the Mechanism for Seeking Clarifications on Interpretation of Foreign Trade Policy (FTP) Provisions from DGFT.

Introduction

The Central Board of Indirect Taxes and Customs (CBIC), vide Instruction No. 07/2026-Customs dated 02 June 2026, has introduced a significant administrative reform aimed at streamlining the process for seeking policy clarifications on the interpretation of provisions of the Foreign Trade Policy (FTP) and related policy conditions.

Issued by the Drawback Division of CBIC pursuant to concerns raised by the Directorate General of Foreign Trade (DGFT), the Instruction seeks to establish a structured, centralized, and institutionally coordinated mechanism for addressing interpretational issues arising during customs assessment and clearance processes.

The Instruction assumes considerable importance in the context of increasing complexity in international trade regulations, growing interdependence between Customs and Foreign Trade Policy administration, and the need to ensure uniform implementation of FTP provisions across Customs formations throughout the country.

By prescribing a standardized escalation mechanism and discouraging direct references by field formations to DGFT, the Board aims to eliminate divergent interpretations, reduce delays in cargo clearance, and provide greater certainty to the trading community.

Background and Need for the Instruction

The administration of India's international trade regime involves close interaction between the Customs authorities functioning under CBIC and the Foreign Trade Policy administered by DGFT.

In the course of import and export clearances, Customs officers are frequently required to interpret various provisions of:

• Foreign Trade Policy (FTP), 2023;
• ITC (HS) Import Policy Schedule;
• Export Policy Conditions;
• Authorisation Schemes;
• Export Promotion Schemes;
• Policy Circulars and Trade Notices issued by DGFT;
• Notifications issued under the Foreign Trade (Development and Regulation) Act, 1992.

In many instances, Customs formations encounter interpretational challenges regarding the scope, applicability, or implementation of particular FTP provisions.

According to the DGFT, several Customs field formations had been directly approaching DGFT Headquarters or DGFT Regional Authorities seeking clarification on policy interpretation issues. Such direct correspondence often resulted in multiple references from different jurisdictions concerning identical policy provisions.

This practice created a number of operational challenges, including:

• Lack of uniformity in interpretation;
• Possibility of divergent responses;
• Delays in cargo clearance;
• Duplication of administrative efforts;
• Increased compliance burden for trade;
• Absence of centralized monitoring of policy issues.

The present Instruction has been issued to address these concerns and establish a more coordinated institutional framework.

Objective of the Instruction

The primary objective of Instruction No. 07/2026 is to ensure:

• Uniform interpretation of Foreign Trade Policy provisions;
• Institutional consistency across Customs formations;
• Efficient coordination between CBIC and DGFT;
• Faster resolution of policy-related disputes;
• Reduction of delays in assessment and clearance;
• Facilitation of legitimate trade.

The Instruction reinforces the principle that policy interpretation should be institutional rather than formation-specific, thereby ensuring that trade receives consistent treatment irrespective of the port, airport, inland container depot, or customs station involved.

Prohibition on Direct References to DGFT

The most significant directive contained in the Instruction is the prohibition on direct correspondence between Customs field formations and DGFT for interpretation of FTP provisions.

The Board has categorically directed that:

Customs field formations shall not directly correspond with DGFT Headquarters or DGFT Regional Authorities for seeking clarification or interpretation of FTP provisions or policy conditions.

This effectively centralizes the process of policy clarification and prevents multiple formations from independently seeking guidance on identical issues. The measure is expected to eliminate conflicting interpretations and promote consistency in policy administration.

Examination at Commissionerate and Zonal Level

The Instruction establishes a hierarchical review mechanism before any policy issue can be escalated.

Under the revised framework:

• Interpretational issues must first be examined at the Commissionerate level.
• The issue should subsequently be reviewed at the Zonal level.
• Only those matters that genuinely require policy-level clarification after due examination may be escalated to the Board.

Such references can be forwarded only through the:

• Principal Chief Commissioner; or
• Chief Commissioner

of the concerned Customs Zone.

This requirement ensures that routine operational matters are resolved locally and only significant policy issues reach the Board for consideration.

Role of National Assessment Centres (NACs)

A particularly noteworthy feature of the Instruction is the involvement of National Assessment Centres (NACs) in commodity-specific matters.

The Board has directed that:

Commodity-specific issues involving interpretation of FTP provisions shall be referred to CBIC only after examination and approval by the concerned National Assessment Centre (NAC).

The NAC system was introduced to bring greater uniformity and specialization in customs assessment across India.

By making NAC scrutiny mandatory, the Board seeks to ensure that:

• Technical expertise is applied before escalation;
• Consistent positions are developed nationally;
• Multiple references on similar issues are avoided;
• Sector-specific knowledge is appropriately utilized.

This provision further strengthens the objective of harmonized assessment practices across jurisdictions.

Standardization of References Sent to the Board

The Instruction also introduces a structured format for references forwarded to the Board.

Every proposal seeking policy clarification must contain comprehensive details, including:

Statement of Facts: A concise summary of the factual background of the issue.

Relevant FTP Provisions: Specific policy provisions, notifications, or conditions requiring interpretation.

Departmental Understanding: The interpretation or understanding adopted by the field formation regarding the policy provision.

Specific Clarification Sought: The precise issue on which clarification is required.

Number of Affected Cases: An indication of the tentative number of cases impacted by the interpretational issue.

Status of Pending Consignments: Whether any live consignments are awaiting clearance due to the issue.

Urgency Categorization

Classification of the matter as:

• Normal;
• Time-sensitive;
• Perishable; or
• Export deadline related.

The requirement for structured references is expected to improve the quality of submissions and facilitate quicker decision-making by the Board.

Trade Facilitation Measures

One of the most trade-friendly aspects of the Instruction is the emphasis on avoiding unnecessary detention of consignments.

The Board has specifically directed that:

Consignments should not ordinarily be kept pending solely because of interpretational issues relating to FTP provisions.

This is a significant policy statement that reinforces the Government's commitment to trade facilitation.

Use of Provisional Assessment

Recognizing that policy clarification may require time, the Board has encouraged field formations to utilize facilitative mechanisms available under the Customs Act, 1962.

These include:

• Provisional Assessment;
• Bond execution;
• Security mechanisms;
• Other legally permissible facilitation measures.

The objective is to ensure that legitimate trade does not suffer on account of administrative uncertainty or pending policy interpretation.

This approach is consistent with global best practices that emphasize cargo movement while allowing regulatory issues to be resolved subsequently.

Impact on Importers and Exporters

For the trading community, the Instruction is likely to produce several positive outcomes.

• Greater Predictability: Uniform interpretation of FTP provisions across Customs jurisdictions will reduce uncertainty for importers and exporters.
• Reduced Delays: The emphasis on provisional assessment and facilitative mechanisms is expected to minimize cargo detention.
• Consistent Compliance Standards: Businesses operating through multiple ports will benefit from harmonized implementation of policy provisions.
• Improved Dispute Resolution: The centralized mechanism should result in faster and more authoritative clarification of policy issues.

Impact on Customs Administration

From an administrative perspective, the Instruction strengthens governance and accountability.

The framework promotes:

• Better coordination between CBIC and DGFT;
• Institutional decision-making;
• Nationally consistent assessment practices;
• Efficient management of policy disputes;
• Reduced duplication of efforts.

The involvement of NACs and Zonal authorities also ensures that policy questions are subjected to multiple levels of scrutiny before reaching the Board.

Strategic Significance

The Instruction reflects a broader shift towards centralized policy administration and standardized customs practices.

In recent years, both CBIC and DGFT have undertaken several initiatives aimed at:

• Reducing interpretational disputes;
• Improving ease of doing business;
• Digitizing trade processes;
• Enhancing inter-agency coordination;
• Facilitating legitimate trade while ensuring regulatory compliance.

Instruction No. 07/2026 forms part of this larger reform agenda by establishing a clear institutional pathway for handling policy interpretation issues.

The move is particularly relevant in the current trade environment where increasingly sophisticated export promotion schemes, import regulations, free trade agreements, and licensing frameworks require coordinated implementation by multiple government agencies.

Conclusion

CBIC Instruction No. 07/2026-Customs dated 02 June 2026 introduces a structured and centralized mechanism for seeking clarifications on the interpretation of Foreign Trade Policy provisions. By prohibiting direct correspondence between Customs field formations and DGFT, mandating examination at the Commissionerate, Zonal, and National Assessment Centre levels, and requiring comprehensive documentation before escalation to the Board, the Instruction seeks to ensure consistency, transparency, and institutional coherence in the implementation of India's foreign trade regulations.

Equally significant is the Board's direction that consignments should not be unnecessarily held up due to interpretational uncertainties and that facilitative mechanisms such as provisional assessment should be utilized wherever legally permissible. This reinforces the Government's commitment to balancing regulatory compliance with trade facilitation.

Overall, the Instruction is expected to enhance uniformity in Customs administration, strengthen coordination between CBIC and DGFT, reduce operational uncertainties for trade, and contribute to a more predictable and efficient foreign trade environment. It represents an important step towards improving policy governance and ensuring that India's trade regulatory framework is administered in a consistent, transparent, and business-friendly manner across all Customs jurisdictions.

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