UNIT 5
Customs Act - II
The imported goods before clearance for home consumption or for warehousing are required to comply with prescribed Customs clearance formalities. This includes presentation of a Bill of Entry containing details such as description of goods, value, quantity, exemption notification, Customs Tariff Heading etc. The Bill of Entry is subject to verification by the proper officer of Customs (under self-assessment scheme) and may be reassessed if declarations are found to be incorrect. Normally import declarations made are scrutinized with reference to documents and other information about the value / classification etc., without prior examination of goods. It is at the time of clearance of goods that these are examined by the Customs to confirm the nature of goods, valuation and other aspects of the declarations.
However, it may be noted that examination of goods is carried out only after facilitation level is decided by the Risk Management System. In case no discrepancies are observed at the time of examination of goods ‘Out of Charge’ order is issued and thereafter the goods can be cleared. Similarly, Customs clearance formalities for goods meant for export have to be fulfilled by presenting a Shipping Bill and other related documents. These documents are verified for correctness of assessment and after examination of the goods, if warranted, “Let Export Order” is given on the Shipping Bill.
Import procedure
Bill of Entry:
- Goods imported into the country attract Customs duty and are also required to confirm to relevant and corresponding legal requirements. Thus, unless the imported goods are not meant for Customs clearance at the port/airport of arrival such as those intended for transit by the same vessel/aircraft or transshipment to another Customs station or to any place outside India, detailed Customs clearance formalities have to be followed by the importers. In contrast, in terms of Section 52 to 56 of the Customs Act, 1962, the goods mentioned in the IGMor Import Report for transit to any place outside India or meant for transshipment to another Customs station in India are allowed transit without payment of duty.
In case of goods meant for transshipment to another Customs station, simple transshipment procedure has to be followed by the carrier and the concerned agencies at the first port/ airport of landing and the Customs clearance formalities have to be complied with by the importer after arrival of the goods at the other Customs station where goods are intended to be delivered to the importer. There could also be cases of transshipment of the goods after unloading to a port outside India. For this purpose, a simple procedure is prescribed, and no duty is required to be paid.
- For goods which are offloaded at a port/airport for clearance, the importers have the option to clear the goods for home consumption after payment of duties leviable or to clear them for warehousing without immediate discharge of the duties leviable in terms of the warehousing provisions of the Customs Act, 1962. For the purpose of clearance of imported goods, every Procedure for Clearance of Imported and Export Goods importer is required to file, in terms of the Section 46 ibid, a Bill of Entry for home consumption or warehousing, as the case may be, in the form prescribed under the relevant regulations. In cases where it is not feasible to make entry electronically on the customs automated system, Principal Commissioner of Customs or Commissioner of Customs, allow an entry in any other manner.
- Foreign Trade Policy provides that Importer-Export Code (IEC) number, a 10-character alphanumeric allotted to a person by the Directorate General of Foreign Trade (DGFT) is mandatory for undertaking any export/import activities.
- For clearance of goods through the EDI system, the importer is required to file a cargo declaration having prescribed particulars required for processing of the Bill of Entry for Customs clearance.
- Under the EDI system, the importer by himself or through his authorized customs broker may file the declarations in electronic format through the service centre or ICEGATE. Facility of uploading scanned documents along with the declaration for filing a bill of Entry, is also available through ‘e-Sanchit’ program. eSANCHIT has been extended to all ICES locations on PAN India basis for all types of exports under ICES.
Self-assessment of imported and export goods:
- Section 17 of the Customs Act, 1962 provides that an importer entering any imported goods under section 46 or an exporter entering any export goods under section 50 shall self-assess the duty. Thus, under self-assessment, it is the importer or exporter who will ensure that he declares the correct classification, applicable rate of duty, value, benefit of exemption notifications claimed, if any, etc. in respect of the imported / export goods while presenting Bill of Entry or Shipping Bill.
- The declaration filed by the importer or exporter may be verified by the proper officer when so interdicted by the Risk Management Systems (RMS). Such verification will be done selectively on the basis of the RMS, which not only provides assured facilitation to those importers having a good track record of compliance but ensures that on the basis of certain rules, intervention, etc., high risk consignments are interdicted for detailed verification before clearance. On the basis of interdictions under RMS, Bills of Entry may either be taken up for verification of assessment or for examination of the imported goods or both. If the self-assessment is found incorrect, the duty may be reassessed. In cases where there is no interdiction by RMS or nonexistence of any other factor, there will be no cause for the declaration filed by the importer to be taken up for verification, and such Bills of Entry will straightaway be facilitated for clearance without assessment and examination, on payment of applicable duty, if any.
- The verification of a self-assessed Bill of Entry or Shipping Bill, which are interdicted by the RMS, shall be with regard to correctness of classification, value, rate of duty, exemption notification or any other relevant particular having bearing on correct assessment of imported or export goods. For the purpose of verification, the proper officer may order for examination or testing of the imported or export goods. The proper officer may also require production of any relevant document or ask the importer or exporter to furnish any other relevant information. Thereafter, if the self-assessment is not found to have been done correctly, the proper officer may re-assess the duty. This is without prejudice to any other action that may be warranted under the Customs Act, 1962.
On re-assessment, contrary to the self-assessment done by the importer or exporter, the proper officer shall pass a speaking order, if so desired by the importer or exporter, within 15 days from the date of re-assessment of bill of entry or shipping bill. When verification of self-assessment in terms of Section 17 requires testing / further documents / information, and the goods cannot be re-assessed quickly however, the importer or the exporter requires the goods to be cleared on urgent basis. In such cases, provisional assessment may be done in terms of Section 18 of the Customs Act, 1962, once the importer or exporter, as the case may be, furnishes such security as deemed fit by the proper officer of Customs for payment of deficiency, if any, between the duty as may be finally assessed or re-assessed as the case may be, and the duty provisionally assessed.
- In cases, where the importer or exporter is not able to determine the duty liability or make self-assessment for any reason, except in cases where examination is requested by the importer under proviso to Section 46(1), a request shall be made to the proper officer for provisional assessment of duty under Section 18 (1)(a) of the Customs Act, 1962. In such a situation an option is available to the proper officer to resort to provisional assessment of duty by asking the importer / exporter to furnish security as deemed fit for payment of the deficiency, if any, between the duty as may be finally assessed or re-assessed, as the case may be, and the duty provisionally assessed.
- For the purpose of proper assessment of duty and to ensure correctness of trade statistics, importers/exporters should mandatorily declare the Standard Unit Quantity Code (UQC), as indicated in the Customs Tariff Act, 1975
Examination of goods:
- The imported goods, which are interdicted for examination by the RMS, are required to be examined for verification of correctness of description/declaration given in the Bill of Entry and related documents. The imported goods may also be examined prior to assessment in cases where the importer does not have complete information with him at the time of import and requests for examination of the goods before assessing the duty liability or, where the proper officer, on reasonable belief feels that the goods should be examined before assessment, giving reasons for the same. Wherever required, samples are drawn in the examination area for chemical analysis, verification or any other purposes.
- After assessment by the appraising group or for cases where examination is carried out before assessment, bill of entry needs to be presented for registration for examination of imported goods in the import shed. The proper officer of customs examines the goods along with requisite documents. The shipments found in order are given clearance order by the proper officer of customs in the Import Shed.
Execution of bonds:
For availing partial or complete exemption from duties under different schemes and notifications, execution of end use/ provisional duty bonds with Bank Guarantee or other surety may be required, in the prescribed forms. The amount of bond and bank guarantee is determined in terms of the instructions issued by the Board or conditions of the relevant notification or provisions of the Customs Act, 1962 or rules/regulations made there under.
Payment of duty:
- The duty can be paid in the designated banks through TR-6 Challan. Facility of e- payment of duty through multiple banks is also available since 2007 at all major Customs locations.
- With effect from 17-9-2012, e-payment of Customs duty is mandatory for importers registered under Accredited Clients Program/Authorised Economic Operator scheme and importers paying duty of Rs. 1 lakh or more per Bill of Entry.
- Customs Notification No. 134/2016-Customs (N.T) & 135/2016-Customs (N.T.) dated 2nd November 2016 allowed Importers certified under Authorized Economic Operator Program as AEO (Tier-Two) and AEO (Tier-Three) to make deferred payment of duty of Customs. The Deferred Payment of Import Duty Rules were notified vide Notification no. 28/2017- Customs (N.T.) dated 31st March 2018
Amendment of Bill of Entry:
Bonafide mistakes noticed after submission of documents, may be rectified by way of amendment to the Bill of Entry with the approval of Deputy/Assistant Commissioner. Levy of Fees (Customs Documents) Amendment Regulations, 2017, issued vide Notification No. 36/2017-Customs (N.T.) dated 11.04.2017, provides a number of amendments which can be allowed on payment of amount mentioned therein.
Prior Entry for Bill of Entry:
- For faster clearance of the goods, Section 46 of the Customs Act, 1962 allows filing of Bill of Entry prior to arrival of goods. This Bill of Entry is valid if vessel/aircraft carrying the goods arrives within 30 days from the date of presentation of Bill of Entry.
- Often, goods coming by container ships are transferred at intermediate ports (like Colombo) from mother vessel to smaller vessels called feeder vessels. At the time of filing of advance Bill of Entry, the importer does not know which vessel will finally bring the goods to Indian port. In such cases, the name of mother vessel may be filled in on the basis of the Bill of Lading. On arrival of the feeder vessel, the Bill of Entry may be amended to mention names of both mother vessel and feeder vessel.
- The Bill of Entry is required to be filed before the end of next day following the day (excluding holidays) on which the aircraft or vessel or vehicle carrying the goods arrives at a customs station at which such goods are to be cleared for home consumption or warehousing.
- Wherein the Bill of Entry is not filed within the time specified and the proper officer of customs is satisfied that there is no sufficient cause for such delay, the importer shall be liable to pay charges for the late presentation of Bill of Entry at the rate of rupees five thousand per day for initial three days of the default and at the rate of rupees ten thousand per day for each day of default thereafter.
Bill of Entry for bond/warehousing:
A separate form of Bill of Entry is used for clearance of goods for warehousing. All documents, as are required to be filed with a Bill of Entry for home consumption are also required with the Bill of Entry for Warehousing which is assessed in the same manner and duty payable is determined. However, since duty is not required to be paid at the time of warehousing, the purpose of assessing the duty at this stage is only to secure the duty by way of execution of Bond. The duty is paid at the time of ex-bond clearance of goods for which an Ex-Bond Bill of Entry is filed.
In terms of Section 15 of the Customs Act, 1962, the rate of duty applicable to imported goods cleared from a warehouse is the rate in- force on the date of filing of Ex-Bond Bill of Entry.
Risk Management System in Import
“Risk Management System” (RMS) is one of the most significant steps in the ongoing Business Process Re-engineering of the Customs Department. RMS is based on the realization that ever-increasing volumes and complexity of international trade and the deteriorating global security scenario present formidable challenges to Customs and the traditional approach of scrutinizing every document and examining every consignment will simply not work. Also, there is a need to reduce the dwell time of cargo at ports/airports and also the transaction costs in order to enhance the competitiveness of Indian businesses, by expediting release of cargo where compliance level is high. Thus, an effective RMS strikes an optimal balance between facilitation and enforcement and promotes a culture of compliance. RMS is also expected to improve the management of the Department’s resources by enhancing efficiency and effectiveness in meeting stakeholder expectations and bringing the Customs processes at par with best international practices.
RMS has dispensed with the practice of routine assessment, concurrent audit and the present focus is on quality assessment, examination and Post Clearance Audit of selected Bills of Entry/ Themes/Auditees Bills of Entry and IGMs filed electronically in ICES through the Service Centre or the ICEGATE are transmitted by ICES to the RMS. The RMS processes the data through a series of steps and produces an electronic output for the ICES. This output determines whether a particular Bill of Entry will be taken-up for appraisement or examination or both or be cleared after payment of duty without assessment and examination. Also, where necessary, RMS provides instructions for Appraising Officer, Examining Officer or the Out-of-Charge Officer. It needs to be noted that the appraising and examination instructions communicated by the RMS have to be necessarily followed by the proper officer. It is, however, possible that in a few cases the proper officer might decide to apply a particular treatment to the Bill of Entry which is at variance with the instruction received from the RMS. This may happen due to risks which are not factored in the RMS. Such a course of action shall however be taken only with the prior approval of the jurisdictional Commissioner of Customs or an officer not below the rank of Additional / Joint Commissioner of Customs, authorized by him for this purpose, after recording the reasons for the same. A brief remark on the reasons and the particulars of Commissioner’s authorization should be made by the officer examining the goods in the departmental comments section of the electronic Bill of Entry in the EDI system.
Post-Clearance Audit (PCA) of the bill of entry selected under the Risk Management System is done to confirm the correctness of the declaration/assessment of the bill of entry. The objective of PCA is to monitor, maintain and enhance compliance levels, while reducing the dwell time of cargo. The RMS selects the Bills of Entry for audit, after clearance of the goods, and these selected Bills of Entry are directed to the audit officers for scrutiny by the EDI system. In case any possible short levies are noticed, the officers issue a Consultative Letter mentioning the grounds of possible short levy and invites views of the importers for justification of declaration made by them. This is intended to give the importers an opportunity to voluntarily comply and pay the duty difference if they agree with the department’s point of view. In case there is no agreement, the formal processes of demand notices, adjudication etc. would follow. The auditors are specifically instructed to scrutinize declarations with reference to data quality and advise the importers suitably where the quality of their declarations is found deficient.
Risk Management System in Export
On similar lines of the RMS in imports, a Risk Management System (RMS) in Export has been introduced with effect from 15-7-2013. The RMS in exports allows low risk consignments to be cleared based on self-assessment of the declarations by exporters. This enables the department to enhance the level of facilitation and speed up the process of export clearance. By expediting the clearance of compliant export cargo, the RMS in exports will contribute to reduction in dwell time, thereby achieving the desired objective of reducing the transaction cost in order to make the business internationally competitive. At the same time, the RMS in exports will ensure proper and expeditious implementation of existing control over export goods under the applicable Allied Acts and Rules. It will also provide appropriate control measures for proper and speedy disbursement of drawback and other export incentives.
With the introduction of the RMS in exports, the practice of routine verification of self-assessment and examination of Shipping Bills has been discontinued and the focus is on quality assessment, examination and Post Clearance Audit (PCA) of Shipping Bills selected by the RMS.
Shipping Bills filed electronically in ICES through the Service Centre or the ICEGATE will be processed by RMS through a series of steps/corridors and an electronic output will be produced for the ICES. This output from RMS will determine the flow of the Shipping Bill in ICES i.e. whether the Shipping Bill will be taken up for verification of self-assessment or examination or both or to be given “Let Export Order” directly after payment of Export duty (if any) without any verification of self-assessment or examination. The RMS will also provide instructions for Appraising Officer/Superintendent, Examining Officer/Inspector or the Let Export Order (LEO) Officer, wherever necessary. It is possible that in a few cases, the concerned officer may decide to apply a particular treatment to the Shipping Bill which is at variance with the instructions received for the RMS owing to risks which are not factored in the RMS. Such a course of action shall be taken only with the prior approval of the jurisdictional Commissioner of Customs or an officer not below the rank of Additional/Joint Commissioner of Customs, authorized by him for this purpose, after recording the reason for the same. A brief remark on the reasons and particulars of Commissioner’s authorization should be made by the officer examining the goods in the departmental comments of the electronic shipping bill in the EDI system.
With the implementation of export RMS, a Post Clearance Audit (PCA) function has been introduced in respect of exports after the LEO is given for export consignment. The objective of PCA is to monitor, maintain and enhance compliance levels, while reducing the dwell time of cargo. The RMS would select the Shipping Bills for audit, after issue of LEO, and these selected Shipping Bills will be directed to the audit officers for scrutiny.
The selection of Shipping Bills for verification of Self-assessment and/or examination will be based on the output given by RMS to ICES. However, owing to some technical reasons if the RMS fails to provide output to ICES or RMS output is not received at ICES end, in time, the existing norms of assessment and examination will be applicable.
National Risk Management Committee:
A National Risk Management (NRM) Committee headed by DG (Systems) reviews the functioning of the RMS, supervises implementation and provide feedback for improving its effectiveness. The NRM Committee includes representatives of Directorate General of Revenue Intelligence (DGRI), Directorate General of Valuation (DGOV), Directorate General of Audit (DG Audit), Directorate General of Safeguards (DGS) and Tax Research Unit (TRU) and Joint Secretary (Customs), CBIC. The NRM Committee meeting is to be convened by RMD at least once every quarter. The following are some of the functions of the NRM Committee: (i) Review performance of the RMS including implementation of ACP/AEO and PCA. (ii) Review risk parameters and behavior of important risk indicators. (iii) Review economic trends, policies, duty rates, exemptions, market data etc. that adversely impact Customs functions and processes and suggest remedial action.
Key takeaway:
- Goods imported into the country attract Customs duty and are also required to confirm to relevant and corresponding legal requirements. Thus, unless the imported goods are not meant for Customs clearance at the port/airport of arrival such as those intended for transit by the same vessel/aircraft or transshipment to another Customs station or to any place outside India, detailed Customs clearance formalities have to be followed by the importers
- Risk Management System” (RMS) is one of the most significant steps in the ongoing Business Process Re-engineering of the Customs Department. RMS is based on the realization that ever-increasing volumes and complexity of international trade and the deteriorating global security scenario present formidable challenges to Customs and the traditional approach of scrutinizing every document and examining every consignment will simply not work
Shipping Bill:
- For clearance of export goods, the exporter has to obtain an Importer- Export Code (IEC) number from the DGFT prior to filing of Shipping Bill. Under the EDI System, IEC number is received online by the Customs System from the DGFT. The exporter is also required to register authorized foreign exchange dealer code (through which export proceeds are expected to be realized) and open a current account in the designated bank for credit of Drawback incentive, if any.
- All the exporters intending to export under the export promotion scheme need to get their licenses etc. registered at the Customs Station. For such registration, original documents are required
Waiver of GR form:
Generally the processing of Shipping Bills requires the production of a GR form that is used to monitor the foreign exchange remittance in respect of the export goods. However, there are few exceptions when the GR form is not required. These exceptions include export of goods valued not more than US $25,000/- and export of gifts valued upto Rs.5 lakhs.
Arrival of export goods at docks:
The goods brought for the purpose of export are allowed entry to the customs area on the strength of the check list and other declarations filed by the exporter in the Service Center. The custodian has to endorse the quantity of goods actually received on the reverse of the check list.
Customs examination of export goods:
After the receipt of the goods in the customs area, the exporter/ customs broker may contact the Customs Officer designated for the purpose, and present the check list with the endorsement of custodian and other declarations along with all original documents such as, Invoice and Packing list, ARE-1, etc. The Customs Officer may verify the packages of the goods actually received and enter the same into the system and thereafter mark the Electronic Shipping Bill, handing over all original documents to the Dock Appraiser who assigns a Customs Officer to carry out examination of goods, if required under the Risk management System and indicate the officers’ name and the packages to be examined, if any, on the check list and return it to the exporter/ Customs Broker.
Examination norms:
- The Board has been fixing norms for examination of export consignments and such norms depend upon the quantum of incentive, value of export goods, country of destination etc. The instructions under the Risk Management System and examination order by the Appraising Groups follow the norms framed in this regard.
- After presentation of goods for registration to Customs and determination of action as to whether or not to examine the goods, no amendments request in the normal course should be entertained. However, in case an exporter still wishes to change any of the critical parameters resulting in change of value, Drawback, port etc. such consignment should be subjected to examination to rule out malafide in the request of the exporter.
- Notwithstanding the examination norms, any export consignment can be examined by the Customs (even up to 100%), if there is any specific intelligence in respect of such consignment. Further, to test the compliance by trade, once in three months a higher percentage of consignments (say for example, all the first 50 consignments or a batch of consecutive 100 consignments presented for examination in a particular day) would be taken up for examination. Out of the consignments selected for examination a minimum of two packages with a maximum of 5% of packages (subject to a maximum of 20 packages) would be taken up for checking/examination.
- In case export goods are stuffed and sealed in the presence of Customs/Central Excise officers at the factory of manufacture/ICD/CFS/warehouse and any other place where the Commissioner has, by a special order, permitted, it may be ensured that the containers should be bottle sealed or lead sealed. Also, such consignments shall be accompanied by an examination report in the prescribed form. In case of export through bonded trucks, the truck should be similarly bottle sealed or lead sealed. In case of export by ordinary truck/other means, all the packages are required to be lead sealed.
- Routine examination of perishable export cargo is not to be conducted. Customs resort to examination of such cargo only on the basis of credible intelligence or information and with prior permission of the concerned Assistant Commissioner/ Deputy Commissioner. Further, the perishable cargo which is taken up for examination should be given Customs clearance on the day itself, unless there is contravention of Customs laws.
Drawal of samples:
The representative sample from the consignment is drawn in accordance with the orders of the proper officer.
If considered necessary, the Assistant / Deputy Commissioner, may order sample to be drawn for purposes other than testing such as for visual inspection and verification of description, market value inquiry, etc.
Stuffing / loading of goods in containers:
- In case of container cargo the stuffing of container at Dock is done under Preventive supervision. Further, loading of both containerized and bulk cargo is to be done under Preventive supervision. The Customs Preventive Officer supervising the loading of container and general cargo into the vessel may give “Shipped on Board” endorsement on the Exporters copy of the Shipping Bill.
- Palletization of cargo is done after grant of Let Export Order (LEO). Thus, there is no need for a separate permission for palletization from Customs. However, the permission for loading in the aircraft/vessel is to be obtained.
Amendments:
- Any correction/amendment in the check list generated after filing of declaration can be made at the Service Centre provided the documents have not yet been submitted in the EDI system and the Shipping Bill number has not been generated. Where corrections are required to be made after the generation of the Shipping Bill number or after the goods have been brought into the Export Dock, the amendments will be carried out in the following manner:
(i) If the goods have not yet been allowed “Let Export” the amendments may be permitted by the Assistant / Deputy Commissioner (Exports).
(ii) Where the “Let Export” order has already been given, amendments may be permitted only by the Additional/Joint Commissioner in charge of Export.
- In both the cases, after the permission for amendments has been granted, the Assistant Commissioner/Deputy Commissioner (Export) may approve the amendments on the EDI system on behalf of the Additional/Joint Commissioner. Where the print out of the Shipping Bill has already been generated, the exporter may first surrender all copies of the Shipping Bill to the Dock/Shed Appraiser/Superintendent for cancellation before amendment is approved on the system.
Key takeaway:
- For clearance of export goods, the exporter has to obtain an Importer- Export Code (IEC) number from the DGFT prior to filing of Shipping Bill.
- Under the EDI System, IEC number is received online by the Customs System from the DGFT.
Duty free import of containers:
- As the containers themselves are liable to duty, Customs duty exemption is provided vide Notification No.104/94-Cus, dated 16-3-1994 which, inter-alia, facilitates them being taken out of the port without duty payment subject to execution of bond. The shipping agents are required to file this bond with the container cell of the Custom House, binding themselves to re-export containers within six months of their import into India. The period of six months may be extended by the Deputy/Assistant Commissioner of Customs for a further period of three months and thereafter by the Commissioner of periods not exceeding six months at one time, in terms of the said Notification.
- The procedure for clearance of containers imported temporarily is as follows:
(a) The nature of bond should be “continuity bond”.
(b) No Bank Guarantee / Security is required is furnished along with the bond.
(c) Bond should be executed by shipping line, Non-Vessel Owning Common Carrier (NVOCC), Steamer agents or their authorised representatives.
(d) The bond amount should cover only the duty element of the imported containers and not the cargo it is carrying.
(e) The validity period of the bond should be for a year, extendable till further such period as requested by the person executing the bond.
(f) Till module for automatic matching of imported and export containers within permissible time is rolled out at all Customs ports, the process of monitoring of period of temporary importation would be done manually.
Movement of export cargo from port/ICD/CFS to gateway port:
The export cargo, after its clearance at a port/ICD/CFS, may be carried in sealed containers to the gateway port for export. Broadly, the procedure in this regard is as follows:
(a) The exporters are required to bring their goods meant for exports to the Port/ICD/ CFS and file six copies of Shipping Bill with all necessary documents like GR form/SDF, AR-4 Form, Certificate issued by Export Promotion Councils, etc. In addition to the usual information given in the Shipping Bill, the exporter is required to mention the gateway port of export along-with the serial number(s) of the container(s). The Shipping Bill is assessed as usual, the goods examined, samples drawn, and if required, inspection carried out by other agencies to check compliance with provisions of various Allied Acts before export is permitted.
(b) The examination order is given on the duplicate and two transference copies of the Shipping Bill i.e. on all three copies. After examination of the goods, container is sealed by the Customs with ‘one time bottle seal’. The duplicate copy of Shipping Bill is retained at the ICD/CFS/port and the transference copies forwarded to the gateway port. The E.P. copy of Shipping Bill is required to be suitably endorsed/stamped by the Customs officer to the effect that the goods are to be transshipped at the gateway port mentioned on the Shipping Bill for their destination outside India.
(c) The goods cleared for export at the port/ICD/CFS are allowed to be carried to the gateway port subject to the conditions of execution of bond similar to that provided for transshipment of import goods under relevant Regulations, and if export goods are manifested for the final destination through the gateway port. The FOB value of goods is to be debited from the continuity bond executed by the custodians. The carriers/ custodians transporting the goods are to be handed over the transference copies of Shipping Bill in a sealed cover.
(d) The containers are allowed to be carried from a port/ICD/CFS to the gateway port by vessel or rail or road or by combination of two or more of these modes of transport.
(e) The Drawback, if any, is required to be paid to the exporters as soon as the Shipping Bill is passed, and goods are shipped at the originating port/ICD/CFS subject to the condition that the necessary bond has been executed by the Steamer 80 Agent/carrier to bring back and submit the proof of export to the Customs within 90 days.
(f) At the gateway port, the containers are normally allowed to be exported under Customs supervision after checking the seals. In case seals are intact and documents are in order, no further examination of goods is undertaken. The Preventive Officer supervising the export of container, endorses the fact of shipment in both the transference copies of the Shipping Bill. Steamer agent has to file EGM in duplicate.
(g) One copy of transference Shipping Bill along with a copy of EGM is sent back to the originating port/ICD/CFS.
(h) At the originating port/ICD/CFS, export manifest and transference copy of Shipping Bill, received from the gateway port, are co-related with the duplicate copy of the Shipping Bill and other relevant documents for closure of export manifest and cancellation of bond
Key takeaway:
- The procedure for clearance of containers imported temporarily is as follows:
(a) The nature of bond should be “continuity bond”.
(b) No Bank Guarantee / Security is required is furnished along with the bond.
(c) Bond should be executed by shipping line, Non-Vessel Owning Common Carrier (NVOCC), Steamer agents or their authorised representatives.
(d) The bond amount should cover only the duty element of the imported containers and not the cargo it is carrying.
(e) The validity period of the bond should be for a year, extendable till further such period as requested by the person executing the bond.
(f) Till module for automatic matching of imported and export containers within permissible time is rolled out at all Customs ports, the process of monitoring of period of temporary importation would be done manually.
There are instances when the importer does not want clearance of the imported goods immediately due to factors such as market price, sale ability, requirement in the factory of production, paucity of funds etc. The importer would prefer to warehouse such goods till they are required. Some imported goods are also warehoused for supplies to EOU/EHTP/ STP/SEZ units. Goods imported for sale in Duty Free Shops at International Airports are also warehoused before being sold to international travelers. Thus, the Customs Act, 1962 contains specific provisions that facilitate the warehousing of imported goods. The imported goods after landing may be allowed to be removed to a warehouse without payment of duty and duty is paid at the time of clearance from the warehouse. Provisions lay down the time period up to which the goods may remain in a warehouse, without incurring any interest liability and thereafter, with interest liability.
Legal provisions: The facility of warehousing of the imported goods in Custom Bonded Warehouses, without payment of Customs duty is permitted in the Customs Act, 1962.
Appointment of Public Warehouses:
Section 57 of the Customs Act, 1962 provides that the Principal Commissioner of Customs or Commissioner of Customs may subject to such conditions as may be prescribed license a public warehouse where dutiable goods may be deposited.
All the applications for licensing of Public Warehouses shall be carefully scrutinized and due consideration shall be given to the following criterion for their appointment: –
(a) is a citizen of India or is an entity incorporated or registered under any law for the time being in force;
(b) submits an undertaking to comply with such terms and conditions as may be specified by the Principal Commissioner of Customs or Commissioner of Customs, as the case may be;
(c) furnishes a solvency certificate from a scheduled bank for a sum of two crore rupees: Provided that the condition of furnishing a solvency, certificate shall not be applicable to an undertaking of the Central Government or State Government or Union territory or to ports notified under the Major Port Trusts Act, 1963 (38 of 1963)
Appointment of Private Warehouses:
As per Section 58 of the Customs Act, 1962, The Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions
The main conditions for granting Private Bonded Warehouse licenses are: Where, after inspection of the premises, evaluation of compliance to the conditions under regulation 3 and conducting such enquiries as may be necessary, the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, is satisfied that license may be granted, he shall require the applicant to, -
(a) provide an all-risk insurance policy, that includes natural calamities, riots, fire, theft, skillful pilferage and commercial crime, in favour of the President of India, for a sum equivalent to the amount of duty involved on the dutiable goods proposed to be stored in the private warehouse at any point of time;
(b) provide an undertaking binding himself to pay any duties, interest, fine and penalties payable in respect of warehoused goods under sub-section (3) of section 73A or under the Warehouse (Custody and Handling of Goods) Regulations, 2016;
(c) provide an undertaking indemnifying the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, from any liability arising on account of loss suffered in respect of warehoused goods due to accident, damage, deterioration, destruction or any other unnatural cause during their receipt, delivery, storage, dispatch or handling; and
(d) appoint a person who has sufficient experience in warehousing operations and customs procedures as warehouse keeper
Appointment of Special Warehouses:
As per Section 58A of the Customs Act, 1962 the Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, licence a special warehouse wherein dutiable goods may be deposited and such warehouse shall be caused to be locked by the proper officer and no person shall enter the warehouse or remove any goods therefrom without the permission of the proper officer.
The Board may, by notification in the Official Gazette, specify the class of goods which shall be deposited in the special warehouse licensed under sub-section (1) of Section 58A of Customs Act 1962.]
Cancellation of License:
Section 58B of the Customs Act, 1962 provides that
(1) Where a licensee contravenes any of the provisions of this Act or the rules or regulations made thereunder or breaches any of the conditions of the licence, the Principal Commissioner of Customs or Commissioner of Customs may cancel the licence granted under section 57 or section 58 or section 58A: Provided that before any licence is cancelled, the licensee shall be given a reasonable opportunity of being heard.
(2) The Principal Commissioner of Customs or Commissioner of Customs may, without prejudice to any other action that may be taken against the licensee and the goods under this Act or any other law for the time being in force, suspend operation of the warehouse during the pendency of an enquiry under sub-section (1).
(3) Where the operation of a warehouse is suspended under sub-section (2), no goods shall be deposited in such warehouse during the period of suspension: Provided that the provisions of this Chapter shall continue to apply to the goods already deposited in the warehouse.
(4) Where the licence issued under section 57 or section 58 or section 58A is cancelled, the goods warehoused shall, within seven days from the date on which order of such cancellation is served on the licensee or within such extended period as the proper officer may allow, be removed from such warehouse to another warehouse or be cleared for home consumption or export.
Key takeaway:
Appointment of Public Warehouses: Section 57 of the Customs Act, 1962
Appointment of Private Warehouses: Section 58 of the Customs Act, 1962
Appointment of Special Warehouses: Section 58A of the Customs Act, 1962
Cancellation of License: Section 58B of the Customs Act, 1962
- After actual export of the goods, the Drawback claim is automatically processed through EDI system by the officers of Drawback Branch on first-come-first-served basis. The status of the Shipping Bills and sanction of Drawback claim can be ascertained from the query counter set up at the Service Center. If any query is raised or deficiency noticed, the same is also shown on the terminal and a printout thereof may be obtained by the authorized person of the exporter from the Service Centre. The exporters are required to reply to such queries through the Service Centre. The claim will come in queue of the EDI system only after reply to queries/ deficiencies is entered in the Service Centre.
- All the claims sanctioned on a particular day are enumerated in a scroll and transferred to the Bank through the system. The bank credits the drawback amount in the respective accounts of the exporters. The bank may send a fortnightly statement to the exporters of such credits made in their accounts.
- The Steamer Agent/Shipping Line may transfer electronically the EGM to the Customs EDI system so that the physical export of the goods is confirmed, to enable the Customs to sanction the Drawback claims.
Procedure for claiming Duty Drawback:
- AIR or the Brand Rate may be claimed on the shipping bill at the time of export and requisite particulars filled in the prescribed format of Shipping Bill/Bill of Export. In case of exports under electronic Shipping Bill, the Shipping Bill itself is treated as the claim for Drawback. In case of manual export, triplicate copy of the Shipping Bill is treated as claim for Drawback. The claim is complete only when accompanied by prescribed documents described in the Drawback Rules 2017. If the requisite documents are not furnished or there is any deficiency, the claim may be returned for furnishing requisite information/documents. The export shipment, however, will not be stopped for this reason.
- Duty Drawback on goods exported by post is also allowed on following the procedure prescribed under Rule 12of the Drawback Rules, 2017.
Key takeaways
- The claim is complete only when accompanied by prescribed documents described in the Drawback Rules 2017.
Reference:
- Indirect Tax - Introduction of Goods and Services Tax by Manan Prakashan
- Indirect Tax by Kalyani Publishers
