TIOL-DDT 2860
03 06 2016
Friday

OUR CESTAT did it at least twice in recent times. In the  Coca Cola case - 2015-TIOL-613-CESTAT-DEL, the Tribunal imposed a cost of Rs.25,000 on the Adjudicating Commissioner.

In  Okay Glass  case -  2015-TIOL-428-CESTAT-DEL, the Tribunal imposed a cost of Rs. 10,000 on the Commissioner who adjudicated the impugned order. The Department took the case in appeal to the High Court of Allahabad. The High Court did not find any merit in the appeal or a substantial question of law and so the cost on the Commissioner remained intact. 2015-TIOL-2145-HC-ALL-CX

The Coca Cola case was taken in appeal to the High Court of Punjab and Haryana with two substantial questions of Law:

(i) Whether CESTAT is empowered to impose cost on the adjudicating authority?

(ii) Whether direction to deposit cost into the PM National Relief Fund is proper when it is not voluntary?

The Tribunal had held,

"The adjudicating authority has been highly and conspicuously nonspeaking, non-reasoned, arbitrary and cavalier while passing the impugned order. Non-application of mind (on the part of the adjudicating authority) is indeed writ bold and large across the impugned order. Such orders adversely and severely impinge upon the public's trust in the public authorities and for that reason a public authority displaying such egregiously irresponsible conduct and that too while performing quasi judicial functions deserves to be put to costs...impose costs of Rs. 25,000/- on the adjudicating authority who passed the impugned order payable to the Prime Minister's National Relief Fund."

The High Court in a recent order found no illegality or perversity in the findings recorded by the Tribunal which may warrant interference by the Court. Accordingly, no substantial question of law was found to arise in this appeal.

Interestingly the High Court did not answer the question whether the CESTAT is empowered to impose costs on the adjudicating authorities and whether the direction to deposit cost to the PM's National Relief fund is proper.

DDT had covered these issues extensively in DDT 2315 18.03.2014.

Please see Breaking News for the latest High Court Order.

Customs - Solvency Certificate for Private Warehouse Licensing Regulations

REGULATION 3 (1) (c) of the Private Warehouse Licensing Regulations, 2016 requires an applicant to furnish a solvency certificate from a scheduled bank for an amount to be specified by the Principal Commissioner/Commissioner of Customs.

CBEC has decided that for the purposes of uniformity, the Principal Commissioners/Commissioners of Customs shall require that the importer furnish a solvency certificate from a scheduled bank equivalent to the maximum amount of duty involved on the goods proposed to be stored in the private bonded warehouse at any point of time.

If the applicant is the Central Government, State Government or a Union Territory administration or their undertakings, there will be no need to obtain any solvency certificates.

In the case of EoUs/EHTP/STPI units, there will be no need to obtain any solvency certificate, as the conditions regarding furnishing of bank guarantee/security are specified in chapter 6 of the Foreign Trade Policy.

As regards, AEOs/ACPs, the circulars issued in their regard shall govern the amount of solvency required to be furnished by the importer. (Why can't Board specify what those circulars are?)

CBEC Circular No. 24/2016-Customs., Dated: June 02, 2016

Annual Conference of Tax Administrators

A joint Conference of Principal Chief Commissioners/Principal Commissioners (1985 batch and prior batches) of CBDT and CBEC to be inaugurated by the Prime Minister of India on 16.6.2016 forenoon, is to be held on 16.6.2016 and17.6.2016 (with the possibility of being extended to the forenoon of 18.6.2016).

CBDT has issued a letter asking all the Principal Chief Commissioners to inform this to all Chief Commissioners, all Directors General and Principal Commissioners (1985 batch and prior batches) of their regions.

Suggestions, if any, with reference to the Conference, are be sent to Member (R), CBDT by the Principal Chief Commissioners.

CBDT F.No. 401/8/2016-ITCC., Dated: June 02, 2016

Customs - New Exchange Rates from Today

CBEC    has notified new exchange rates for Imported Goods and for Export Goods with effect from today. The USD is 68.30 for imports and 66.60 Rupees for exports.

Notification No. 80/2016-Cus (NT)., Dated: June 02, 2016

Export Promotion Schemes - Hosur added

UNDER several exemption notifications pertaining to imports under the various promotional schemes, the imports are allowed only through certain ports, airports, ICDs, or Land Customs Stations. Now Hosur is added to the list of airports/ICDs notified for export and import. 20 Notifications are amended.

Notification No. 36/2016 - CUS Dated:  June 01, 2016

Customs Brokers

AS per the Customs Brokers Licensing Regulations, 2013, "Customs Broker" means a person licensed under these regulations to act as agent for the transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs Station.

The word, ‘broker' is not a very respected one in India. The customs Brokers in India would rather like the old name, Custom House Agent almost institutionalized as CHA. For most stakeholders, it is not clear whether the agent was the agent for Customs or the customer. Any way now he is a broker - proper.

In order to provide a clear understanding of a wide spectrum of Members' practices in terms of brokers' role, institutional framework, regulatory/licensing requirements, challenges, opportunities and lessons learned, and to further provide guidance to Members, where needed, as mandated by the Policy Commission, the WCO recently developed a comprehensive Study Report on Customs Brokers.

Highlights from the Report:

Customs brokers generally act as an intermediary between traders and Customs in Customs clearance processes. Brokers' knowledge of Customs laws and processes in addition to their work experience in the trade supply chain can be useful for both traders and Customs. While Brokers support traders by providing all necessary documentation and undertaking formalities related to cargo clearance, Customs brokers are also expected to maintain government interests by ensuring compliance with Customs and other regulatory requirements and the collection of appropriate duties and taxes.

In line with ongoing Customs reforms and to further enhance their service delivery, some Customs brokers are transitioning towards a more comprehensive consultancy and advisory role, rather than being confined to merely filing declarations/documents for Customs release and clearance. They also collaborate with other actors in the supply chain on behalf of traders, such as freight forwarders, carriers/agents, warehouse operators and transporters. In some cases, Brokers have even expanded to provide many other services in the supply chain, such as cargo handling, warehousing, multi-modal transport carriage, packaging, consolidation, insurance coverage, delivery services, as well as providing consultancy in compliance and dispute resolution.

There are varied licensing and regulatory models adopted by Customs administrations to authorize legal and/or natural persons to act as Customs brokers. Many administrations have specific licensing requirements to act as a broker, while others simply allow anyone to establish a free business and take up the job of a clearing agent on behalf of others. There are also practices, for example in Asia, where some administrations make concessions from the use of licensed brokers when a person transacts any business solely on his own account.

Some Members permit a licensed Customs broker as an individual to operate and practice his/her profession without having any linkage to a Customs brokerage entity, whereas some others only allow the licensed brokerage entity to carry out such activities. In some cases, a periodic (such as annual, five or ten years) renewal/validation of the licence is required, while in other cases the licence remains valid until suspended/revoked on specific grounds. It is also seen that some administrations issue port-specific licences and identity cards to brokers to transact business. They need to have an ID and/or endorsement of their licence for each of the ports where they want to transact business.

Licensing/accreditation requirements vary, but in general include sound knowledge of Customs laws and other regulatory requirements; clean track records in terms of security and other compliance matters; financial solvency - surety bond, security deposit; minimum educational qualification; specified working experience; in some cases, a written and/or oral examination and even minimum hours of training. Some administrations also prescribe certain licensing obligations for brokers in respect of business ethics and professional conduct; due diligence on clients; and/or correctness of information provided.

Several Members use some kind of regulatory and/or licensing criteria for Customs brokers. By obtaining license/permission through a specified process, Customs brokers are allowed to practice while enabling Customs administrations, or the relevant licensing government agency, have a complete list of brokers with their verified credentials. Audits/checks of this list of registered Customs brokers at prescribed intervals, ensure that those who are licensed have maintained their standards and therefore, administrations can focus on those brokers with poor compliance record.

An examination as part of licensing requirements of a Customs broker seems to be useful for several administrations to test the knowledge of the applicants. This examination can act as an initial screener of Customs brokers, which could increase compliance rates because of the level of knowledge of Customs law required to pass the exam. One opportunity could consist of Customs administrations, Customs brokers associations, and other relevant government agencies collaborating together to produce a comprehensive examination that will evaluate the knowledge of the applicants to all the applicable and pertinent laws concerning Customs clearance, declaration, and requirements.

Some Customs administrations are already providing, or have started to look into providing training support for Customs brokers. They are playing a significant role in enhancing professional standards of Customs brokers, among others by providing training that challenges their relevant knowledge and skills (e.g. electronic filing of declarations), while also teaching brokers new relevant knowledge/skills. Likewise, a number of initiatives are being taken by Customs brokers and freight forwarders associations by themselves and/or in collaboration with Customs administrations to enhance the capacity of brokers and thus the effectiveness of clearance processes. Customs and brokers associations are also focusing on retraining/re-fresher courses for Customs brokers at regular intervals to keep their knowledge and skills up to date.

Licensing requirements, examinations, and training all support both Customs brokers and Customs administrations because a lack of professionalism and training often leads to delays in the goods declaration and Customs clearance processes. The lack of knowledge in Customs procedures, necessary documents, insufficient knowledge of harmonized systems, can lead to avoidable errors that ultimately wastes limited Customs administrations' personnel and creates backlogs and delays. It is recommendable that any reform or modernization of Customs includes providing the necessary information and training to Customs brokers.

In India, the word formalities means money paid to government officers. Now we should not take it as if the WCO has also recognized this.

Until Monday with more DDT

Have a nice weekend.

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