APRIL 11, 2017

By Vijayaraghavan Ramesh

THE changes to Section 46 and 47 of Customs Act, 1962 have come into effect from 1st April 2017. What is the intent behind these changes and whether these changes would result in decrease in dwell time of import clearance in Customs ports?

It appears that plausible intent to curb the following delays is summarized as below:

a) Imported cargo lying in ports for days/months congesting the ports for free movements of goods

b) Cargo imported and lying in ports for identifying the beneficial owner to take custody after import clearance

c) Lack of Customs expertise in some of the trade circles with regard to compliance procedure to be undertaken for filing the bill of entry including the correct classification and to avail the beneficial notification, if any

d) Pre inspection and consultation process in Customs with some of the officers as regards the intended compliance and also the duty liability to be borne by the importer

e) Delay in obtaining the requisite original documents from the supplier like the proper commercial invoice, Country of Origin certificate to claim preferential duty benefits etc., in country compliance documents like MSAI certificate, Drug licence, MRP labelling, SIP, NOC from PQ/AQ authorities, original advance authorization licences or other scrips etc.,

f) Arrival of cargo in the wrong port and delay in obtaining the transshipment permission

g) No money to pay Customs duty

h) Dispute with the overseas supplier with regard to cargo inwards

i) Lack of storage facility with the importer especially some of the traders who would use the Custodian premises as the transit hub and to clear the goods after identifying the local buyer

Now by virtue of Notification nos. 26/2017-Cus (N.T) and 27/2017-Cus (N.T), both dated 31-3-2017, the charges have been prescribed whereby for first three days of delay a sum of Rs 5000 per day is fixed and thereafter a sum of Rs 10000 per day is fixed. The discretion, if any, in waiving these charges in case of bonafide default and no willful delay is vested with Additional Commissioner of Customs posted in the ports. It is well known practice in Customs field formations that the Additional Commissioner would seldom take the decision on his own. The file movement giving the recommendation should proceed from Examiner/ Inspector to Appraising officer to Group AC/DC and then to ADC. There would be persistent delay in the facts & circumstances for getting favourable recommendation and in most cases this discretion would be misused to deny legitimate benefit of waiver. Again there is lack of clarity as regards to "willful default". The Board should have cited examples of "willful default". Normally, this facility of wavier would be availed by some small businesses or one-time filers or new businesses that are into import/export of goods for the first time. Therefore, for such importers these charges are exorbitant to absorb.

Further, the amendment in Section 47 of the Customs Act, 1962 lacks any beneficial purpose. The earlier period of 2 days to pay duty was good enough for every section of importers. It is a known fact that Customs Broker would invariably file the import bill of entry in vast majority of imports. They have a dedicated team to work round the clock to generate the bill of entry no. Most of the shipments under the Customs administration dispensation would ensure that the bills are released under Risk Management System (RMS) and these facilitated RMS bills may be released during late evening with duty challan and are made known to the importer only the next working day. In such a situation, the interest @ 15% p.a would kick in immediately on the next working day leaving little scope for them to avoid the same. This would result in unnecessary cost to the importer for no fault of them. Is this the intended purpose of the amendment?

Board in its wisdom might have recommended the above and the Government of the day has found favour in accepting the same. It is felt that this move could seriously increase the cost of doing business in India. Having said so, the Government could have considered that most of the delays happening in the Customs field formations are with regard to unsettling the settled issues on classification and valuation by the ever vigilante officers. In these cases, dilly-dallying with the demand for higher duty with total revenue bias is the order of the day resulting in huge demurrages and detention charges for the importer. There is little effort to address these issues. Hope somebody in the Government echelons of power pay heed to these lame noises.

(The writer is a retired Superintendent and the views expressed are strictly personal.)