SEPTEMBER 18, 2017

By G Mohana Rao, Assistant Commissioner (Retd.)

Along with the implementation of GST w.e.f 1st July, 2017, various procedures pertaining to exports like factory stuffing, refund/rebate/drawback, warehousing etc have been revisited. As part of the same, the factory stuffing procedures has also been revisited vide circulars number 26/2017-Customs dated 1st July, 2017 and 36/2017-Customs dated 28th August, 2017.

Central Excise officers' supervised factory stuffing has paved way for self-stuffing and self-sealing by the exporter. Permission for self-sealing once granted shall be valid till cancelled. The checks on the part of the government shall be through risk based controls and intelligence set-up. Very noble intentions and great facilitation measures indeed!! It's certainly the need of the hour. It is a given that exports need to grow if GDP has to grow. All out efforts need to be made to incentivise the exports. However, the present scheme of things creates lot of barriers for the exporters which need to be looked into. The funds in the form of IGST paid by merchant exporters are blocked with no signs of clarity.

The self-sealing albeit is of an Electronic Seal - a RFID tamper proof one-time seal, something new being introduced. Interesting! The electronic seals will have to conform to parameters as specified in the subject circulars. The exporters will have to directly procure the seals from the vendors. A tripartite linkage is being established between the exporters, Risk Management Division (RMD), Vendors for proper checks and balances. The vendors, before commencing selling of seals will have to submit its certifications to RMD and inform the serial numbers of E-seals intended to be sold. Risk based controls will be established by RMD. The exporters, at the time of putting the e-seal, will have to write the details of the goods stuffed in the container viz. IEC, Shipping Bill number and date, e-seal number, date and time of sealing, destination customs station of export, container number, trailer-truck number etc. All these details will have to be written electronically on the e-seal through some mobile or web application to be provided by the vendors. The vendors will also have to make arrangements for reading the e-seals at the port of export by way of some reader scanners- hand held or fixed. These reader scanners shall be used by the Customs officers to verify the integrity of the e-seals. The vendors will also have to integrate the information stored on their data retrieval systems through ICEGATE.

The transport documents for the movement of self-sealed containers are to be the same as those prescribed under the GST provisions. E-way Bill prescribed in the GST,the date of implementation is yet to be announced. The exporters are being asked to absorb too many things at one go. GST Council has appointed another committee to look into the problems of exports.

The procedure is starting from 1st October, 2017 –less than a fortnight away. It appears that the ECO-SYSTEM for doing all this is not ready. All field formations have to appoint nodal officers to look after the self-sealing procedure who shall be responsible for coordinating the arrangements of installation of reader-scanners. The names of vendors are not yet announced. There are no signs of any reader scanners etc. being installed at the ports. Complete confusion with no clarity is there in the minds of the exporters. The information of e-seals will have to be transmitted by vendors to RMD as well as to the respective destination ports/ICDs of export declared by the exporter. This requires consultation amongst the nodal officers at each ICD/Port, RMD and vendors. It would have been better if the date of implementation was announced ONLY once the whole system was in place . It appears that the date of implementation will also have to be postponed as is the case with GST returns where almost every date for filing of returns in GST is being changed at frequent intervals.

There is no doubt that the proposed new factory stuffing procedures are excellent, but, in order to make a scheme successful, all the logistics shall be taken care of thoroughly & fully. Along with the good intentions, good implementation is also necessary to reap the benefits effecively.

( The author is Partner, Elysian Tax Advisors, Mumbai and the views expressed above are strictly personal)