CAG raises serious objections against Customs functioning
THE latest report of the CAG on the Compliance Audit of the Customs Department presented to Parliament on 1.8.2014 shows the Customs to be a thoroughly incompetent and inefficient Department due to which the Government is losing precious revenue. And for a change, the CAG pointed out a couple of instances where the Customs Department collected more revenue than what is mandated.
Assessing Officer levied excess duty on imports
As per notification no.51/96-cus dated 23 July 1996, goods imported by Public Funded Research Institutes/Universities are exempted from whole of the additional duty of customs leviable under Section 3 of the Customs Tariff Act, 1975. Audit scrutiny revealed that in case of 2991 items imported by Public Funded Research Units through ACC, Bangalore during the years 2010-11 to 2012-13, the Assessing Officer in contravention of provisions in the aforesaid notification, levied four per cent additional duty thereby resulting in excess levy of CVD of Rs.8.79 crore. This was pointed to the Ministry in June 2013/November 2013; their reply has not been received (March 2014). Your job is to collect the correct revenue; not a penny more, not a penny less - now they will not even refund the illegally collected excess duty and if the poor importer is tempted into filing a refund claim, the department will claim it to be time barred. Will the department take action against any officer for illegally collecting excess duty?
Disposal of Seized Goods:
The system of disposal of seized and confiscated goods by the department was characterized by lack of proper maintenance of records, inadequate quality of documentation, non-projection of targets, delays in adjudication as well as non-compliance with the prescribed guidelines resulting in delays in disposal of the goods, blockage of storage space and loss to the public exchequer.
Incorrect updation of EDI system resulted in short levy of CVD
The Finance Bill 2012 was introduced in Lok Sabha on 16 March 2012. As such, changes in the Excise duty and Customs duty rates, if any, were to be effective from the mid-night of introduction of Finance Bill i.e. 16 March 2012. Therefore, if there were any change in the Excise duty rates it would normally be effective from the 17 March 2012, unless otherwise stated in any notification or as part of the provisions of Finance Bill 2012. Government of India enhanced the rate of Central Excise duty (CVD) from 10 percent to 12 per cent for all the goods falling under tariff headings 8607, 8608 and 8609 vide notification no.18/2012 - CE dated 17 March 2012. Subsequently, Finance Bill 2012 was passed by the Parliament which received the assent of the President on 28 May, 2012. Scrutiny of Bills of Entry and Import/Export data relating to ICD Tughlakabad, ICD Patparganj, NCH, Delhi, Kolkata (Port), Kolkata (Airport), Custom Houses, Kochi and White field - Bangalore, Air Commissionerate, Devanhalli for the period May 2012 to March 2013 revealed that various importers imported different items falling under Customs tariff heading (CTH) 8607 - Parts of Railway or Tramway Locomotives or Rolling stock, 8608- Railway or Tramway track fixtures and fittings, Mechanical signalling and CTH 8609- Containers specially designed and equipped for carriage. The imported goods were assessed to CVD at the rate of6 per cent, instead of at the rate of 12 per cent under aforesaid Finance Act. Further, it was observed that although the aforesaid Commissionerates levied CVD at the proposed enhanced rate of 12 per cent during the period from 17 March 2012 to 27 May 2012 but the same was incorrectly reduced to 6 per cent after the assent of the Act by the President on 28 May 2012. Thus, incorrect updation of the notification Directory in the ICES database by the department resulted in short levy of duty aggregating to Rs. 30.17 crore. Deputy/Assistant Commissioner of ICD, Tughlakabad, Patparganj and NCH Custom House, New Delhi intimated (April/May 2013) recovery of Rs. 1.86 crore along with interest of Rs.7.34 lakh. Reply from other Commissionerates are not received (February 2014). No accountability was fixed for the erroneous updation of notification Directory. The importer had to pay 18% interest for the lapse of the Customs Department.
Adjudication
Board has prescribed 27 specific time frames, within which the officers would complete adjudication in the cases which relate to seizure alone. The Commissioner or Additional/Joint Commissioner of Customs is required to complete adjudication within one year from the date of service of the Show cause notice. Audit scrutiny revealed that nine Commissionerates did not adhere to the aforesaid provisions and there were delays in adjudication ranging from 1 to 204 months in respect of 65 cases having seizure value of Rs. 3317.57 lakh.
The Assistant/Deputy Commissioner of Customs is required to complete adjudication within six months from the date of service of the show cause notice. Audit scrutiny revealed that six Commissionerates did not adhere to the aforesaid provisions during the period 2010-11 to 2012-13, resulting in delays in adjudication ranging from 1 to 23 months in respect of 343 cases having seizure value of Rs. 271.40 lakh.
Improper control over warehoused goods
Provisions of section 62 of the Customs Act, 1962 read with provisions of Customs Manual stipulate that warehoused goods should not be removed from the warehouse without the permission of proper officer. Preventive officer of customs is to accompany the importer/agent with the key of customs lock and is to put his signature in the bond stock register maintained in the warehouse. The private warehouse keeper has to submit statement report of receipt, issue, balance in bond to customs bond department to locate time expired goods lying in warehouses and to ensure that there is no discrepancy in the stock of Customhouse record vis-à-vis warehouse record.
(i) Audit scrutiny of records of Central Warehousing Corporation under Jaipur commissionerate revealed (June 2013) that the Preventive Officer did not accompany the importer/custodian on the dates of entry/removal of warehoused goods which was evidenced by the fact that the Bond-stock register was not bearing signature of the Preventive officer. Thus there is a lapse in preventing risk of substitution and un-lawful removal of warehoused goods.
(ii) In Mumbai Commissionerate in respect of 1 Public and 5 private warehouses, it was noticed that the statement report of receipt, issue, and balance in bond was not submitted to Customs Bond Department. Non-submission of monthly report leads to improper control of warehouse goods. This was pointed out and accepted by the department.
(iii) The Ex - bond clearances need to be entered in the ‘ Warehouse Bill Register', and the entries need to be signed by the Bond Officer indicating the supervision of the removal of the warehoused goods. However, it was seen from the Warehouse Register furnished under ICD, Sanatnagar, Hyderabad -II Commissionerate, that in some cases, the register showed ‘none'/'only part' of the stock as cleared as at the end of the year. However, on verification by Audit in the EDI System, it was found that the stocks were completely cleared from the warehouse.
(iv) Similarly, scrutiny of records of a private bonded warehouse (Kandla) revealed that signature of Preventive officer (PO) was not found in the Bond Stock register which signifies the fact that the PO had not accompanied the importer/custodian on the dates of entry/removal/clearance of the warehoused goods.
Obviously, the Customs officers have no time for statutory work, which can be neglected with impunity, as there is nobody to question.