Customs - Poor Trade Facilitation - CAG Comments
THE CAG recently submitted a report to Parliament on the Performance of Import and Export Trade Facilitation through Customs Ports.
Audit observed,
The Indian economy is one of the fastest growing economies among the emerging markets today. One important cause is the rapid growth in international trade. In order to sustain the current pace of export growth in a highly competitive global market, there is a need to reduce the associated costs.
Trade Facilitation is aimed at ensuring the movement and clearance of goods across borders at the minimum cost. It is a term used to denote all steps for simplification of procedures and reduction of costs in the course of international trade. Reduction in idle time in any segment of the trading process would reduce transaction costs and would facilitate trade in general and enhance the price competitiveness of Indian goods in international market. Delays increase not only the cost of compliance but also lead to impediments to efficient trading across borders like congestion at the ports.
As a measure of trade promotion, trade facilitation has come to occupy a significant place in the multilateral discussions on trade in the recent past due to the importance given by the international community in liberalizing trade.
Over the years, the Department of Revenue (DoR) had initiated various trade facilitation measures like simplification of rules and procedures, IT initiatives, e-governance, Accredited Client Programme (ACP), 24x7 clearance facility, Authorised Economic Operator (AEO) Programme etc.
The objective of this performance audit was to assess the adequacy of regulatory framework, policy implementation, operational issues and internal controls.
Audit found:
Lack of uniformity in customs operations:
A foreign vessel calling Chennai and then calling Cochin is not permitted to carry even empty containers from Chennai to Cochin even though cabotage has been relaxed for Cochin, while on the reverse leg containers from Cochin are accepted in Chennai. The reason furnished by the department was the lack of provision in the ICEGATE portal to handle such movements.
Department of Revenue (DoR) in their reply (January 2015) stated that a module has been provided in ICES 1.5 for trans-shipment of import cargo from a Seaport to another Seaport on 7 February 2014.
Since the audit observation was raised after February 2014, DoR was advised to review its status.
Examination of Export goods at the factory premises: Why this facility is not used?
After the receipt of goods in the dock, the Customs Officer on the basis of the checklist and other declarations filed by the exporter in the Service Centre may inspect/examine the shipment. The customs officers mark the SBs and also hand over the original documents to the Dock Appraiser who assigns a customs officer for examination. The system selects the packages to be examined and also directs whether the goods require a NOC/Certificate from the outside agency.
Audit observed that in eight Commissionerates, during the period 2010-11 to 2013-14, examination of the cargo in 32 per cent of SBs filed took more than 24 hours.
Examination of goods predominantly takes place at CFSs and involves unpacking of the goods resulting in delay and at times loss of goods. Despite an option for the exporters for getting the goods examined by Central Excise officers at their factory premises, as a facilitation measure, the quantum of SBs examined at the factory was only 37 per cent which is low leading to unnecessary time lag.
DoR in their reply (January 2015) stated that reasons for not utilizing the facility of examination at the factory premises by exporters are not ascertainable. CBEC on its part has decided, inter alia, that a single factory stuffing permission is sufficient for all the customs locations. Also, a circular dated 22.07.2010 has been issued that any request for factory stuffing by exporter/manufacturer communicated through e-mail to Central Excise Authority should be considered for scheduling for factory stuffing by Central Excise authorities.
Audit is of the opinion that necessary coordination and monitoring may be required to implement the said facilitation procedure.
Recommendation : Department may examine and address the reasons for non-utilization of the facility of examination at the factory premises, by the exporters.
Permanent Trade Facilitation Committee:
As per Board's circular dated 25 October 2013, Permanent Trade Facilitation Committees (PTFCs) established at each Custom House as a trade facilitation measure was to meet regularly with minimum of one meeting each per month on a pre-decided date aimed at encouraging stakeholder participation and expeditious resolution of local issues (without these being escalated to the Department/Board).
Audit observed from the data provided by ten Customs Commissionerates that in five Customs Commissionerates monthly meetings were held during the period 2010-11 to 2013-14, whereas in two Customs Commissionerates the meeting was held only on a quarterly basis. In Custom House, Amritsar, the first PTFC meeting was held in May 2014.