Customs Provisional Assessment - CAG Slams
PROVISIONAL Assessment (PA) is a facilitation measure given to the importer/exporter under the provisions of Customs Act 1962 to avoid hardship by way of payment of demurrage charges or other financial losses. In addition, with the introduction of self - assessment system in the Finance Act, 2011, the importer or exporter is mandatorily required to self - assess the duty in terms of Section 17 of the Customs Act, 1962. This self - assessment is subject to verification by the proper officer of the Customs. In case an importer or exporter is unable to make self-assessment, he may, request the proper officer in writing for the assessment of the imported goods or export goods. In such cases and in other circumstances such as non - availability of relevant information or documents or due to any other reasons mentioned in Section 18 of the Customs Act, 1962, the proper officer wherever deems it necessary to make further enquiry may direct that the duty is to be assessed provisionally and allow clearance of such goods by taking bond with appropriate security as withholding clearance of goods.
There are 94 Customs Commissionerates. Out of which Bills of Entry (BsE)/ Shipping Bills (SBs) and related records/documents pertaining to 42 Commissionerates on pan India basis covering the period from 2011 - 12 to 2013 - 14 were selected by the CAG for conducting audit on provisional assessments.
Out of 42 Commissionerates selected, 26 Commissionerates provided the information sought by Audit to varying extent and the remaining 16 Commissionerates had not furnished any information. However, all the 42 Commissionerates were audited by the various field formations of Customs Receipt Audit wing.
Audit noticed that there was no provision to watch pendency of provisional assessments, receipt of test report documents, revalidation of bond or Bank Guarantee (BG) etc from the system.
Further the following deficiencies resulted in lack of monitoring of Provisional Assessment cases.
i. No provision existed in the system to distinguish provisional duty bonds against bonds executed for various other schemes. The reasons for resorting to provisional assessment such as pendency of receipt of test report, valuation or any specific reason could not be ascertained from the system.
ii. Details such as date of finalization, reasons for non - finalization, revalidation of Bond/BG, details of provisional duty paid, final duty assessed could not be generated from the existing modules in EDI.
iii. Manual finalization of provisional assessments still continued.
iv. Final assessments were made manually up to November 2014 and as such the data on the pending provisional assessments shown in the EDI system did not match with the actual pendency position. Data as per EDI system and physical data maintained in the registers needs reconciliation.
v. Lapsed/cancelled bonds do not get reflected in the Bond Ledger/Bond Module in ICES module.
vi. Separate reports on number of bills of entry/shipping bills assessed provisionally and finalized could not be generated from the EDI system.
vii. Report on age - wise registration and pendency of provisional assessments could not be generated.
viii. Module for levy of Extra Duty Deposit (EDD) does not exist and the same is being levied manually.
ix. This module was unable to generate monthly reports, group - wise (within Commissionerate) and consolidated report for the Commissionerate.
x. At ACC, Bengaluru, 1455 bills of entry filed under 34 bonds were closed during March 2015. However, the fact of their closure under bond management module could not be verified from the EDI system.
CAG wants CBEC to examine the impact of the above audit observations on its facilitation measures pan India.
Scrutiny of records in 13 Commissionerates, revealed that 173 bills of entry were not eligible for provisional assessment as requisite clarifications/documents were available with the department. Despite having all the documents/clarifications, the department resorted to provisional assessment leading to postponement of recovery of duty for a period ranging from 1 to 4 years.
The audit of provisional assessments of customs duty has revealed abnormal delay in finalization of provisional assessment and consequent delay in realisation of revenue. More than 36000 cases with bond value exceeding Rs.108389.37 crore were pending beyond 6 months for collection of Customs Revenue.
There were several cases of non - compliance of Customs rules, regulation relating to provisional assessment, provisional duty bond and bank guarantee management. There was continuance of cases of operational malfunction and delays in finalization of the assessments pointed out in earlier audit report.
The module for finalisation of provisional assessment launched under ICES.1.5 with effect from April, 2014 needs to be streamlined with all its functionalities. Audit noticed issues worth Rs. 545.92 crore alongwith the issue of execution of bonds valued at Rs. 28679.48 crore without any security or Bank Guarantee, in addition to the systemic deficiencies which could not be quantified.
Source: CAG Report No. 5/2016