Swift Clearance - Not Really!

By Vijay Kumar

WE received this note from Mr. BV Kumar, a former Member of the CBEC.

“I am enclosing a small note, which is based on a very recent experience in one of the Custom Houses. It is also sad to note that most of the staff don't come to the offices till 11AM and the outward procession starts from 4PM. This is the state of affairs, which one can see by a casual visit to any of the Central Govt. Offices.

I saw an advertisement in the leading newspapers dated 31.3.2016 regarding “Swift clearances” which would be implemented with effect from 1st April 2016.

In one of the Customs houses where machinery for a project was imported under Project Import Regulations, the BCD applicable was 5% and there was no dispute in this regard. However, for determining the CVD, the Appraiser was of the view that every machine (assembly or sub-assembly) is required to be assessed on merits.

We met the Principal Commissioner of Customs to convince that the machinery which was imported has been specifically manufactured by the overseas supplier, for producing a particular product and on that basis the classification of the goods is required to be determined for applying the CVD rate duty.

The Principal Commissioner of Customs was of the opinion that the rate of duty applicable for CVD should be as proposed by the Appraiser. He also advised that in order to expedite the clearance it is better to pay the CVD in full rather than resort to provisional assessment under the Customs (Provisional Duty Assessment) Regulations, 1963.

Not to delay the implementation of the project it was decided by the importers to pay the CVD as determined by the Appraiser. Accordingly, the CVD was paid immediately.

Surprisingly the Bills of Entry were being tossed from the SIIB to the Group concerned and from there to the Project Import Group. The Deputy Commissioner concerned was not in the seat most of the time and it took nearly 10 days to clear the consignment.

The result is additional expenditure on warehousing charges, container's rent to be paid in foreign exchange, demurrages and delay in implementation of the project resulting in escalation in interest costs on borrowings, delay in production of goods, and frustration of the importers. I wonder, is the government really serious, in implementing their slogans: ”ease of doing business”, minimum government and maximum governance”, etc.

It is fine to advertise in the papers about swift clearances but the real proof is in its implementation.

It is high time Rule 56 J is implemented to compulsory retire those officers who are known to be corrupt or inefficient and cannot measure up to their responsibilities to meet the policy objectives of the government”.

In the case of a major project, the import of the machinery required for setting up of the plant may take more than one or two years since machinery is not available off the shelf and is fabricated after receiving a specific order and after entering into a contract with the overseas suppliers. Even in such cases, the electronics, the boilers, the internal combustion engines, conveyor belts, and other specialized equipment, etc are outsourced from different specialist manufactures and supplied to the project by an overseas supplier on a turnkey basis.

In such cases to determine the CVD applicable it would take enormous amount of time to examine each machine (Assembly or Sub-Assembly) to determine their classification.

In order to facilitate quick clearance and assessment, a separate classification under the Central Excise Tariff Act, on the same lines of Heading 9801 of the Customs Tariff Act, 1975 is required to be notified. It is high time this is implemented so that this would facilitate clearance of goods imported under Project Import Regulations.”