Adverse Comments of PAC on Customs ICES
IN the Report mentioned above, the Public Accounts Committee made certain adverse (to put it mildly) comments on the working of the Customs ICES.
- Although the ICES application has been operating for the last 18 years, the CBEC could not overcome its weaknesses in areas of IT strategic planning, personnel management and training and policy for internal assessment and audit of core applications, as highlighted in the C&AG's scrutiny as well as in the Committee's examination of ICES 1.5. At the application level, date validations in several critical areas such as customs and excise exemption notifications, country of origin based exemptions, Retail Sale Price (RSP) based assessments. etc., which are essential for ensuring correct exemptions have been found to be lacking thereby allowing incorrect exemptions by the applications leaving scope for mis-declarations and incorrect assessments and resultant leakage of revenue. The Committee observe with serious concern that even after incurring Rs. 604 crore in upgrading the version form ICES 1.0 to ICES 1.5, the Department did not assess their cost and time saving, if any, due to the enhanced competence of ICES 1.5.
- Customs exemption notification dated 17 March 2012 which was amended by notification dated 23 January 2013 enhancing the BCD rate from 'nil' to 2.5 percent in respect of certain goods involving crude oil imports. However, in 15 instances of imports of 'crude sunflower oil' and 'crude palm kernel oil' made on 23 and 24 January 2013 under Chennai Sea Customs were assessed at 'nil' rate of BCD vide exemption notification dated 17 March 2012 instead of the revised version dated 23 January, 2013, resulting in short collection of duty of Rs. 2.29 crore. Similarly, according to Section 14 of the Customs Act 1962,valuation of goods for assessment of duties of customs is to be ascertained with reference to the 'rate of exchange' of the foreign currency of the invoice as in force on the date of presentation of BE and the rate notified by CBEC. The Board, vide NT notifications dated 21 May 2012 and 24 May 2012, had upwardly revised the exchange rates for the Japanese Yen, the U.S. Dollar and the Hong Kong Dollar, effective from 22 May 2012 and 25 May 2012, respectively. However, the changes were not updated in the system, resulting in incorrect assessment and consequently short levy of duty. The Committee desire that the Ministry may probe the matter and take suitable action against the erring officers for furnishing incorrect information. The Committee also feel that failure in updation of central excise duties, exemption notifications and exchange rates is a serious lapse and a matter of dereliction of duty on the part of concerned officers/staff particularly since the Chennai Customs, where audit noticed the irregularity, itself has been the nodal site for updation of notifications.
- The Committee observed various Audit paras of CAG and found that there had been numerous cases of short levy due to casual and negligent attitude of the concerned officers and staff resulting in huge revenue loss to the Government exchequer. As per the Performance Audit report only, the total revenue implication was calculated as Rs. 847.16 crore, The Committee are surprised that even after numerous such incidents of short levy no responsibility has been fixed upon the concerned staff/officers of the Department.
- The Committee note that the Department, although aware of the challenge faced by them due to a surge in the online shopping transactions across borders is yet to fully grasp the custom implications of the online shopping businesses, both national and international. It is evident from the reply given to the Committee which merely informed that such transactions, being either through courier or posts mode, are dealt with under the relevant procedures of the Customs Act.
- The Committee observe that optimum utilization of hardware was not being done and the procurement and distribution of the same lacked proper planning. The Committee take critical note of the Audit observation that only 250 and 100 Thin Client terminals have been installed at Chennai Sea and Chennai Air Commissionerates against 414 and 166 received by them. Again, in case of Chennai Air and ICD Patparganj, it was observed that out of 100 and 62 numbers of installed terminals, only 80 and 30 terminals were actually in use as on 31st March 2013.