Trade Facilitation in Indian Customs

By Shamima Siddiqui
Director (M&C), PIB, with inputs from the Ministry of Finance

New Delhi, Dec 29, 2011 (Washington Bangla Radio / PIB India) Trade facilitation results in reduction in dwell time, transaction costs, procedural requirements and documentation associated with Customs procedures at international borders including sea ports, airports.  Inland Container Depots/Container Freight Stations, Land Customs Stations and warehousing locations.  Customs is uniquely placed to facilitate trade as it is the primary agency dealing with import and export of goods, persons, and conveyances at international borders.  In this direction Customs functions in tandem with stakeholders – port authorities, carriers, clearing agents, DGFT, Banks and other Government departments like environment, health authorities etc. – to achieve meaningful and effective trade facilitation that reduces transaction costs.

The goals of trade facilitation are achieved through various policies and procedures as well as by automation and improved dissemination of information to stakeholders.

·         Self Assessment is a major trade facilitation measure that would result in significant reduction in the time taken for clearance of imported/ export goods through Customs and associated transaction costs. Self Assessment of Customs duty by importers or exporters was introduced vide Finance Act, 2011.  This is paradigm shift away from assessment by Departmental officers to a trust based system of self-assessment.  The objective is to expedite release of imported/ export goods.

·         On Site Post Clearance Audit (OSPCA) Scheme

In accordance with the legal provisions introduced vide the Finance Act, 2011 a scheme of ‘On Site Post Clearance Audit’ (OSPCA) has been implemented w.e.f. 1.10.2011 in case of the importers registered under the Customs Accredited Client Programme (ACP).  This scheme is aimed at facilitating Customs clearance of goods and reducing dwell time.

·         An Authorised Economic Operator (AEO) Programme

An Authorised Economic Operator (AEO) programme has been developed to enable businesses involved in the international trade to reap the following benefits among others i.e. secure supply chain from point of export to import and  reduction in dwell time and related costs.

AEO programmes have been implemented by other Customs administrations that give AEO status holders preferential Customs treatment in terms of reduced examination, faster clearances and other benefits.

·         Accredited Client Programme (ACP)

An ACP (Accredited Client Programme) was introduced in 2005 concurrently with introduction of Risk Management System (RMS).  The objective of the programme is to provide assured facilitation to importers who show good track record and compliance. The imports by ACP clients are normally exempt from assessment of duty and examination of goods.

·         Automation and Trade Facilitation

(i)     Customs Application ICES 1.5:

ICES 1.5 works on the latest technology stack and provides a single uniform application to all Customs locations. ICES 1.5 has proved to be a major trade facilitator.

(ii) Risk Management System (RMS):   RMS, an electronic system, interdicts import declarations (goods) on the basis of pre-defined risk parameters, which are then subject to assessment or examination or both.  Other declarations (goods) are allowed clearance without examination and assessment.  The present version of RMS (RMS 3.1) compatible with ICES 1.5 was launched on 4.6.2010.

(iii)Indian Customs EDI Gateway: ICEGATE portal connects about 15 external stakeholders – port authorities, custodians for sea, air and ICD cargo – with ICES 1.5 for         exchange of about 100 messages with regards to goods clearance .CBEC is the first Government department to receive the coveted ISO 27001 quality certification from Standardization Testing and Quality Certification (STQC) Directorate of the Ministry of Information and Communications Technology, Government of India, in July, 2011.

·         Execution of a Common Bond by Exporters

The exporters working under the Advance Authorization, Duty Free Import Authorization (DFIA) and Export Promotion Capital Goods (EPCG) schemes were required to execute bonds binding themselves to the export obligation, at the time of each import.  Further, this bond was required to be executed separately for each authorization  at different ports in case the goods are being imported from different ports.  The Task Force on Transaction Cost in Exports recommended that the authorization holders may be permitted to execute a single running bond with Customs authorities for all their imports under any Export Promotion (EP) scheme, from any port in India.

·         24 X 7 Deployment of Customs Officers

24X7 Customs operation were started at select port such as JNPT, Mumbai, Kolkata, Chennai, Ennore, Okha, Mangalore, Paradeep, Gopalpur, Mundra, Visakhapatnam, Sikka for attending to round the clock clearance of factory stuffed containers.

·         Single Factory Stuffing Permission

Exporters may avail a single factory stuffing permission applicable for all customs stations subject to certain procedural requirements.  This means that exporter needs not to obtain factory stuffing permission on case to case basis from each jurisdictional officer.  Such factory stuffing can be scheduled through e-mail.

·         Drawback to Exporters Without Receipt of Foreign Exchange

It is now decided that Drawback will continue to be admissible if the payment for the goods is received through ECGC provided the RBI writes off the requirement of realization of export proceeds and exporter produces a certificate from the concerned Foreign Mission of India about the fact of non-recovery of sale proceeds from the buyer.

·         Passenger Facilitation

For passenger facilitation the current form of Disembarkation Card (Customs part) has been amended to covey important instructions regarding declaration of foreign currency etc. at international airports.

·         CHA Licenses

All eligible applicants who had passed required examination under Customs House Agents Licensing Regulations, 2004 are now automatically given licenses.  The net result is a greater choice of CHAs for the trading community and resultant efficiency in Customs clearance.

·         Refund of 4% SAD

For expeditious sanction and refund of 4% SAD, the procedures applied in general and especially for ACP importers have been simplified for sanction of refund without pre-audit within a fixed time of 30 days.

·         Finalization of Projects under Project Import Regulations, 1986

It is now provided that project import contracts shall be finalized in 60 days from date of submission of required documents by the importer.

·         Improved communication with trade

A round the clock Helpdesk has been implemented at ICEGATE to assist the trade. Customs Manual has also been updated to provide stakeholders the latest guidelines and circulars on every issue for ready reference.


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