Background
he Finance Act, 2011 has introduced the concept of ‘Self- Assessment’ for imported goods and export goods in the Customs Act, 1962. Self-Assessment is a dynamic move from the existing structure of governance of custom clearance of goods. In this regard, a circular had been issued [Circular No.17/ 2011- Cus. dated 8 April 2011 (the Circular)] which inter alia clarified that verification of the declarations/ assessments would be undertaken by Customs authorities at the premises of importer/ exporter. In August 2011, Department of Revenue Issued a draft guideline on On-Site Post Clearance Audit at the Premises of Importers and Exporters Regulations, 2011 and sought views/ comments of trade and industry. This regulation has now been formally been notified on 4th October 2011, in the GAZETTE OF INDIA, & has come into force on this date.
Key Points of the Regulation have been highlighted below:
DEFINITIONS:
• Under this regulation ‘audit’ means examination of bills of entry, shipping bills, invoices, packing lists, import licenses, books of account, and other records of transaction relating to imported and export goods, and may include inspection of goods at the premises, if available and where necessary, drawl of samples;
• ‘Books of account’ includes ledgers, day-books, cash books, account-books and other accounts whether kept in the written or printed form and data stored on a floppy, disc, tape or any other form in electro-magnetic data storage device;
• ‘Premises’ includes the place at which imported or export goods and connected books of account, records of transaction and other documents are ordinarily kept by an importer or exporter, as the case may be, and his registered office or the premises indicated in his Importer Exporter Code (IEC) issued by the Ministry of Commerce and Industry and the places wherever the imported or export goods, as the case may be, are ordinarily kept.
OBLIGATONS OF IMPORTERS & EXPORTERS:
(a) To maintain prescribed documents/records for a period of 5 years from the date of Import/Export and to make them available for verification in a timely manner as required by proper officer.
(b) To provide true and correct information to the proper officer.
(c) To render assistance to the proper officer in the discharge of his official duty and shall in no case refuse or obstruct the proper officer in discharge of official duty.
MANNER OF CONDUCTING AUDIT:
(a) The proper officer to provide at least fifteen days advance notice to the importer/ exporter, to conduct audit.
(b) The proper officer shall gather information relating to imported/ export goods before conducting audit.
(c) The audit shall be conducted in the premises of the importer/ exporter and the proper officer may also visit the premises, if required.
(d) The proper officer shall discuss the objections with the importer/ exporter so as to provide an opportunity to offer clarifications.
(e) The Draft Audit Report containing the audit findings shall be prepared.
(f) The importer/ exporter may make voluntary payments of duty due where he agrees with the audit findings which shall be recorded by the proper officer in the Audit Report.
(g) The proper officer may inspect imported/ export goods, if necessary.
PENALTY PROVISIONS:
Contravention of any provisions of these regulations by Importer/Exporter or failure to comply with any of the provision of these regulations may attract a penalty which may extend upto fifty thousand rupees.
CONCLUSION:
1. As a consequence of this procedure, the onus of ensuring that appropriate and accurate declarations such as classification, duty rate, value, imported/ export goods, are factored at the time of self-assessment rests with the importer.
2. Introduction of the above changes would result in higher accountability of the importer / exporter on customs assessment and increased visibility of the trend in import/ exports, the financials of the company and transfer pricing documents.
3. Previously entities availing specific benefits under the Import –Export policies would be subject to such onsite audits to assess the correctness of the claims made by them. With this notification all types of importers and exporters can now be subject to the onsite audit.
4. However the regulations have not prescribed as to which government officer will conduct audit, frequency of audits and the extent of scrutiny.
5. Hence with a view to promote International trade, FDI, better trade relations & the underlying aims and targets of Liberalization to be achieved, this regulation is in line with the international best practices & exhibits faith in trade by Government.
Disclaimer : The information contained in this write up is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. We recommend that professional advice is sought before taking any action on specific issues.
