"Aapda mein hamne aage badhne ka awsar khoja" (we found opportunity to move forward in disaster) the Indian Prime Minister Mr. Narender Modi said on January 12, 2021 talking about earthquake in Gujarat in 2001, while addressing valedictory function of the second National Youth Parliament Festival. He emphasised on following the same approach in dealing with Corona virus pandemic. And this is exactly what India ought to be doing.
Earlier the Federal Government launched many schemes including Ease of Doing Business and Make in India. Both these schemes have brought in certain benefits but full potential thereof have not been realised in first few years. And then Corona pandemic hit China in December 2019 and spread its tentacles across the globe over a period of time. Now almost every country has suffered corona - some have suffered only first wave and some others are already suffering much more ferocious second or third or fourth wave.
In the middle of corona pandemic true to his words, the Indian Prime Minister is pushing for Make in India scheme with a new vigour and policies. Production Linked Incentive (PLI) Schemes are one of its kind scheme covering around 14 industry sectors in which cash incentives are being offered for setting up local manufacturing units and meeting other specified conditions. All the new units and of course existing manufacturing units need to undertake import of critical raw materials and export finished goods, where these units have to deal with the first authority - Indian Customs.
Customs authorities in every country play a significant role in not only ease of doing business therein, but also are gives a flavour of tax and regulatory environment in that country. Customs authorities are responsible for enforcement of both tariff barriers and non-tariff barriers in addition to collecting customs duties on imported products. Hence, the way Customs authorities of each country at each port of import or export conduct themselves, have a major impact on ease of doing business in the country. Customs authorities may become a gatekeeper or facilitator to trade largely determines happiness index and cost efficiencies of the industry.
The Central Board of Indirect Taxes and Customs (CBIC or Board) is the nodal authority for administration of indirect taxes - Goods and Services Tax (GST) and Customs of the Indian Federal Government. While GST has been introduced in India on July 1, 2017 and is still in the process of stabilising, Customs has been there for decades, even prior to independence of India. Over a period of time processes of Customs clearance of imported goods have been streamlined and automation has introduced long back in the form of Electronic Data Interchange (EDI), under which all filing of documents for export and import are to be done online exploiting major potential of technology.
Successive Boards have introduced various trade facilitation measures, some of which worked while others did not work, but there has always been the intention of improving environment for importers and exporters community. However, it is not the contours of facilitation measures but implementation thereof determines success or failure of such measure.
CBIC has also adopted a Citizens Charter, last updated on December 20, 2019 version of which is available on its website www.cbic.gov.in and the Board swears by it. Herein, I propose to do a reality check of actual compliance to some of the key standards laid down in Citizen Charter.
The first standard laid down is acknowledgement by Customs authorities of all written and electronic communications within 3 days. Is it actually happening? Answer is absolutely no. Most of the time industry sends letters - and now mostly vide email on ids notified on the website of Customs Houses on account of restrictions on travel due to Corona. However, very rarely these letters or email communications are replied not only by junior officers but also by senior officers. It is one way traffic where industry keeps on writing emails and letters without getting any response, which have caused lot of heart burn to industry and added to cost to Indian products making them uncompetitive in international market.
The second standard laid down is to convey decision on matters including declarations and assessments within 15 days. This is one of the major challenges faced by importers. Customs officers at the port of import many times change classification or value of imported goods for various reasons both valid and on flimsy grounds and where importer does not agree to such revised assessment, Customs officers are mandated to pass an appealable order within 15 days under Section 17(5) of the Customs Act. This mandate of law is flouted with impunity by Customs officers and percentage of compliance thereof does not even register to a scale of 1 percentage. This one single non compliance to standard set by CBIC in Citizen Charter costs big time to importers in terms of loss of productivity and meeting supply targets and cost of litigation.
At Sr. No. 15 of the standards is issue of orders in original or orders in appeal by adjudicating or appellate authorities of Customs within 30 days of conclusion of hearings. Compliance with this standard of Citizen Charter is not more than 25 - 30 percent. However, adjudication and appeal to departmental authorities is most of the time is mere formality where unofficial principle is to confirm action proposed in show cause notice irrespective of the fact whether there is any evidence against the noticee or not. Further, most of the time sketchy orders are passed by Customs authorities without even dealing with the arguments and judicial precedents cited by the noticee, leading to violation of principle of natural justice and at times passing of strictures by the High Court and Supreme Court.
Similarly at Sr. No. 16 is finalisation of provisional assessment within 30 days of conclusion of enquiry or submission of requisite documents, is not even rarely followed.
For the purpose of this article, I don't intend to delve into small issues but have kept only to big ticket items. CBIC can do the fact check of above points by calling for report from field formations, which will corroborate above narrations.
Presently, a great team of officers with impeccable credentials and interest of India at the core of their heart constitute leadership of CBIC, which has the backing of attentive Finance Minister and a great visionary and strongman as Prime Minister. Hence, this is the best opportunity for current leadership of CBIC do something different and leave a great legacy.
Citizen Charter should not be treated as a badge on the wall but a code of honour to live by Customs officers. Listing of good sermons and timelines to meet them has no meaning if the same are not followed through. CBIC must device a way to actual monitoring of compliance with above timelines for various items of work provided in the Customs Act and Citizen Charter by its officers. Calling of report of compliance from field formations have no meaning unless a follow up audit of actual compliance at field level is done and responsibility fixed or administrative action taken for non-compliance. Unless a cultural change of from being kings of customs frontiers to facilitators of trade is inculcated in Customs officers, no actual change is going to happen at ground level. A real change of thought process and attitude of Customs officers is required which can only happen with sending stern message by CBIC of meaning business coupled with rigorous training and strict action against erring officers.
In case CBIC takes up only above mentioned 4 standards of Citizen Charter for strict compliance and enforcement, Indian Customs will become facilitator and not gatekeeper for trade. Then industry will cross the first barrier with a smile and assurance of certainty of taxes and ease of doing business, leading to India also become factory of world - an alternate to China. This will also go a long way in realising dreams of our Prime Minister of converting disaster into opportunity and various schemes of the Indian Federal Government including PLI Schemes will bear fruit.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.