1. Challenge Us
CUSTOMS SELF
ASSESSMENT AND ONSITE
POST CLEARANCE AUDIT
January 31, 2012
All rights reserved | Preliminary & Tentative
K Sivarajan l Director
BMR Advisors
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2. CONTENTS
Self Assessment
On-site Post Clearance Audit
Authorized Economic
Operator
All rights reserved | Preliminary & Tentative
SELF ASSESSMENT
All rights reserved | Preliminary & Tentative
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3. SELF ASSESSMENT – TRADE FACILITATION
Trust based Customs Trade Partnership
Assured facilitation for compliant importers/exporters
Trade
Facilitation Control the interdiction in RMS and comprehensively rationalize
various interventions, targets, rules
Reducing pre-clearance checks based on risk parameters in case
of self assessed documents
Facilitation target of 80% for Air Cargo Complexes, 70% for
Seaports and 60% for ICDs to be achieved in short span
Faster Clearance of goods
Reducing dwell time of goods at customs port
All rights reserved | Preliminary & Tentative
Reducing transaction costs of import/export
Self Assessment Manual
Standard Operating Procedures
Compulsory compliance requirements
Key aspects of customs (Classification, valuation, exemption etc)
India Customs Update | 5
SELF ASSESSMENT – KEY ELEMENTS
COMPLETION OF SELF ASSESSMENT
Bill of Entry / Shipping Bill shall be deemed to have been filed and
Self self-assessment of duty completed when, after entry of the
Assessment
electronic declaration in the Indian Customs Electronic Data
Interchange System either through ICEGATE or by way of data
entry through the service centre, a bill of entry number/shipping bill
number is generated by the Indian Customs Electronic Data
Interchange System for the said declaration
All rights reserved | Preliminary & Tentative
India Customs Update | 6
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4. SELF ASSESSMENT – KEY ELEMENTS
KEY ELEMENTS
Description of goods – brand, grade, specifications etc
Self
Assessment Classification of goods – HSN (amendment from Jan 1, 2012)
Levy of duty/cess – Applicable duties, exemption notifications
(conditional), project imports etc
Valuation of goods
Licensing for imports/exports – Foreign Trade Policy
Benefits under Export Promotion Schemes
Benefits of Free Trade Agreement and country of origin norms
All rights reserved | Preliminary & Tentative
Online filings
GATT Declaration
INTERNAL PROCESSES
CHA capabilities and coordination
Customs / logistic team capabilities
Systems, processes, records maintenance
India Customs Update | 7
SELF ASSESSMENT - PROCESS FLOW
Self assessed BOE
Computerized risk profiling & Risk based intervention / verification
Risks observed by RMS
RMS Facilitated BOE Re-Assessment by Customs
Assessment
accepted
On site Post Clearance Payment of duty
Audit / No O-in-O Assessment
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is challenged
Audit Para / Show Investigation by Speaking order
Cause Notice SIIB
Review / Appeal
India Customs Update | 8
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5. ON-SITE POST
CLEARANCE AUDIT
All rights reserved | Preliminary & Tentative
ON-SITE POST CLEARANCE AUDIT (‘OSPCA’)
To verify completeness and accuracy of assessment claims
based on:
Background Financial data, Commercial data
Logistics and inventory data etc
Statistical analysis of the data – trend, outliers, average
etc
Document based audit for the entity at importer’s location
Operational for ACP clients from October 1, 2011
Audit to be conducted by:
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Audit wing of LTU – If registered with LTU
Central Excise Commissionerate – Other Units
OSPCA to be done simultaneously with Central Excise/
Service Tax Audit
Current audit procedure (Excise Audit – 2000) to apply
India Customs Update | 10
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6. KEY DEFINITIONS UNDER PCA REGULATIONS
Audit
“Audit” means examination of bills of entry, shipping bills, invoices, packing lists, import
licences, 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, drawal of samples
Books of account
“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
All rights reserved | Preliminary & Tentative
Premises
“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
India Customs Update | 11
CHANGE – AUDIT INFORMATION WINDOW
On site Audit – Expanded Information window
Import information
Financials, book of accounts,
Foreign currency remittance
Import information
Production / Inventory / End Use
Invoice, Packing list
Insurance, Freight,
Product information
Commercial, Transfer Pricing
All rights reserved | Preliminary & Tentative
Other regulatory filings, MIS,
Management books etc
Electronic data – mails, ERP etc
CUSTOMS ASSESSMENT / AUDIT ONSITE AUDIT
Pre April 2011 Post April 2011
India Customs Update | 12
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7. AUDIT PROCESS
Key Elements
OSPCA at the premises of Importers and Exporters
AUDIT
Minimum 15 days notice for audit
Obtain prior information if required
Visit the premises to gather information, if necessary
Conduct the audit in the premises of the importer/exporter
Inspect the goods if available during Audit
Take samples of goods and copies of relevant documents to verify
correctness of assessment of duty
All rights reserved | Preliminary & Tentative
Audit objections and opportunity
Draft Audit Report
Voluntary payment basis draft audit findings
India Customs Update | 13
AUDIT OBLIGATIONS
Obligations of Importers/exporters for the purpose of Audit
Make available in a timely manner the books of account, records of
Obligations transaction and other relevant documents maintained relating to the
imported or export goods as required by the proper officer
For a period of five years from the date of import/export
Provide true and correct information to the proper officer
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
Failure to comply with these regulations – Penalty up to INR 50,000
All rights reserved | Preliminary & Tentative
India Customs Update | 14
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8. AUDIT CAPABILITIES
AUDIT CAPABILITIES
Ability to capture and document classification / valuation and other
Capabilities import related positions taken by the importer at the time of self
assessment
Ability to quickly produce relevant documents at the time of audit
Ability to represent and articulate the tax positions and defend the
self assessment before the audit team. This would mean change in
skill set of importer’s employee responsible for customs audit
Better understanding of the rights and obligations of the importer
and the Customs audit party
Better understanding of customs laws and procedures and ability to
All rights reserved | Preliminary & Tentative
represent the case before the Audit party
Ability to take decisions on accepting or challenging contrary views
of the Customs Audit party
India Customs Update | 15
All rights reserved | Preliminary & Tentative
Challenge Us
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