Introduction of Faceless Customs

This article deals with the Faceless Customs in India. The expectation of growth in businesses i.e. Customs services are also changing around the world. Keeping in mind the advancement of businesses in terms of service, the Customs Department is making progressive changes to face the challenges by introducing efficient clearance procedures and digitalization. The introduction of the Faceless Customs, under the efficient Turants Custom framework, is one of the initiatives which looks promising to improve the ease of doing business in India. India started the nationwide faceless assessment program in all Customs ports for imports starting on 31 October 2020, after a period of pilot testing in the stations of Chennai, Bangalore, Mumbai and Delhi.  

All goods imported into India have to pass through a series of protocols for proper examination, assessment and evaluation. This will help the government to file proper tax and also check the goods against illegal import.  Also it is important to note that the importer will not be allowed to import in India without the IEC (Import Export Code) number issued by the DFGT (Directorate General of Foreign Trade). The Faceless Customs under the Customs 2.0 reforms has been made online to make the process more modern, efficient and professional. The Central Board of Direct Taxes (CBDT) said that now all income tax appeals, ranging from allocation of appeals, to communication of notices, verification, enquiry and hearing will take place digitally. Faceless assessment allows an assessing officer to verify and give out-of-charge to a Bill of Entry (BOE) regarding imports made at a different Customs station, whenever such BOE has been assigned by the Customs automated system. Faceless Customs schemes will honour sincere income-tax payers in the country. Submissions can be done from home to save the taxpayers time and resources.

Customs Duty 

Customs Duty is imposed when goods are shipped across borders between nations. It is the tax the government imposes on export and import of goods. The custom duty depends on a few important factors such as the quantity, dimensions, weight and the value of goods. It is beneficial because it ensures a country’s economic stability, jobs, raises its revenues and regulates the movement of goods. Under Customs Act, 1962, the Customs Duty in India is authorised to impose taxes on import and export goods by the Indian Government. All matters related to custom duty fall under the Central Board of Excise & Customs (CBEC) headed by the Chairperson. The CBEC formulates policies and controls the administrative decisions, smuggle prevention, custom duty evasion and safety through strict protocols.

Custom Clearance  Process

Import and Export of goods into and outside the country undergo an integral process called Customs Clearance. In this process, the respective importer or the exporter submit valid documents to the customs department. The customs department evaluates and verifies the information in the given documents. It’s a time consuming process which may vary to days. Until the documents get verified, it remains in the custody of the Custodian, a person approved by the Principal Commissioner or Commissioner of Customs. Some of the major steps and procedure involved in the clearing of customs contains :

1) Calling of vessels

Once the vessel reaches the country, the goods are to be claimed by the person who carried it. In this instance, it would be the airline. There is no need for the importer or the exporter to get involved. The airline will take care of it.

2) Filing Import General Manifest

The person in charge of the goods should file an Import General Manifest electronically before the goods arrive in the country. It contains the details of the goods.

3) Post Verification Operations

The customs authorities will allow entry of the vessel only after the review of the Import General Manifest and post verification of documents. An IGM number will be assigned and the vessel  will be allowed to land and  unload the cargo.

4) Custody of Custodian

Once the goods arrive, it will be under the custody of the custodian until it clears the custom process.

5) Filing Bill of Entry

The importer or exporter who has to pick up the goods, should fill a bill of entry electronically for the clearance of the goods. The bill of entry contains the tax and the duty which is to be paid. Once paid, the bill of entry should be submitted along with the duty paid challan and other important documents to the authorities claiming for making an order permit clearance.

6) Delivery of goods

On showing the permit clearance to the post authorities, the person can take the delivery of goods.

During the above process, the customs authorities are responsible for the clearance of the goods into India. These authorities are stationed at the port of Entry and are usually known to the importer during clearance. However, since October 21st, due to faceless customs, the importer will not know where the goods are at any given point of clearance and only once the shipment has cleared, will the importer be notified. 

Faceless Customs

Faceless assessment, a component of the Turant Customs programme, is an innovative initiative focused on anonymised assessment, self-registration of goods, automated clearances of bills of entry and digitisation of Customs documents.  To help with this new system, the Government has constituted a body called National E- Assessment Centre (NEC). Apart from NEC at New Delhi, Regional E- Assessment Centres (REC) have also been opened. One assessment unit, one verification unit, one technical unit and one review unit have been opened under REC. NEC is responsible for sending a notice to the taxpayer for the case in the Assessment Unit.  Based on the receipt of the notice, the taxpayer will file his response to NEC. NEC will then communicate with the assessment , verification and technical unit. The assessment unit may request NEC for any additional information from the taxpayer, or conduct an enquiry or verification. After collecting all the information, NEC will send it to REC. The assessment unit in REC will prepare a draft assessment order either accepting the returned income of the taxpayer or modifying the return income of the taxpayer and send a copy of such order to the NEC. This draft order includes details of penalty proceedings, if any.

Impact

With the introduction of Faceless assessment, it is aimed to replace physical interaction with an online evaluation for verification of goods and automated clearances of bills of entry. Online evaluation will help in maintaining healthy practices, assurance of certainty and consistency . It will also help in faster clearance of goods and limited contact between trade and custom officers. It helps the government to analyze and maintain the standard and remove the unethical practices leading to corruption.

Although this process is supposed to be fast and efficient, it has been understood that it has caused issues with many of the import and export industries and also the freight forwarders. There are complaints in the delay of the clearance. In a web-conference meeting held, representatives of the Federation of Freight Forwarders’ Associations in India (FFFAI) informed the CBIC that clearance times were slowed down by over 48 hours to two weeks and at least 20% of the import consignments were being held up for a long time. This delay in customs is causing more damage by adding costs , disrupting the supply chain and leading to cancellation of orders.

Conclusion

Faceless Customs assessment was started to improve the Ease of Doing Business and reduce duty evasion and is a response to a long-standing industry demand to facilitate, be efficient and streamline control procedures and eliminate illegal practices. The present Customs administration has stepped up adequately to maintain their core values by ensuring just and fair appeal orders even in the face of legislation by balancing regulatory requirements with technological enhancement. This would go a long way to reduce trade transaction costs in the interface between the taxpayers and the Government.


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