24 August 2016

Provisional assessment – India relaxes Customs regime

Central Board of Excise and Customs (CBEC) under the Indian Ministry of Finance has simplified the procedure for provisional assessment in case of import of goods, as provided in Section 18 of the Customs Act, 1962.


Differential duty deposit dispensed with

In a major relief to the importers, requirement of 20% deposit of the duty provisionally assessed, as was prescribed in Customs (Provisional Duty Assessment) Regulations, 2011 has been dispensed with. The Ministry, in this regard, has also rescinded the said Regulations with effect from 22nd of August, 2016. Circular No. 38/2016-Cus., dated 22-8-2016, issued by the Central Board of Excise & Customs (CBEC) states that such requirement of deposit meant importers had to follow refund procedures, leading to increase in transaction cost, delay in clearance and also diminished ease of doing business.


Security to be provided by bank guarantee or cash deposit only

Further, laying down certain guidelines for procedure relating to provisional assessment, CBEC Circular states that requirement of security, which is to be furnished along with the bond, is to be met by either obtaining bank guarantee or cash deposit, as convenient to the importer, and that no securities should be obtained. The Board in this regard is of the view that since acceptance of security requires evaluation of underlying asset value or of the net worth of the person executing such security, it poses difficulties to the importer and administrative challenges to the Revenue department.


Section 18 of the Customs Act provides for furnishing of security as the proper officer deems fit for the payment of deficiency in duty.


Quantum of security

Considering various situations and status of importer, the Circular prescribes quantum of bank guarantee/cash deposit to be furnished by the importer while seeking provisional assessment. In cases relating to verification of origin, signatures and seals under FTAs and in cases where the proper officer finds it necessary to order provisional assessment and where differential duty has been estimated, the guidelines provide for 100% of the differential duty to be made good as bank guarantee or as cash deposit.


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