CBIC should do away with IGCRS Rules for the export oriented units

The export oriented units (EOUs) continue to struggle with various processes involved in complying with the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 (IGCRS Rules), mainly due to incompetence of the Central Board of Indirect Taxes and Customs (CBIC) and its online functionality, Indian Customs Electronic Gateway (ICEGATE). 

The EOUs import their requirements without any duty payment, under the notification 52/2003-Customs dated 31.3.2003, which requires them to follow the IGCRS Rules. In August, the CBIC, without adequate preparation, asked the EOUs to adopt electronic processes through ICEGATE. Since then, the EOUs have been struggling through various processes of generating new unique IGCRS identification number (IIN), uploading the bond details, furnishing intimation of imports to be made, filing  bills of entry quoting the IIN, filing monthly returns of receipt and consumption of imported inputs and getting credits in their running bond accounts. The ICEGATE officials are solving the problems pointed out by the EOUs but it is evident that they made the software programmes to electronically enable the IGCRS processes, without adequate knowledge of 

the legal provisions, departmental instructions and the processes involved.   

The Export Promotion Council for EOUs and Special Economic Zones (EPCES) has created a ‘Whatsapp’ group where the EOUs post their difficulties in following the electronic procedures and the ICEGATE officials guide them. Many queries posted in the group get answers from the officials but on many matters it is the EOUs that are telling the officials about the correct legal provisions and procedures and what needs to be done. 

The EOUs were required to file only a single B-17 bond for all their activities but now they are required to file a continuity bond every year in addition to the B-17 bond. The EOUs could maintain their own running bond account debiting it when imports were made and crediting it when exports or domestic tariff area clearances were made and such debits/credits were subject to periodic audits. Now, the EOUs are required to submit details of imports/exports along with supporting documents to the jurisdictional Customs officers, who will authorize the credits - a process involving unnecessary paperwork, unwarranted delays and unacceptable costs. The ICEGATE officials were not aware that in respect of capital goods, only 25 per cent of the duty saved had to be debited and credited to the running bond account. The online system now requires filing the monthly returns of imports separately for each port. Instead of auto-populating the details or allowing upload of a spreadsheet file prepared off-line, ICEGATE wants the EOUs to manually enter all the import/export details in the online IGCR-3 monthly returns module, which is time-consuming and carries risks of typographical errors. The IGCR-3A return format calls for one-to-one correlation of consumption of inputs/components/consumables imported under particular bills of entry with finished goods exported under particular shipping bills, which is near impossible in some sectors. 

The EOUs are struggling with many such issues that ICEGATE may tackle in coming weeks/months but in the meantime, they are incurring heavy costs imposed by the CBIC/ICEGATE. The CBIC should do away with the IGCRS Rules for the EOUs, 

as they serve no useful purpose, only cause harassment and encourage corruption. The functioning of EOUs can very well be monitored through periodic returns and audits alone.   

tncrajagopalan@gmail.com