 "A leg-up for trade but clarity eludes traders")
The Customs will soon discontinue the practice of making manual debits on physical copies of advance authorisations. This new instruction from the Central Board of Excise and Customs (CBEC) will apply to authorisations to be issued henceforth for registration at EDI Customs ports. The officer examining the imported goods and/or giving 'out-of-charge' order will ensure that the proper debit of the authorisation is made in the EDI system. This change will not affect the use of the telegraphic release advice facility for clearance of goods at non-EDI ports with respect to advance authorisation registered at EDI Customs locations, as the authorisation will get debited in the system at the EDI port of registration and only the advice for release will go to the non-EDI port. Physical copies of advance authorisations registered at non-EDI Customs ports will continue to be debited manually.
Usually, only some advance authorisation holders registered for imports want to simultaneously avail domestic sourcing on the same authorisation. Once the manual debits on physical copy are discontinued, if a holder of advance authorisation wants to get an advance release order (ARO) or invalidation letter for domestic sourcing from the regional authority (RA) that issued the authorisation, he may request the Customs at the EDI port to issue an advice letter for the quantity and value in favour of the RA concerned. The Customs will debit/update in the system the same day and issue the advice letter. The Customs will also send a copy of the letter by email to the RA concerned. Thereafter, the advance authorisation holder can approach the RA to issue an ARO or invalidation letter.
In case the Commissioner of Customs at port of EDI registration of advance authorisation decides to permit clearance manually at the time of EDI breakdown, he should take suitable safeguards and ensure subsequent entry of debits in EDI for proper accounting.
The present practice of issuing physical advance authorisations, concurrently with electronic transmission of certain types of authorisations, will continue. The physical copies will continue to be presented to the Customs for registration, till DGFT's electronic transmission to Customs server includes certain details being specified by the RA, like higher bank guarantee or cash security than normally due or waiver of bank guarantee or additional conditions imposed such as restricted export obligation periods or absence of facility of extension of export obligation period in case of certain products, details of invalidation for domestic procurement prior to EDI registration at port of import. The CBEC will separately review this aspect with the DGFT.
The idea behind these instructions is to facilitate trade and to that extent they are welcome. But it appears the changes have not been thought through. Will an advance authorisation holder who wants to procure indigenous inputs through the back-to-back letter of credit route use the same release letter? His bankers have no access to the EDI systems of the Customs or the Director General of Foreign Trade. Should they also proceed on the basis of the release letter issued by the Customs? If they want to verify the genuineness of the release advice, how should they proceed? Also, at the time of redemption of the authorisation, how will the RA determine the extent of utilisation of the authorisation? Hopefully, these doubts will be cleared soon.
E-mail: tncrajagopalan@gmail.com
