Government of India Ministry of Finance
Department of Revenue Central Board of Indirect Taxes and Customs
Anti-Smuggling Unit
***
Instruction No. 02/2021- Customs
Room No. 501, Hudco Vishala Building,
Bhikaji Cama Place, New Delhi
Dated: 16th February, 2021
To
All the Principal Chief
Commissioners/Chief Commissioners of Customs/ Customs (Preventive), All the
Principal Chief Commissioners/Chief Commissioners of CGST and Customs, The
Director General of Audit, The Director General of Systems, All the
Principal Commissioners/Commissioners of Customs/Customs (Preventive), All
the Principal Commissioners/ Commissioners of COST and Customs, The
Commissioner, Directorate of Data Management.
Madam/Sir,
Subject:
Streamlining of Customs Post Clearance Audit (PCA) work Instructions-
regarding:
I am directed to draw your kind attention to the Notification
No. 85/2017-Customs (NT), dated 07.09.2017, the Circular No.02/2019-Customs,
dated 08.01.2019, the Customs Post Clearance Audit Manual, 2018 and the
Instruction No.18/2020 dated 06.10.2020 relating to Customs Post Clearance
Audit. Under the new Customs Post Clearance Audit (PCA) scheme there are
Transaction Based Audit (TBA), Premise Based Audit (PBA) and Theme Based Audit
(ThBA) and upon review thereof the findings are:
i. There is a huge
pendency in all the three types of Audit;
ii. There is no proper system
of reporting;
iii. Monitoring of Customs PCA performance is not
effective;
iv. The follow up mechanism of audit detections needs
strengthening;
v. Time lines need to be streamlined for various
activities of Customs PCA;
vi. Monthly meetings to be streamlined;
vii. Supervision by the Zonal Chief Commissioners is not effective and
viii. Quarterly bulletins need improvement in term of content and structure.
2. Further, the Board has noticed several gaps in the existing reporting
system. These include absence of proper formats for reporting, lack of
prescribed timelines and inadequate performance monitoring mechanism etc.
3. The Board has examined the matter and accordingly it has been decided to
issue the following instructions in respect of Customs PCA.
3.1
Transactional Based Audit (TBA)
3.1.1. Liquidation of pendency: The
Monthly Performance Reports (MPR) section of the Directorate of Data Management
(DDM) portal shall have two parts for reporting TBA in order to capture the
details under two separate categories, namely for the period ending on
31.03.2021 and for the period from 01.04.2021 onwards (refer to para 5 on MIS
reports). All the historical pendency accumulated up to 31.03.2021 is required
to be cleared by 30.09.2021. All Customs Audit Commissionerates/Customs
Houses/Customs Commissionerates shall draw an action plan in this regard. It is
also understood that some of the formations complete the post clearance audit
manually for sets of bills of entry and the same is not captured in the system.
In such cases, the formations may take up the matter with the Directorate
General of Systems to find a way to wipe out the pendency in the system.
3.1.2. Half yearly meetings on TBA: Respective Zonal ADGs of DG Audit shall
convene half yearly meetings of all the Customs Audit Commissionerates/Customs
Commissionerates to discuss the conduct of TBA. The meeting may deliberate upon
topics such as including local risk parameters in the selection of BE/SB for
TBA, the issue as to whether increase or decrease the total number of bills
selected for audit, and the progress/pendency of TBA etc.. Similarly, the DG
Audit shall convene half yearly meetings of the committee consisting of all
Zonal Chief Commissioners or the officers deputed by him. The committee shall
discuss the points placed before it by the ADG level meetings. It shall also
review the total number/percentage of transactions selected for TBA. The RMCC/DG
ARM may also be made part of these meetings.
3.1.3. TBA in exports: As of
now the PCA on exports has not yet started. In this regard, DG (Audit) may take
necessary steps to start Export PCA from 181 April 2021. For the purpose, DG
(Audit) may in consultation with DG ARM draw an action plan for the same and may
furnish an Action Taken Report by 15.3.2021.
3.2. Premise Based Audit
(PBA)
3.2.1. The scope and Coverage: As per the Audit Manual, AEO T1, T2
and T3 categories are to be audited once in every two/three/five years.
Therefore, the audit planning is required to be done in such a way that 50% of
the AEO T1, 33.33% of the AEO T2 and 20% of the AEO T3 shall be audited every
year. As the AEOs-LO such as Customs Brokers, warehouses, etc. can be taken up
under ThBA, or inspected by the formations. The PBA shall be restricted to
importers and exporters only and other entities won’t be covered under PBA
hereafter. It is clarified further that, for the year 2020-21, if any such
entity has been selected for PBA, the Audit shall be completed as planned.
3.2.2. Selection of Premises: The DG Audit shall prepare the list of
auditees for PBA in consultation with the DGARM. For this purpose, a committee
consisting of all the Commissioners of Customs (Audit), representative from DRI
HQ and the ADG, National Customs Targeting Centre (previously RMCC) shall meet
in February every year to finalise the list of auditees for PBA for the next
financial year. The final list shall be communicated to the Audit
Commissionerates before 31st March. The Audit Commissionerate shall plan the PBA
for the year in such a way that the number of auditees is evenly spread in all
the months and all selected entities are audited. It must be ensured that every
entity selected should be subjected to the full audit cycle starting from Desk
Review, Audit Plan, Audit Verification and preparation of audit report.
3.2.3. Role of Audit Commissionerates: The present practice of sending
questionnaire to the other Commissionerate under whose jurisdiction the entity
operates shall be stopped forthwith. Rather only the audit reports with the
details of detections shall be forwarded to the respective formations for
further necessary action. Accordingly, the pendency of follow up must be
reflected in the monthly report of the respective Commissionerate.
3.2.4.
Visiting premises: The visit to premises shall be kept as minimum as possible
and all the communications if any required shall be done through electronic
modes and meetings if necessary shall be done through Video Conference. If a
visit is necessary, only then the field Commissionerate under which the
entity/premises falls shall be asked to conduct the visit and submit their
report. The Audit Commissionerates in such cases shall give specific mandate to
the jurisdictional Commissionerates on the scope and objective of the visit and
the areas to be focussed during such visits. Generalised terms of reference
shall be avoided.
3.3. Theme Based Audit (ThBA)
3.3.1. Selection
of themes: The DG Audit shall convene half yearly meetings of the committee
consisting of all the Principal Chief Commissioners/Chief Commissioners in
charge of Customs (Audit) Commissionerates. The committee shall meet in January
and July to select the themes for ThBA for the first and second halves
respectively for each financial year.
3.3.2. Timelines for ThBA: the
timelines of the various activities in ThBA are given below:
Ell. No. |
Event |
Timeline |
1. |
Meeting for the finalization of the themes |
January/July |
2. |
Preparation for the ThBA by the lead Commissionerate |
31m March/ 30th September |
3. |
Completion of ThBA |
31st July/31m January |
4. |
Report to DG(Audit) |
20th August/20th February |
3.4. MIS reports
3.4.1: New formats: Three
new formats namely, CUS PCA-1 (Annexure-1), CUS PCA-2 (Annexure-2), and CUS
PCA-3 (Aunexure-3) are prescribed for the reporting of the PCA performance of
TBA, PBA and ThBA respectively. A new format CUS PCA-4 (Annexure-4) is
prescribed for the reporting of the status of audit detections and it is given
as Annexure-4 of this instruction.
3.4.2. MIS reports in DDM Portal: DDM
to make these new formats available in the MPR section of the portal before
31.03.2021. DG Systems shall submit an Action Taken Report in this regard before
20.03.2021.
3.4.3. Uploading data in the new formats: While the reports
relating to PBA and ThBA (i.e CUS PCA-2 and CUS PCA-3) shall be submitted online
by the respective zones having Audit Commissionerates, the reports in respect of
TBA (CUS PCA-1) and status of detections (CUS PCA-4) shall be submitted online
by all the Zones including the Zones having Audit Commissionerates. All the
Commissionerates shall upload the details in these formats in the DDM portal
before 10th of every month from 01.04.2021 onwards.
3.5. Post Audit
Compliance Cell (PACC)
3.5.1. All the Customs (Audit and jurisdictional)
Commissionerates shall have PACC to ensure effective monitoring of Customs PCA.
The PACC of Customs (Audit) Commissionerates shall monitor TBA, PBA and ThBA, as
the case may be. The PACC of jurisdictional Commissionerates shall monitor TBA
and will also coordinate with the audit Commissionerates on PBA and ThBA. The
ADC/JC rank officer shall supervise the proper functioning of PACC.
3.5.2. Principal Commissioner/Commissioner of Customs (in charge of audit or
jurisdictional Commissionerate shall convene monthly meeting of PACC and shall
send a consolidated monthly report to the ADG Audit of the concerned Zone within
seven days of the meeting. The monthly PACC meeting shall be completed at least
seven days before the MCM meeting, so that there will be enough time to prepare
for the MCM.
3.6. Monitoring Committee Meeting (MCM)
3.6.1. The
Principal Commissioner/Commissioner of Customs (in charge of audit or
jurisdictional Commissionerate as the case may be) shall convene monthly meeting
of MCM preferably in the third week of the succeeding month to monitor the audit
performance. The ADC/JC in charge of the PACC of all the concerned
jurisdictional Commissionerates shall attend this meeting.
3.6.2. The MCM
shall discuss about performance of TBA, PBA and ThBA, as the case may be, and
decide on the objections raised during the month. Besides, the MCM shall also
take stock of the status on the decisions taken previously, progress on the
pending audit objections; and any other relevant issue which has a bearing on
conducting PCA.
3.6.3. The principal Commissioner/Commissioner shall send
a monthly report to the DG (Audit) within seven days of the MCM.
3.7.
Supervision by Principal Chief Commissioner/Chief Commissioner
3.7.1. All
the Zonal Customs heads (in charge of Customs audit Commissionerates and
jurisdictional Commissionerates) shall examine 5% of the audit reports on a
selective basis.
3.7.2.The Pr. CCs/CCs shall send a report to the DG
Audit at the end of every six months (first report by 30th October and the
second report by 30th March) on such scrutiny done by them.
3.8.
Quarterly Bulletin
3.8.1. The quarterly bulletin shall be published by DG
(Audit) for every quarter by the end of the succeeding month of the relevant
quarter.
3.8.2. In addition to the existing contents the quarterly
bulletin shall also contain the following:
i. details of detections of
Customs PCA (All India and Zone wise data);
ii. details of the pendency
in TBA;
iii. details of pendency in the settlement of audit paras;
iv. details and outcomes of the following meetings:
a) committee
headed by DG Audit, consisting of chief commissioners in charge of Audit
Commissionerates meets in January and July every year to decide the themes for
ThBA,
b) committee headed by the DG Audit, consisting of Commissioners of
Customs (Audit), representatives from DRI HQ and ADO in charge of Customs in DG
ARM; meets in February every year to finalize the list for PBA,
c)
committee headed by DG Audit, consisting of all zonal Chief Commissioners to
review TBA meets on a half yearly basis, and
d) committee of
Commissionerates of Customs (audit and jurisdictional) headed by zonal ADGs of
DG (Audit) to review TBA on a half yearly basis.
v. activities done in
terms of different timelines for ThBA;
vi. details of MCM held during the
quarter, and
vii. half yearly reports from the Zonal Chief Commissioners
on their review of 5% of audit reports on a random basis.
4. In the
Customs PCA Manual, 2018, any aspect which is inconsistent with the above
instructions shall be brought to notice for suitable modification of the manual.
In case of a conflict the provisions of this Instruction will prevail.
5.
The difficulties, if any, faced in implementation of these instructions may be
brought to the notice of the Board.
End.: Annexure-1, 2, 3 and 4.
F.No. 715/03/2020-Cus (AS)
(Sharad Srivastava) Director
(Anti-Smuggling)
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