March 5, 2002

'15'

TRADE FACILITATION MEASURES

   In the recent past, a number of initiatives and measures has been taken by the Government to simplify the customs procedures for expeditious clearance of imported/export cargo and to reduce the transaction cost of Indian imports and exports. Many of the Customs procedures were reviewed and wherever required a new procedure has been introduced to facilitate the trade. Some of such measures are as follows:

    The implementation of EDI at Customs stations has revolutionized the functioning of Customs. The System features on-line assessment, duty payment and examination of goods. Under EDI the objections or queries raised by the Customs officers are processed on the System, thereby capturing the complete record of the life cycle of an import/export document. Thus the System enables detailed monitoring of the operations by supervisory officers and delays/responsibilities can now be pin pointed. A major advantage of the EDI is that human inter-face with the Trade has been considerably reduced and is normally required only at the time of examination/physical clearance of the goods. Further, the processing time of goods declaration – for imports and exports – has become much faster.

    In the last two years the Customs automation has been extended to all the major ports, airports and ICDs/CFSs. As on date, the import and export documents are processed electronically at 23 Customs stations. Electronic Message Exchange (EME) has also commenced with several of Customs community partners like RBI, DGFT, DGCI&S, AEPC, etc.

    The departmental website has gone on-line on 22.8.2000. The Tele Enquiry Systems have been introduced at major Custom Houses for automated information regarding status of import and export consignments. The facility of filing the import and export documents over the internet is also expected to be introduced shortly.

    Hitherto, the Customs field formations were functioning on one shift basis during normal working hours i.e. 10 AM to 5.30 PM for clearance of imported/export goods. Further, except on payment of overtime, no clearances were allowed on holidays. To allow expeditious clearance of imported/export goods, the Department has introduced two shift working on all working days to allow clearance during 8 AM to 10 PM at 7 Air Cargo Complexes, i.e. Delhi, Mumbai, Kolkata, Chennai, Goa, Hyderabad and Bangalore. One shift working has also been introduced on all holidays to allow clearance during 10 AM to 5 PM at the said Air Cargo Complexes.

    The goods brought for exports are physically examined by the Customs at the Gateway ports to verify the correctness of the goods declaration. As a measure of trade facilitation and to reduce the transaction cost of exports, the Government has reduced the scale of examination for export goods considerably and has also simplified the procedure for examination of such cargo. Under the revised norms, factory sealed export goods i.e. the export goods stuffed and sealed in the presence of the Customs/Central Excise officers and exports made under free shipping bills i.e. where there is no export incentive, would not be examined at the gateway ports except where there is a specific intelligence. The exports under Drawback/DEPB Schemes have been divided into two categories for applying the scale of examination. Under the new norms only 2% of the cargo would be examined in case of consignments where the amount of Drawback/DEPB involved is Rs.1 lakh or less. The corresponding figure is 10% for consignments where the amount of Drawback/DEPB involved is more than Rs.1 lakh. Likewise, exports under EPCG/DEEC Schemes have been put into two categories depending upon the value of the consignment. The scale of examination is 2% for consignments where the FOB value is Rs.5 lakhs or less. The corresponding figure is 10% for consignments where the FOB value is more than Rs.5 lakhs.

    In all cases referred to above, in respect of consignments selected for examination, a minimum of two packages with a maximum of 5% of packages (subject to a maximum of 20 packages from a consignment) shall be opened up for examination. The package numbers to be opened for examination will be selected by the System.

    Having regard to the fact that the examination norms for export cargo have been lowered significantly, a little higher percentage of examination has been prescribed for export consignments sent to sensitive places, namely, Dubai, Sharjah, Singapore, Hong Kong and Colombo. The scale of examination varies between 25% to 50% depending upon the value of the consignment/export incentive involved.

    As a measure of trade facilitation, the exporters are allowed to get their goods stuffed in containers in their factories in presence of the officers from the Customs or Central Excise. Such factory stuffed containers are not subjected to further examination at the gate-way ports. Until very recently, the exporters were required to take permission from the Department each time they wanted to avail of the facility. In some of the field formations, permission was being given for a fixed period ranging from three months or six months. To avoid procedural hassles involved in renewal of permission for factory stuffing, the Department has recently introduced a system of one-time permission, which shall be valid forever unless it is withdrawn by the Customs because of the exporter having committed any fraud or other irregularities.

    An Overtime Fee is levied by the Customs for any services rendered to trade in Customs area beyond the normal office hours and on holidays. The overtime is also charged if any service is rendered to trade beyond Customs area. The overtime was collected from each importer/exporter/shipping line for a minimum of 3 hours for supervision of movement of cargo at the gate of the docks after normal working hours. Such payment of overtime was resulting in extra expenditure to importers and exporters and creating procedural hassles by way of obtaining permission for posting of officers on overtime and deposit of fee, etc. To reduce the transaction cost and paperwork, the Department has introduced 24 hours a day, 7 days a week, 365 days a year working for Customs at the gates of the docks, thereby dispensing with the practice of collection of overtime for supervision of movement of containers at the gates of the Docks. This measure would help reduce the transaction cost of exports and imports.

    The facility of import and export by courier mode was earlier available through international airports only. To facilitate Indo-Bangladesh trade, the facility has been extended at Land Customs Stations at Petrapole and Gojadanga in Indo-Bangladesh border. Under the scheme, the authorized couriers are allowed to take clearance on behalf of the importer and exporter under a simplified procedure.

    The imported cargo is allowed to move from ports to ICDs/CFSs under a procedure called ‘transhipment procedure’. For transhipment of containers to ICDs/CFSs, hitherto the shipping lines were required to submit an application along-with a sub-manifest to the import section of the Custom House at the gateway port. In the import section, the papers used to scrutinized at various stages resulting in delay in issuance of transshipment permit. To reduce the delay, the Department has introduced ‘a single window system’ for issuing transhipment permit. As per the revised guidelines, applications for transhipment is to be processed with the help of a

    computer by the officer only. The practice of filing of sub-manifest along-with the application for transhipment has been dispensed with. Earlier, the carriers in private sector were required to execute a bond with a bank guarantee (@15% of bond value) to safeguard government revenue payable on imported cargo being transhipped. The requirement of bank guarantee was causing blockage of their capital resulting in increase in transaction cost of imported cargo. To facilitate the trade, the Department has exempted custodians of ICDs/CFSs carrying imported cargo from the gateway ports to their ICDs, from the requirement of furnishing a separate bank guarantee.

    At the ICDs/CFSs, goods brought for export are allowed clearance by the Customs and after clearance, goods are stuffed in containers and taken to gateway ports for loading unto a foreign going vessel. The export containers once sealed at the ICD/CFS were not allowed to be re-opened for consolidation at the gateway port. In such a situation, if a shipping line did not have full container load of cargo for a particular destination, he had to either wait for more cargoes for that destination to come at the ICD or send the container half-empty. Carrying half-empty containers increases freight charges for exporter and waiting for more cargoes at the ICD delays the export resulting in other problems. To minimise the freight charges on export, the shipping lines used to stuff the containers with LCL cargoes, irrespective of their destination and carry such containers to international hub ports, namely, Dubai, Singapore, Colombo, etc. At the hub ports the containers of LCL cargoes used to be re-opened for the purpose of consolidation of the cargo in containers destination-wise. Similarly, import containers stuffed with LCL cargoes, irrespective of destination used to be brought to the international hub ports where shipping lines used to consolidate the cargo and stuff in containers destination-wise. Such consolidation of LCL export and import cargoes in a port outside India was resulting extra expenditure for Indian exporters and importers and it was also causing foreign exchange outgo.

    To develop Indian ports as consolidation hub ports and to reduce freight charges for exporters and importers, the Department has allowed consolidation of export and import LCL cargoes at Indian ports. The facility allows shipping lines to take the containers stuffed with LCL export cargo, irrespective of destination, from ICD/CFS to a gateway port, where these can be opened and reworked with cargoes received from different ICDs/CFSs. After such re-working, cargoes can be stuffed in containers destination-wise. Similarly LCL import cargo brought from different destinations at any gateway port can be re-worked and consolidated to stuff containers ICD-wise. With this facility of re-working of containers at gateway ports, the exporters and importers get benefited by way of saving in freight charges, reduction in transit time, and better handling and safer delivery of cargoes, as the activity takes place under the supervision of Indian agencies.

    In recent years a large number of ICDs/CFSs have been set up in the hinterland to enable the exporters and importers to export/import goods at their door steps. The setting up of these facilities has also reduced the congestion at the ports. As of now, as many as 160 ICDs/CFSs have been approved, out of which about 100 are fully operational. The ICDs recently identified for export and import of cargo are at Balasore, Rajkot, Miraj Derabassi (Chandigrah), Vapi and Verna (Goa) etc.

    The procedure for movement of goods in coastal vessels has been simplified considerably. To allow the trade to take clearance of their cargo at their nearest port, a scheme was introduced to allow imported cargo unloaded at the gateway port to be taken to another port in a coastal vessel. The formalities for customs clearance are undertaken at such other ports. Similarly, export cargo after clearance at a port has been allowed to be taken to another port in a coastal vessel for loading unto a foreign going vessel. In such cases drawback is paid immediately after export has been allowed at the originating port without waiting for the proof of export from the gateway port. For better capacity utilisation of such coastal vessels and to reduce freight cost, the Department has allowed carriage of domestic cargo along-with imported/export cargo.

    Hitherto, port to port movement of export cargo by rail after clearance at the originating port was not being allowed, whereas such movement was allowed by coastal vessels. To increase the competitiveness among various modes of transport and to reduce freight charges, the Department has recently allowed movement of export cargo from one port to another by rail.