Self –Assessment under Customs

With effect from 8-4-2011, Self-Assessment has become the norm of assessment of Customs duty in respect of imported/export goods. This is a measure aimed at facilitating trust based compliance management in respect of goods which are imported into or exported from India. With introduction of the concept of self assessment, Government expected to usher a new era of trust based Customs-Trade partnership which is a welcome move. The focus of self assessment is reliance on declarations made by importers/exporters for facilitating the clearance of imported/export consignment. Its rudimentary aim is to reduce pre-clearance checks based on risk parameters. The basic postulates of Self-Assessment are covered under Board Circular No.17/2011- Custom dated 08.04.2011.

As the clearances are based on self-assessment, on-site post clearance audit at the premises of importer or exporter has been introduced to protect the interest of the Revenue. This measure empowers the customs authority to inspect the account books of the company and to verify each import or export related declaration or documentation. Therefore, importer/exporter are expected to maintain and preserve the documents in a proper manner.

As per the new scheme, while the responsibility for assessment has shifted to the importer/exporter, the Customs officers would have the power to verify such assessments and make re-assessment, where warranted. In furtherance of this legislative provisions, Board always makes endeavour to attain higher percentage of  facilitation and  ensure that there is no disruption in the assessment work, and clearance of imported and export goods .

Thus, Importers/exporters are required to declare the correct description, value, classification, notification number, if any, and themselves assess the Customs duty leviable, if any, on the imported / export goods. The Section 17 of the Customs Act, 1962 provides for self-assessment of duty on imported and export goods by the importer or exporter himself by filing a Bill of Entry or Shipping Bill, as the case may be, in the electronic form ( Section 46 or 50). Self-Assessment is covered under  Sections 17, and also supported by  Sections 18, 46 and 50 of the Customs Act, 1962.  The Bill of Entry (Electronic Declaration) Regulations, 2011 and Shipping Bill (Electronic Declaration) Regulations, 2011 are being framed to carry out the aforesaid provisions. In terms of Section 17(6) and to verify the correctness of self assessment, in order to safeguard the revenue On-site Post Clearance Audit was  introduced at the premises of Importers and Exporters. Accordingly, important changes are also made in Section 46 of the Customs Act, 1962 whereby it has been made mandatory for the importer to make entry for the imported goods by presenting a Bill of Entry electronically to the proper officer except for the cases where it is not feasible to make such entry electronically.

Self assessment scheme has also enacted provisions to impose penal liability on erring importer/exporter, for the commission or omission of act willfully, whereas it  would result in trade facilitation for the compliant importers/ exporters, however, non compliant importers/ exporters could face penal actions on account of wrong self assessment done with the intent to evade duty or to avoid compliances under Customs law/ Foreign Trade policy. However, bonafide errors are excluded from the ambit of invocation of penal provisions. Therefore, to avail of the benefit of the facility, trade would now need to put in place robust systems and processes to ensure that accurate information is submitted to the Customs as the onus would lie largely on the importer/ exporter

Salient features

(a) Importer/exporter is responsible for correctly disclosing relevant details in the Bill of Entry/ Shipping Bill. They subscribe to the truthfulness of the declaration in terms of Section 46(4) and 50(2) of the Act.

(b) Declarations made by the importer/exporter would be verified by Customs authorities through contract, base for transfer price, invoice, catalogue  etc. If required the goods may also be examined or tested by the officer.

(c)  Verification could result in re-assessment of duty by the  Customs authorities for which speaking order is required to be passed within 15 days from the date of assessment. (except in cases where reassessment is accepted in writing by the importer/ exporter/CHA). Such speaking order can be subject to review/ appeal.

(d) Verification of Self-Assessment and Re-Assessment – Sections 17(2) and 17(3) of the Customs Act, 1962 provide for verification of the Self-Assessment by the proper officer of Customs. In the process of verification, the Customs officer may ask for further documents or information, or get the goods examined or send the sample of imported / export for testing by an approved agency. Requirement of information for the purpose of verification will be documented by the proper officer. After verification, based on the merits of the case, the proper officer may either accept the Self-Assessment or initiate the process of reassessment as described under Section 17(4) of the Act, 1962.

(e)  Provisional assessment under Section 18(1) would be resorted to in the cases where self assessment is not possible/Customs authorities cannot verify the assessment. However, same would require permission of concerned jurisdictional Commissioner of Customs. In cases, where the importer or exporter is not able to determine the duty liability / make assessment for any reason, under Section 17(1)  except in cases where examination is requested by the importer under proviso to sub-section (1) of Section 46, a request shall be made to the proper officer for assessment of the same under Section 18 (1) of the Customs Act, 1962.  In this situation an option is available to the proper officer of Customs to resort to provisional assessment of duty by asking the importer / exporter to furnish security as deemed fit by the proper officer for differential duty equal to duty provisionally assessed and duty finally payable after assessment. In this regard, it is clarified that importer should not resort to this provision in a routine manner and it is expected that this would be done in deserving cases only where importer or exporter is not able to assess the goods for duty for want of certain information / documents etc.

(f) In terms of Section 17(6) of the Customs Act, 1962, cases where re-assessment is not undertaken or where re-assessment is done but speaking order is not passed, would be subject to audit at the premises of the importer/ exporter.

(g) Importer/exporter are also required to put adequate checks and balances to ensure that CHA /CB makes correct declarations, to avoid any penal consequences on account of incorrect declarations made by the CHA/CB.

Hence, in both the cases where no self-assessment is done and when self-assessment is done and reassessment is required under Section 17, the importer or exporter can opt for provisional assessment of duty by the proper officer of Customs.  The difference is that when no self-assessment is done, the provisional assessment shall get converted into final assessment and when self-assessment is done, the provisional assessment shall get converted into re-assessment.