The circular should clear the customs ports which are choked with disputed cases of export goods like T shirts, brass artware and the like. (We too were told of a case of several wagon loads of sugar meant for Pakistan. The consignment is held up for years, the demurrage bill is now more than the value of goods, as the customs and exporter fight out the dispute on the violation of export rules). Once the export goods enter customs custody, and there is a dispute between the exporter and customs on questions of quality or quantity or value or any of the numerous columns in the shipping bill or the various provision in the maze of economic laws, the consignment comes under the seizure procedure, it can neither go out of the country nor return to the home land till the matter is resolved. The current circular should clear the ports since the source is the department of revenue itself. Similar statements in the official Exim policy have been largely ignored by the customs in the past but this one should result in movement.

The department of revenue now says that exports should be allowed in all cases on provisional basis. In technical parlance, the goods otherwise subject to seizure under Customs Act, 1962 will not be physically seized but will only through the seizure procedure. The circular says, “the seized goods should be released provisionally and allowed to be exported on execution of a bond for an amount equivalent to the value of seized goods and probable fine and penalty which might be imposed”.

Liberal interpretation of the circular shows that the exporter is now free to export. Violation of an export condition or restriction is a compoundable offence which can be settled with money in due course of time but the movement of goods to the overseas buyer cannot be stopped. Thus a rice exporter without a certificate of contract registration with APEDA, which is a condition of free export under the Exim Policy, cannot be stopped by the customs, they have to give a let export order and adjudicate the matter later. The customs will have only the bond to prod the exporter, the circular does not call for any bank guarantee or surety on the part of the exporter.

The actual implementation by the field customs commissioner of the trade facilitation measure remains to be seen. The officers may take shelter in the wordings of the circular which seems to cover only cases of misdeclaration of quantity, value and other parameters in the shipping bill, violation of the restrictions in other GOI policies, as distinct from prohibitions, do not seem to be thrust of the direction. Similarly, the use of the past tense in the wordings indicates that it is meant only for held up cases, future consignments will be dealt with under the law which does not expressly allow simultaneous seizure and release.

The other moot point is that of quantum of fine and penalty in the case of export of “improper” goods. Will the customs wipe out the MOP (Margin of Profit) when deciding the fine on the lines of practice in the case of imports? Or, should the fine be a nominal one or two percent of the value of goods. Does the Commissioner have the power to let the exporter off the hook without a fine in special circumstances calling for leniency? There are no guidelines on the subject, the present practice is to decide the case based on the face value of the exporter!

No more declarations

Three days after the liberalisation on the let export front, the  department of revenue took another step on 5 August to clean up the clutter of irrelevant declarations on the non availment of various benefits in the export shipping bill. The circular implements the recommendations of the Chief Commissioners several months ago which said that only five documents, namely, commercial invoice, packing list, ARE-1, self declaration form and  declarations specific to the export promotion scheme adopted by the exporters are necessary for exports. All other documents and declarations are not necessary for customs clearance.

Following the recommendations, the department says that as many as nine declarations in the drawback based exports are no longer necessary. This is specially so since the department has fixed cap values on weight basis or value basis and this alone limits the disbursal amount. Another five declaration in the DEPB case and two for advance licences have been done away with.  (Some of these declarations will continue in the case of manual filing of shipping bills. Once these stations come under EDI, the exception will be dropped).

The dropping of the declarations may not mean much in terms of saving of transaction cost since the declarations were being rubber stamped or printed in the shipping bill itself, however, the change does show that the department is coming to realize the need for procedure reform. We understand that a common export document is being drafted which will be the mother of all documents and will subsume other documents under it. We have yet to see this paper, hopefully it will be different from the Aayaat Niryaat form of the DGFT which has become a mixture of disparate documents forcibly joined together.

India-Bangladesh trade

The World Bank has supported a major research led by renowned South Asia Scholar Dr Garry Pursell on the subject of India-Bangladesh trade in the formal and informal sector. Two meetings in Dhaka on the 13 August and in Delhi on 18 August at the IIC Annex will discuss the findings. The highlights and conclusions will be carried in this column.