Handling of Appeal cases for Imports and Exports

 A Centralised Review and Appeal Cell (CRAC) is being created in JNCH under the jurisdiction of the Commissionerate NS-V to monitor/co-ordinate/process all orders-in-original (OIO) passed by authorities up to the level of Additional Commissioner, filing of appeals before the Commissioner of Customs (Appeals) and CESTAT, examination / review of the orders of the Commissioner (Appeals) /CESTAT, whether such orders were in consequence of appeal preferred by the department or importer/exporters/others.

Guidelines in order to streamline the procedure of review, filing of appeal etc

1.   OIOs passed upto level of Additional Commissioner of Customs: Copies of all such adjudication orders by adjudicating authorities shall be endorsed to the CRAC, which shall put up such orders for acceptance or otherwise to the concerned Commissioner, through the supervising Joint/Additional Commissioner (in-charge of group / section) of the adjudicating authority. In case the order is accepted in review by the competent authority, the CRAC shall intimate to the concerned section/group/CAC with a note of acceptance. In case it is decided by the Commissioner that the order is not legal and proper, the CRAC shall, within five days of such decision, put up a formal direction to the adjudicating authority, under Section 129 D(2), for the approval of the Commissioner. The said direction of the Commissioner shall be conveyed to the concerned group/section for filing appeal before the Commissioner (Appeals). Upon filing of such appeal, the concerned group/section shall intimate the CRAC accordingly.

2. OIAs passed by Commissioner (Appeals): All such orders shall be examined in the CRAC for acceptance or otherwise. The file will be put up by Deputy/Assistant Commissioner (Review) through the Additional/Joint Commissioner in-charge of the group/section to the concerned Committee of Commissioners. If the "order-in-appeal" is accepted by the said committee, the CRAC shall inform the concerned Group/Section accordingly, for further necessary action. In case the Committee of Commissioners is of the view that the order-in-appeal is not legal and proper, the necessary authorisation and grounds of appeal shall be prepared and the appeal shall be filed before the CESTAT by the Deputy/Assistant Commissioner (Review). Copy of said appeal shall be sent to the concerned Group/Section for taking further necessary action in relation to similar matters.

3. OIOs passed by Commissioner of Customs: Orders-in-Original, passed by the Commissioners of Customs, if reviewed by the Committee of Chief Commissioners with a direction to file appeal before the CESTAT, shall be handled by the Cell and appeal would be filed in the CESTAT by the Deputy/Assistant Commissioner (Review) based on the "order of review" and "grounds of appeal" as communicated by the Chief Commissioner's Office. Copy of said appeal shall also be sent to the concerned group/section for taking further necessary action in relation to similar matters.

4. CESTAT orders: All orders passed by the CESTAT shall be examined in the CRAC and will be put up by the Deputy/Assistant Commissioner (Review) to the concerned Commissioner of Customs through the Additional/Joint Commissioner in-charge of the concerned group/section. If any order of the CESTAT, which is adverse to the revenue, is accepted by the Commissioner, concurrence of the Chief Commissioner shall be obtained as per Customs Board's instructions. If any appeal is to be preferred against any order of the CESTAT with High Court/Supreme Court, the CRAC shall obtain the necessary concurrence of the Chief Commissioner. Such appeals shall, however, be filed by the Centralised Legal Cell and the CRAC shall forward the file to the CLC along with the grounds of appeal and review order. Copy of all orders passed by CESTAT alongwith status (acceptance or appealed against) and copy of appeal, if filed shall be sent to the concerned group/section for taking further necessary action in relation to similar matters.

5. Seeking Comments from Group / Section: As soon as copy of any OIA or CESTAT order is received, a copy of the same should be sent to concerned group / section seeking comments on factual as well as legal point. However, in order to ensure that there is no delay in further processing of said OIA / CESTAT order, concerned group / section is required to send comments (on facts as well as on law points) within 10 days of receipt of said communication. If no comments are received within the said period of 10 days, it will be presumed that group / section has no comments to offer and it will be treated as deemed recommendation of acceptance of said OIA / CESTAT orders. While processing the any other order, if it is felt that any factual information needs to be verified, the CRAC may seek comments/views from the concerned group/section with the approval of the Additional/Joint Commissioner (Review). It is expected that concerned group/section shall reply to such requests within 05 days from the date of receipt. In case of delay, the CRAC will bring this fact to the notice of Additional/Joint Commissioner(Review) for perusal, who shall interact with his concerned counterpart to ensure that the matter is resolved on priority.

6. Time frame for Completion of work: The Cell shall ordinarily process orders- in-original/ appellate orders in the following time frame:

Officer	TA	EO/PO	Supdt./AO	AC/DC
Maximum Time	2 days	3 days	1 week	1 week

6.1   The file should be put up to concerned Commissioner within 3 weeks from the receipt of order for deciding the case. This time limit shall, however, not apply to the orders of CESTAT involving an issue of classification or valuation, where the appeal lies to the Supreme Court. In such cases, the case file must be put up to the concerned Commissioner within 5 days of receipt of the orders of the Tribunal. Therefore, it is essential that at the time of receipt of CESTAT order itself, orders involving an issue of classification or valuation are identified and processed expeditiously.

6.2   In case of remand, the approval and communication should be made by the CRAC to the CAC as well as to adjudicating authority within one week from the receipt of order for initiating denovo proceedings.

6.3   The timelines for filing appeal by the Department, as prescribed by Board, are as follows:

S. No.	Order By	Appeal to	Period for filing Review	Period for filing Appeal	Customs Section
1	Adjudicating Authorities subordinate to Commissioner	Commissioner (Appeal)	3 months	1 month	129 D
2	Commissioner (Appeals)	CESTAT		3 months	129 D
3	Commissioner	CESTAT	3 months	1 month	129 D
4	CESTAT	High Court		180 days	130
5	CESTAT	Supreme Court		60 days*	130 E
6	High Court	Supreme Court		90 days**	130 E

       * Period for filing Civil Appeal in case of classification & valuation matters.

       ** Period for filing SLP.

6.4   Since the proposal for filing of appeal/SLP before the Supreme Court against the order of Tribunal / High Court respectively, should be sent to the Board within 15 days of receipt of the order/ 20 days of the pronouncement of order, hence in all such cases, such decision should be communicated within 10 days from the receipt of the order or pronouncement of order so that Centralised Legal Cell will have sufficient time to file appeal/send proposal for filing appeal to JS (Review).

Customs Post Clearance Audit

Indian Customs Circular No. 02/2019-Cus dated 08.01.2019

A new audit approach is envisaged in implementation of Customs Post Clearance Audit (PCA), as well as the exposure to international best practices. Further, under the WTO's Trade Facilitation Agreement (TFA),

• each member shall adopt post clearance audit to ensure compliance with customs and other related laws and regulations;
• each member shall select a person or a consignment for post-clearance audit in a risk-based manner;
• each member shall conduct post clearance audits in a transparent manner.

PCA allows Customs to reduce border controls by shifting compliance checks from the clearance stage to the post clearance stage.

(1)PCA was first introduced in 2005 (when the Risk Management System was operationalized). It replaced the conventional system of concurrent audit, which formed a part of the assessment process, by separating the audit function from assessment function, thereby facilitating expeditious clearance of goods. Onsite Post Clearance Audit (OSPCA) was also introduced in 2011, which envisaged a more comprehensive audit carried out at the premises of importers and exporters. Hitherto, OSPCA was conducted under section 17(6) of the Customs Act, 1962 as the provisions empowered the proper officer to audit the assessment of duty on the imported goods or export goods at his office or at the premises of the importer or the exporter.

(2)  Customs clearance over the years has undergone a paradigm shift. From a dedicated focus on duty/ revenue, the attention has expanded to trade facilitation, regulatory compliance and intelligent enforcement. The legal framework would define the scope of entities that would be subjected to customs audit, the manner, rights and obligations of the auditee and other related issues. In the light of the revised focus, a new section 99A (under Chapter XIIA) was introduced in the Customs Act through the Finance Act 2018, to provide a statutory framework for audit. An exhaustive definition of 'Auditee' to include custodians or licensees of a warehouse, customs brokers and any other person concerned directly or indirectly in clearing, forwarding, stocking etc. was introduced making it distinct from the scope of the audit prior to these statutory changes. Along with the expanded definition of auditee, a complementary amendment has been made in the sub-section (2) of section 17 as well. The changes in the said sub-section have broadened the ambit of assessment from "assessment of duty" to "assessment of the entries made under section 46 or section 50 and the self-assessment of goods". These statutory changes have been made given the prominent role Customs audit is going to play in future in the context of increasing trade facilitation.

(3) Customs board has also issued 'Customs Audit Regulations, 2018' vide notification No. 45/2018-Cus (NT) dated 24.05.18 in supersession of the On-site Post Clearance Audit regulations consequent to omission of sub-section (6) of section 17. Indian Customs Board vide notification No. 39/2018-Customs (N.T.) dated 11.05.2018 has appointed officers in Customs Audit commissionerates of specified ranks as officers of Customs for the purpose of carrying out audit under section 99A of the Customs Act.

(4)  Under the new scheme, Transaction based audit (TBA) and Premises based audit (PBA) have been prescribed. Transaction based audit (TBA) was actually introduced in 2005 (when the risk management system was operationalized). Transaction Based Audit is a form of the erstwhile PCA. It may also be noted that a TBA may subsequently be converted into a Premises based Audit (PBA). PBA was first introduced in the year 2011 by way of On-site Post Clearance Audit at the premises of Importers and Exporters Regulations, 2011 whereby it was laid down that audit shall also be conducted at the premises of the importers / exporters. However, the new provision on Customs Audit under section 99A of the Customs Act, 1962 has extended the scope of Premises Based Audit by including other entities who are concerned with imports or exports. In PBA, customs would review the import and export over a given period and check all relevant commercial records, including financial statements and contracts to verify the particulars given in a goods declaration. PBA would enable the department to bridge the communication divide and usher in a new era of partnership with trade. Further, Board may also select any criteria or Theme for the audit.

(5)  Directorate General of Analysis and Risk Management has been entrusted the responsibility of identifying the potential focus areas and entities for various types of audit. Audit Comissionerates have started functioning in right earnest with encouraging results. The Chief Commissioners shall put in place a suitable monitoring arrangement to review the progress and performance of audit. Apart from overall supervision, Chief Commissioner shall examine on a selective basis, 5% of the Audit reports, selected randomly based on the quarterly reports submitted by Audit Commissionerates to ensure that audit has been conducted as per prescribed procedures.

Risk Matrix for Regulatory Authorities

Regulatory Authorities - Risks Response
1.	Prompt publication
		Regulatory agency publishes regulatory requirements promptly, communicates with industry stakeholders regularly and keeps communication up-to-date
2.	Industry Partnership
		Government- Business joint programs Training & Guidance on product regulations
3.	Manufacturer Accreditation
		Government and businesses(manufacturer/producer) join hands to carry out inspection to promote compliance
4.	Importer Self-assessment
		Importer self assesses product risk and applies to regulatory authority for a low-risk categorization
5.	Import prioritization
		Importer provides data and samples on proposed items for priority/expedited testing
6.	Product /Type Approval
		Importers obtain certification for product pre-approval with regulatory agencies. Import would not be permitted for those types not approved
7.	Laboratory Certification
		Regulatory authority permits import based on testing and/or Certification by an internationally accredited body approved by the regulatory agency
8.	Import Permitting
		Regulatory agency requires importers to apply for a permit for the import of a commodity requiring inspection and/or testing. The permits issued may contain conditions including testing at source
9.	Withholding release
		Regulatory authority withholds release pending the furnishing of additional information/ documentation about the product
10.	Sampling and detention
		Regulatory authority draws samples of products and detains consignment until product is proven to be compliant
11.	Random testing
		Regulatory authorities interdict consignments to test products randomly. A higher percentage of consignments may be selected where items are high-risk.
12.	Port & Route restriction
		Regulatory authorities mitigate risks by restricting products to be imported by specified ports or navigational routes;
13.	Product Licensing
		Regulatory authority issues licenses a product under which only the product of a specified kind and quantity are permitted
14.	Conditional Release
		Consignment is delivered from Customs control under bond to importer's custody. Products will not be used until the regulator approves for use. It will be redelivered into regulatory control, if the product fails testing or other conditions of release.
15.	Sanitization-fumigation
		Imported product is subject to appropriate processing or treatment that minimizes or eliminates risks.
16.	Reconditioning/rectification
		Regulatory authority requires importer to take corrective action voluntarily. Corrective action applies to only rectifiable defects or violations.
17.	Rejecting consignment
		Regulatory authority determines that the import of a product (or the imported product) is not in conformity regulatory standards/ specifications or attract Prohibition
18.	Destruction
		Regulatory authority orders destruction of products refused admission with or without fine/penalty

INCOTERMS 2020

The purpose of INCOTERMS

INCOTERMS: a contraction of "INternational COmmercial TERMS", INCOTERMs define the reciprocal obligations of seller and buyer under an international contract of sale and purchase. It specifies the respective responsibilities of the parties, but do not specify the point at which title is transferred. INCOTERMS set out how the associated costs and risks are apportioned.

INCOTERMS 2020: two distinct groups

• The INCOTERMS 2020 are applicable from 1^st January 2020.
• It is an update of the 2010 version and the eleven INCOTERMS have been maintained and are classified into two distinct groups:

Rules associated with all modes of transport: EXW - FCA - CPT - CIP - DAP – DPU - DDP

Rules which apply to maritime transport and inland waterway transport: FAS - FOB - CFR – CIF

2020 Main changes:

• The 2020 version offers two forms of presentation: Apart from the classic presentation, the 2020 version proposes a “horizontal” presentation where each of the 10 rules is presented INCOTERM by INCOTERM, making it possible to better appreciate the differences between each rule.
• The advisory notes which already existed in the 2010 version are now included in the 2020 INCOTERM rules.
• New explanations are also included, for example: “How to choose the INCOTERM rule which is the most appropriate for a given transaction.” Or, “How to structure the sales contract with other contracts such as the transport or insurance contract.”
• INCOTERM DAT (Delivered at Terminal) becomes DPU (Delivered at Place Unloaded): it becomes an agreed destination country INCOTERM place. It’s basically the same INCOTERM but the DPU is said to be unloaded unlike the DAP which is not unloaded. The DPU is also the only INCOTERM among the 11 which is unloaded.
• INCOTERM CIP has been modified: INCOTERM CIP 2010 was limited to taking out a minimum insurance policy. From now on, the insurance coverage must be a comprehensive risk policy.
• INCOTERM CIF alone allows for a minimum insurance policy. Attention! Differential treatment of insurance for CIP and CIF.
• INCOTERM FCA: offers an additional option for the bill of lading: the parties may agree that the seller obtains the bill of lading.

APPLICABLE TO ALL TRANSPORT MODES 

1. EXW: The seller has fulfilled his obligation to deliver when the goods are made available on his own premises (workshop, factory, warehouse, etc.). The buyer bears all the costs and risks involved in transporting the goods from the seller’s premises to the desired destination. This term represents the minimum obligation for the seller. To be used essentially in national exchanges
2. FCA: The seller has fulfilled his obligation to deliver when he has delivered the goods, cleared for export, to the carrier nominated by the buyer at the named place. The buyer chooses the transport method and carrier. He pays for the main transport. Costs and risks are transferred at the moment the carrier takes charge of the goods. The Bill of Lading option allows the buyer and the seller to agree that the seller can obtain the Bill of Lading.
3. CPT: The seller chooses the transport method and pays the cost of carriage for the goods to the named destination. He also clears the goods for export. The risks transfer from the seller to the buyer at the point where the goods are delivered to the first carrier.
4. CIP: The seller has the same obligations as under CPT, but in addition must provide a comprehensive insurance policy. The seller clears the goods through customs for exportation.
5. DAP: The seller must deliver the goods by placing them at the disposal of the buyer on the means of transport arriving ready to be unloaded at the agreed place, if specified, at the named place of destination on the agreed date or within the agreed time. The seller takes responsibility for the risks related to the transport of the goods to the place of destination.
6. DPU: The seller has fulfilled its obligations when the goods are placed at the disposal of the buyer, unloaded from the means of transport at the agreed place of destination (this place may be a terminal, a warehouse or the buyer’s premises).
7. DDP: Whilst the EXW term represents the minimum obligation for the seller, DDP represents the maximum. The seller is responsible for everything, including import customs clearance and the payment of all applicable duties and taxes. Costs and risks are transferred at the moment of delivery to the buyer. The costs and risks of unloading are borne by the buyer.

APPLICABLE ONLY TO SEA OR INLAND WATERWAY TRANSPORT:

1. FAS: The seller has fulfilled his obligation to deliver when the goods have been placed alongside the vessel nominated by the buyer at the named port of loading. The buyer must bear all the costs and risks of loss or damage the goods could be victim to. The term FAS requires the seller to clear the goods for export.
2. FOB: The seller has fulfilled his obligation to deliver when the goods are on board the vessel nominated by the buyer at the named port of shipment. The seller clears the goods for export. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.
3. CFR: The seller must choose the vessel and pay the costs and freight necessary to bring the goods to the named port of destination. The export formalities are the responsibility of the seller. The transfer of risk occurs at the moment when the goods are placed on board the vessel.
4. CIF: The seller is bound by the same obligations as for CFR but must also procure minimum marine insurance. The export formalities are the responsibility of the seller. The sea voyage, on the sea or inland waterways transport, are at the risks and perils of the buyer. The transfer of risk of loss of or damage to the goods occurs when the goods are loaded on board the vessel.

 An essential distinction (departure/arrival)

7 Multimodal INCOTERMs and 4 maritime INCOTERMs

Sales at departure are covered by 8 INCOTERMs: On the main transport, the goods are transported at the risk and peril of the buyer.

• Multimodal INCOTERMs– Sale at departure: EXW / FCA / CPT / CIP
• Maritime INCOTERMs – Sale at departure: FAS / FOB / CFR / CIF

Sales at arrival are covered by 3 INCOTERMs: On the main transport, the goods are transported at the risk and peril of the seller.

• Multimodal INCOTERMs - Sale at arrival: DAP / DPU / DDP