The Central Board of Revenue (CBR) has introduced massive changes in the Customs Act, 1969 with a view to simplify import procedures; expedite cases at the level of adjudication and tribunals and bring customs laws in line with the WTO rules and regulations and the revised Kyoto Convention.
Sources said on Tuesday that the board has amended different sections of the Customs Act in budget 2007-2008 to "effectively check under-invoicing by applying accurate valuation methods".
According to sources, a new section has been added to the Act to end litigation in the courts of cases challenging values determined especially for goods such as cloth. A window has been provided in the new rules to take these disputes to the Directorate General of Valuation.
This is for the first time that CBR Customs Wing has introduced such a large number of amendments to facilitate importers, exporters and domestic industry , sources said.
The following are the amendments in Customs Act and rationale behind each change:
Section 2: The term "appropriate officer" caters for the functions to be performed under the provisions of the Act. Words "and the rules made thereunder" have been inserted to make the definition more comprehensive. The term "Board" has been redefined as the nomenclature of the Central Board of Revenue has been changed to the Federal Board of Revenue.
Section 3A: The Directorate General of (Intelligence and Investigation) has been re-designated and the nomenclature changed to the "Directorate General of (Intelligence and Investigation),Federal Board of Revenue", to expand its jurisdiction and bring both the Direct and Indirect Taxes into its ambit.
Section 3B: The Directorate General of Inspection and Internal Audit has been renamed as "Directorate General of Internal Audit".
Section 3D: The functions of valuation and post clearance audit have been bifurcated and the organisation has been re-designated as "the Directorate General of valuation".
Sections 18: Reference to section 25 A was hitherto missing which has been added in subsections (3) and (5). Proviso under sub-section (5) has been added to cap the cumulative incidence of duties under section 18 and to keep it within the limit of rates bound by the government in different multilateral agreements.
Section 18D: New section has been added to provide legal cover for charging fee and service charges on account of various services and also in anticipation of ventures of public-private partnership.
Section 19C: The new section has been inserted to bring our law in conformity with the revised Kyoto Convention. Importer will not be asked to pay where the cumulative amount of all duties and taxes is equal to or less than rupees one hundred against one Goods Declaration. Section 39 has also been aligned to cater for the situation in case the refund or draw back of rupees hundred is involved.
Section 21A: The change in the rate of surcharge from fifteen to "fourteen" percent per annum in case of deferment will bring this section in conformity with section 83 (2), which provides for levy of 14% surcharge per annum where the owner fails to pay within ten days of the import and with the Customs Rules as well which also provide for levy of 14% surcharge.
Section 22A: New section provides for duty free re-import of temporarily exported plant and machinery. This section should be read with PCT heading 9918 where an entry has also been made to give effect to this new provision.
Section 25: Title of the section has been changed as "value of imported and exported goods" to distinguish it from section 25A, as both sections deal with the determination of value.
The words appearing in sub-section (4) the words "in writing" have been substituted due to non practicability of application of this provision. Its binding nature has been dilute to overcome objections of the courts whereby recorded evidence is demanded by the courts in such disputes.
Sub-section 10 of Section 25 provides for sequence to be followed for determining the customs value. The words "under this Act" have been omitted and mandatory provision of the section for applying sequential order has been re-worded to provide for "may" to give it non binding effect.
Sub-section (1) has been substituted and the Directorate General of Valuation has been empowered to determine and notify the values for different classes of goods. This is akin to old ITP system.
In sub-section (2) the power to determine value of different goods has been given.
Through sub-section (3) the notified values would have immediate effect without waiting for the publication in the official Gazette. The values determined and notified under this section have been provided legal cover to avoid litigation.
Section 25D: New section has been added. This is intended to end litigation in the courts whereby the values determined especially for some goods especially cloth have been challenged in the courts.
Section 39: In clause (b), the words "less than hundred" have been changed to cater for non payment of drawback of less than or equal to one hundred rupees to make it compatible with new inserted section 19C.
Section 81: The word "pay order" has been inserted as an additional instrument for the payment of differential amount in sub-section (1).
In sub-section (2) in the proviso, the Director Valuation has also been empowered to extend the period for finalisation of provisional assessment.
Section 179: In sub-section (1), the monetary limit for adjudication by Deputy Collector and the Assistant Collector have been increased to eight and three hundred thousand rupees respectively.
Section 185A: Reference to an officer-incharge of a police station has been deleted as the anti-smuggling powers delegated to Police have already been withdrawn.
Section 185F: In sub-section (1), the Director of Intelligence and Investigation has also been included to authorise him to file appeals before the Special Appellate Court.
Section 193A: In sub-section (3), the period of ninety days has been specified or deciding the appeals by the Collector (Appeals). Power to remand back the case has been withdrawn. Proviso of the sub-section has been added after sub-section (3) whereby the power to extend the limitation has been fixed as ninety days.
Section 194: The scope of sub-section (3) for appointment of Member Technical has been expanded to include other senior officers of the Department to be appointed as Member Technical.
Section 194A: Sub-section (3) has been substituted, reworded to clearly specify that the minimum level of officer for filing appeals under the authorisation of Collector will be Assistant Collector.
New sub-section (8) has been added which aims to provide legal cover where references or appeals were filed by the officers of lower ranks and were questioned on the point of jurisdiction.
Section 194C: Sub-section (3) has been substituted and rupees five million has been fixed as the limit for hearing of cases by the single bench. Clause (C) of sub-section (4) has been substituted to enhance the powers of the technical member to rupees five million.
Section 195C: Sub-section (1) has been substituted and brought in conformity with the judgement of the Apex Court to exclude FIRs and criminal proceeding from the ambit of ADRC.
In sub-section (2) the words "Central Board of Revenue" has been substituted with the words "Board" and the words "thirty days" has been inserted to specify time limit for the constitution ADRC after filing of application.
Sub-section (3) the time limit of forty five days for making recommendations has been increased to sixty days.
Section 196: By including in sub-section (1), the Director of Intelligence & Investigation and the Additional Director have been enabled to directly file reference to the High Courts.
Section 202: A new proviso after sub-section (1) clause (b) has been inserted for the recovery of arrears in case the ownership is transferred. After sub-section (5), a new proviso has been added to empower the board and the authorised officers to write off non-recoverable arrears.
Section 203A: Through this new section board has been authorised to make expenditure of the fees and services charges collected under section 1 8D.
Section 207: The words "bill of lading" has been omitted and the scope of licensing in case of Freight Forwarders has been restricted to only those, who actually transact customs related business.
Section 225: New section has been added to provide continuity to the existing arrangements under the Act, the rules or procedures and for smooth transition to the Federal Board of Revenue. In order to effect the changes as summarised above, the following notifications have been issued/rescinded or amended.