Government of
Ministry of Finance
Department of Revenue
Central Board of Excise &
Customs
***
To,
All
Chief Commissioner of
Customs,
All
Chief Commissioner of
Central Excise,
All
Chief Commissioner of Customs & Central Excise,
Director
General , Directorate
of Revenue Intelligence,
Sir,
Subject: Introduction of Risk
Management System (RMS) in Imports- regarding-
***
Attention
is invited to the Board's circular letter F.No.450/30/2003-Cus-IV dated
2. The Board has decided to introduce the
‘Risk Management System’ (RMS) in major Customs locations where the Indian
Customs EDI System (ICES) is operational. The implementation of the RMS is one
of the most significant steps in the ongoing Business Process Re-engineering
initiatives of the Customs and Central Excise Department.
3. The ever increasing volumes and
complexity of international trade and the deteriorating global security
scenario present formidable challenges to Customs. The exponential growth in
trade volumes means that the traditional approach of scrutinizing every
document and examining every consignment will simply not work, as it would
neither be desirable nor possible to constantly increase the resources with the
increasing workload. Also, there is a need to reduce the dwell-time of cargo at
the ports and airports and to reduce the transaction costs in order to enhance
the competitiveness of Indian businesses, by expediting release of cargo where
compliance is high. This necessitates that the department should be selective
in its approach to deployment of its resources. The advances in Information
Technology offer an opportunity to address these challenges faced by the
department by putting in place an effective risk management system. The primary
objective of the Risk Management System, therefore, is to strike an optimal
balance between facilitation and enforcement and to promote a culture of
compliance. It is intended to improve the management of the resources of the
department to enhance the efficiency and effectiveness in meeting stakeholder
expectations and to bring the Customs processes at par with the best
international practices.
4. With the introduction of the RMS, the present practice
of routine assessment, concurrent audit and examination of almost all Bills of
Entry will be discontinued and the focus will be on quality assessment,
examination and Post Clearance Audit of Bills of Entry selected by the Risk
Management System.
5. Bills of Entry and IGMs
filed electronically into ICES through the Service Centre or the ICEGATE will
be transmitted by ICES to the RMS. The RMS will process the data through a
series of steps and produce an electronic output for the ICES. This output will
determine whether the Bill of Entry will be taken-up for action (appraisement
or examination or both) or be cleared after payment of duty and Out of Charge
directly, without any assessment and examination. Also where necessary, RMS
will provide instructions for Appraising Officer, Examining Officer or the
Out-of-Charge Officer. It needs to be noted that the decisions communicated by
the RMS on the need for assessment and/or examination and the appraising and
examination instructions communicated by the RMS have be followed by the field
formations. It is possible that in a few cases, the field formations might
decide to apply a particular treatment to the BE which is at variance with the
decision received from the RMS owing to risks which are not factored in the
RMS. Such a course of action shall however be taken only with the prior
approval of the jurisdictional Commissioner of Customs or an officer authorized
by him for this purpose, who shall not be below the rank of Addl./Joint
Commissioner of Customs, and after recording the reasons for the same. A brief
remark on the reasons and the particulars of Commissioner’s authorization
should be made by the officer examining the goods in the departmental comments
in the EDI system.
6. The existing system of concurrent audit
shall be abolished and replaced by a Post-Clearance Compliance Verification
(Audit) function. The objective of the Post Clearance Verification Programme is to monitor, maintain and enhance compliance
levels, while reducing the dwell time of cargo. The RMS will select the bills
of entry for audit, after clearance of the goods, and these selected bills of
entry will be directed to the audit officers for scrutiny by the EDI system. In
case any possible short levies are noticed, the officers will issue a
Consultative Letter setting out the grounds for their view to the Importers/CHAs. This is intended to give the importers an opportunity
to voluntarily comply and pay the duty difference if they agree with the
department’s point of view. In case there is no agreement, the formal processes
of demand notices, adjudication etc. would follow. It may also be noted that
the auditors are specifically being instructed to scrutinize declarations with
reference to data quality and advise the importers/CHAs
suitably where the quality of their declarations is found deficient. Such
advice is expected to be followed and will be monitored by the local risk
managers. It hardly needs emphasis that compliance in all its dimensions is in
the mutual interest of the Government and the Trade and Industry and it will
enable the government of give increasing levels of facilitation. The Importers/CHAs are urged to co-operate in the department’s efforts in
this direction.
7. The national management of the Risk
Management System shall be the responsibility of the Risk Management Division,
being established under the Directorate General of Systems. There will be a
local Risk Management System catering to the needs of the Custom Houses. The
local Risk Management System will carry out the live processing of the Bills of
Entry and Import General Manifests etc.
The Commissioners of Customs are required to appoint the administrator
for the ‘Local Risk Management System’ at the level of the Joint/Additional
Commissioner for assigning user privileges on the Local Risk Management System.
8. The implementation of RMS will
necessitate reorganization of staff. Custom Houses are required to undertake a
comprehensive re-organization of the officers deployed for processing Bills of
Entry. The present appraising
facilities should be right-sized in tune with the reduced quantum of Bills of
entry coming for assessment. Such staff should be diverted to the Post
Clearance Audit. The strength of the staff for examination of cargo would also
be required to be readjusted.
9. The existing facilitation schemes viz.,
the Self-assessment scheme, Fast track / green channel scheme, Accelerated
customs clearance schemes etc., would be phased out with the implementation of
the RMS and the Accredited Clients Programme. As the deployment of the RMS is likely to
take place in phased manner across the ICES locations, the existing
facilitation schemes will continue to be operative in each Customs station
until the operationalisation of the RMS at that
station.
10. NACEN will support the RMD in conducting
the necessary training of the officers for running and managing the RMS at the
ICES locations.
11. Detailed draft Public Notices, Standing
Orders and Instruction Manuals will be forwarded by the DG (Systems) separately
12. Receipt of this circular may please be
acknowledged.
13. Hindi version will follow.
Yours faithfully
(Anupam Prakash)
Under Secretary to the Government of
Copy to:
1. PS to Chairman (E&C),
2. All Members, CBEC
3. CDR,CESTAT
4. All Directorates, CBEC
5. All Commissioners, CBEC
6. All Joint Secretaries/Directors/Deputy
Secretaries, CBEC
7. All Under Secretaries/STOs/TOs,CBEC
8. Guard file.
(Anupam Prakash)
Under Secretary to the Government of