Provisional Assessment of Import Export
Provisional Assessment of Import Export
Once the Bill of Entry or the Shipping Bill comprising of all the relevant information/ details along with all the appropriate documents is submitted, the duty leviable on the imported goods and exports will be assessed by the Customs Officer. There are times when it is not possible to conduct a proper evaluation due to the non-availability of relevant information or documents. A delay made in the clearance of goods makes it difficult for importers and exporters to pay for the demurrage/ detention charges, disturbances in the production schedule and other financial losses. Likewise, the delay in clearance leads to the cancellation of an export order, an increase in interest liability and other economic damages to the exporters. To overcome all these turbulences, Section 18 of the Customs Act, 1962 facilitates to assess the duty provisionally thereby, allowing clearance of goods by taking a bond with appropriate security.
Conditions to Permit Provisional Assessment
Given below are the conditions for allowing provisional assessment.
- When the concerned officer is satisfied that an importer or an exporter is unable to furnish any document that is necessary for the assessment of duty on the imported goods or the export goods.
- When the concerned officer considers it necessary to perform any chemical or order test on the imported or exported goods for assessment purposes.
- When the importer or the exporter has produced all the given all the necessary documents and furnished full information for the assessment of duty, but the concerned officer considers it appropriate to make further enquiry for assessing the tax.
During the given circumstances, the pending production of such documents or furnishing such information or completion inquiry, the concerned officer of the Customs orders that the duty leviable on goods have to be assessed provisionally. The importer or exporter has to execute the appropriate bond and furnish the requisite security to the satisfaction of the concerned officer to make the payment between the duty that is finally assessed and the duty that is provisionally determined. Goods that are cleared for home consumption or exportation, the amount that that is paid provisionally will be adjusted against the duty that is finally assessed. If the paid amount falls short of the duty assessed, the importer or exporter has to pay the deficiency. On the other hand, if the paid amount is in excess to the duty finally assessed, the importer or exporter can claim a refund. For goods that are warehoused, if the duty finally assessed is in excess to the duty that is provisionally assessed by the concerned officer, it might require the importer to execute a bond, for a sum that is equal to twice the amount of the excess duty.
Terms of Bond
- If the provisional assessment permits the pending production of any documents or to furnish any information by the importer or exporter, the terms of bond will be the documents or information that is furnished within a month or within the given period by the concerned officer can permit the person to execute the warrant and shall pay the deficiency between the duty that is finally assessed and the duty that is provisionally estimated.
- If a provisional assessment is permitted for the completion of any test or enquiry, the terms of the bond will be applied to the person executing the bond paying the deficiency between the duty that is finally assessed and the duty that is provisionally assessed.
Determination of Amount of Bond and Security/ Surety
According to the Customs Regulation 1963, the importer or the exporter claiming the provisional assessment has to execute a bond for the difference between the duty that would be finally assessed and the provisional duty. When the calculation of the exact difference between the duty provisionally assessed and the duty that is finally assessed is not possible, there are some chances to make some estimate of the same. Generally, the amount of surety and the security for provisional assessment is restricted to the difference of duty provisionally assessed and the duty which is finally assessed.
However, the bond for provisional assessment has to be submitted with surety or security or both as considered by the officer. Usually, the requirement of surety/ security is assigned by the Government Departments or undertakings.
Finalisation of Provisional Assessment
Provisional assessments are finalized within 6 months. For machinery contract cases or large project import cases, the finalization takes place over some years. This is because the action to finalize can be taken only after all the imports under the contract have been made.
Every effort made to finalise the cases has to be made within 6 months of the date of import of the last consignment covered by the contract.
Guidelines to be Followed
Class of Importer
Amount of Bank Guarantee or Cash Deposit that has to be Obtained as “Security of the Differential Duty”
|1||The imports made by Authorized Economic Operators (AEO-T3)||0%||In terms of Circular No. 33/2016- Customs dated 22nd July 2016, as amended.|
|2||Imports by Authorized Economic Operators (AEO- T1 and AEO- T2)||
(b) 50% for AEO-T1 or 25% of the applicable bank guarantee or cash deposit
|In terms of Circular No. 33/2016- Customs dated 22nd July 2016.|
|3||Imports that are made by Public Sector Undertakings/ Government Central/ State/ UT and their undertakings||0%|
|4||Cases referred to SVB||According to Circular No. 5/2016- Customs, dated 9.2.2016 issued from F. No. 465/12/2010 Cus. V|
|5(a)||Cases that are related to verification of origin under FTAs which are based on the reasonable belief that the matter involves mis-declaration of origin or the value addition||100%||Based upon “Operational Certification Procedures” as mentioned in the non-tariff notifications issued on Rules for determination of origin|
|5(b)||Cases selected on a random basis for verification of the origin||0%|
|5(c)||Cases that are related in verifying the seals and signature under FTAs||100%||Provided that the Commissioner of Customs or the Principal Commissioner of Customs reduces the amount of security where there are goods and justifiable reasons to do it|
|6(a)||Cases, where the importer is unable to make self-assessment and has sought provisional assessment||Not applicable||As these cases will be provisionally assessed by the officer as deemed fit.|
Cases, where the officer considers it necessary to order a provisional assessment, whether for the purposes of chemical test or requirement of information or causing inquires.
(1) Where differential duty has been estimated.
(2) Where, despite best efforts by the officer, differential duty cannot be computed
Provided that the Principal Commissioner of Customs or the Commissioner of Customs may reduce the amount of security where there are good and justifiable reasons to do so.