The Central Board of Excise and Customs (CBEC) has tightened the procedures for monitoring and finalisation of assessments under Project Import Regulations (PIR).
Heading 98.01 under Customs Tariff covers goods required for initial setting up of a project or substantial expansion of an existing unit. The project/unit may be an industrial plant, irrigation project, power project, mining project, project for the exploration for oil or other minerals, or any other project notified by the Government in this behalf. The basic idea is to classify all goods required for a project under 98.01 and extend concessional duty rates. Once a contract is registered under PIR, all imports covered by the contract become classifiable under 98.01 liable to duty at the project rate. The tariff entry covers not only capital goods but components and raw materials required for their manufacture, besides spares required for maintenance of such machinery.
The imports under 98.01 are assessed provisionally against a bank guarantee or security deposit equivalent to two per cent of the value of the goods (up to Rs 1 crore). The assessments are finalised after the importer gives a reconciliation statement, within three months from the date of clearance of the last consignment under the contract registered. It indicates the details of goods imported, together with necessary documents of proof required by the Customs for finalisation of assessment. There were delays in the presentation of such statements, plate site verification (PSV) of proper use of goods released at concessional duty rates by the Customs and finalisation of assessments. Therefore, CBEC has issued tougher instructions now.
The latest CBEC Circular (22/2011 dated May 4) says where the importer does not give a complete reconciliation statement within the time limit stipulated, necessary action must be initiated for enforcing bond/undertaking/cash security/bank guarantee and issue of notice for demand of duty and penalty for non-compliance with the provisions of the Regulations. In case of goods cleared under Release Advice from other ports, the importer should ensure the provisionally assessed Bills of Entry at the ports of import are finally assessed, audited and presented along with other documents at the port where contracts are registered. Customs must finalise the assessments within 60 days from the presentation of the required documents.
To facilitate PSV, the importer must show a certificate from a registered chartered engineer, certifying the installation of imported items of machinery, along with other documents. PSV is required to be done in cases where project value exceeds Rs 1 crore and in other cases at least 10 per cent of the project imports registered will be subject to such PSV. As this involved delay, the CBEC decided that all the relevant particulars of the contract, giving complete details of the goods imported, should be communicated to the jurisdictional Central Excise Commissioner, who should arrange to conduct a PSV within 15 days and confirm if the imported goods were installed at the registered plant site in time. However, in cases of government departments and public sector undertakings, the requirement of PSV can be fulfilled by issuing an appropriate certificate by the Head of PSU/government undertaking in the rank of chairman/executive director.
The central message from the CBEC is that importers and customs field formations cannot take it easy any more.
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