OFFICE OF THE CHIEF COMMISSIONER OF CUSTOMS
MUMBAI ZONE-I, NEW CUSTOM HOUSE ,
BALLARD ESTATE, MUMBAI-400 001.

MINUTES OF THE OPEN HOUSE MEETING OF THE CHIEF COMMISSIONER OF CUSTOMS, MUMBAI ZONE-I and III HELD WITH REPRESENTATIVES OF THE TRADE AND INDUSTRY ASSOCIATION ON 05.05.2003 AT 3.30p.m. IN THE CONFERENCE HALL OF MUMBAI CUSTOMS HOUSE.

The Open House meeting for this month was held under Shri Subrata Basu, Chief Commissioner of Customs, Mumbai Zone-I, Shri C. Sen, Chief Commissioner of Customs, Mumbai Zone-III on 05th May, 2003 in the Conference Hall, 2nd flr., New Custom House, Ballard Estate, Mumbai.

The following officers were present from the department:

1. Shri K.K. Agarwal, Commissioner of Customs (General), Mumbai Custom House.
2. Shri Ahmed Hussain, Commissioner of Customs (Imports), Mumbai Custom House.
3. Shri K.M. Tiwari, Commissioner of Customs (Export Promotion), Air Cargo Complex
4. Shri Rakesh Sharma, Commissioner of Customs (Import), Nhava Sheva Custom House.
5. Shri Deepak Kumar, Additional Commissioner of Customs, CCO, Mumbai Custom House.
6. Shri C.M. Sharma, Additional Commissioner of Customs, CCO, Mumbai Custom House.
7. Shri Rakesh Kumar Sharma, Additional Commissioner of Customs (EDI), Mumbai Custom House.
8. Shri V.K. Verma, Joint Commissioner of Customs (Export Promotion), Mumbai Custom House.
9. Shri O.P. Khanduja, Joint Commissioner of Customs (Imports), Mumbai Custom House.
10. Shri Rajendra Singh, Joint Commissioner of Customs (Export Promotion), Mumbai Custom House.
11. Shri Sandhu, Jt. DGFT, Mumbai.
12. Shri Sanjay Lunia, Jt. DGFT, Mumbai.
13. Shri Gyan Sarovar, Deputy Commissioner of Customs, Mumbai Custom House.
14. Shri Sidney D’Silva, Appraiser (EDI), Mumbai Custom House.

The following representatives of the Trade & Industries Associations and the Bombay Custom House Agents Association attended the meeting :

1. AIIEA (All India Importers & Exporters Association)
Shri Mohan Nihalani
Shri Nehal R. Sodha
Shri Nirav B. Raval
Shri Pravin Sanghavi

2. BCHAA (Bombay Custom House Agent’s Association)
Shri Pankaj Shah
Shri Shashi Tanna
Shri Bharat Shah
Shri Nimish Desai
Shri Sorab P. Engneer
Shri Naval H. Mehta

3. MANSA (Mumbai & Nhava Sheva Ship Agent’s Association)
Shri C.R. Nambiar
Shri V.D’Souza

4. FIEO (Federation of Indian Exporter Organisation)
Shri Gulam Mohd.

5. Dyestuff Manufacturer’s Association of India
Shri S. Srinivasa

6. TATA GROUP
Shri M. Rajendran Nair

7. Confederation of Indian Industries
Shri S.K. Kini

8. Bombay Chambers of Commerce & Industries
Shri Pravin Kanakia.

9. Siemens Ltd.
Shri P.S. Sant

10. IMC (Indian Merchant Chambers)
Shri Virendra Parekh

11. Indian Drug Manufacturers’ Association
Shri Vasudev Kataria
Shri Mahesh H. Doshi
Shri K. K. Thakur

The Chief Commissioner of Customs, Mumbai Zone – I, welcomed all the members of the Trade, Industry and CHAs Association and the officers to the meeting.

2. The minutes of the meeting earlier held on 07.04.2003 were read and these have been taken as correctly recorded.

3. The representatives of the Trade, Industry and CHA Association raised the following points.

I. Points by All India Importers & Exporters Association
(a) Due to un-authorised audit by certain customs officers, namely Mrs. Durando and Mr. Thorat, the exporters has to run between DGFT and Customs for no fault of theirs. The plight is further exaggerated as no action has been taken against the concerned officers nor the book has been re-audited by the Customs as the files are not traceable. It was therefore requested that relief be granted to the exporters waiving the production of documents lost by the Customs and vigilance action be taken against the defaulting officers.

It was clarified that this issue was discussed in the last Open House meeting held on 07.04.2003 when the Commissioner of Customs (Export Promotion), Mumbai Custom House has explained the background of the case and efforts made so far in this case. It was therefore decided that this matter may be taken up with him again.

It was further explained that the Trade should generally confine its points on redressal of their grievance instead of suggesting action against any concerned officer.

[ Action : The Joint Commissioner of Customs, CIU,
Mumbai Custom House ]

(b) The CBEC Circular No. 79/02/CUSTOMS dated 27.11.2002 regarding DEEC logging have not been implemented by Mumbai Customs on the ground that the matter has been refered to Finance Ministry for clarification of certain points. It is unfortunate that the Customs have found provision of said Circular none implementable.

It was clarified that the Mumbai Customs has to bring certain provisions to the notice of the Ministry and seek clarification.

Although the clarification of this point have not been received as yet, however vide Order F.No 605/21/2003/DBK dated 22nd April 2003 the Ministry has constituted a Committee headed by Shri.Shishir Kumar, Commissioner of Customs (Export Promotion), Mumbai Custom House, Shri Rajendra Singh, Joint Commissioner of Customs (Export Promotion) and Shri.Sanjay Lunia, JT. DGFT, Mumbai as its member to scrutinise the cases of logging of old DEEC Book issued under Advance Licensing Scheme prior to 1997 (wherin are pending for logging) in terms of instruction contained in DOR Circular No. 79/02 Customs dated 27.11.2002.

It was further stated that Custom House shall be issuing a Public Notice based on the said Ministry’s order dated 22.04.2003. It is further hoped that this Committee will take a broad view of the whole issue and would settle the cases as quickly as possible.

[ Action :The Joint Commissioner of Customs, (Export/DEEC), Mumbai Custom House ]

II. Points by Indian Drug Manufacturers’ Association.
(a) Revival of Screening Committee set up under the Circular No. 93/98 dated 22.10.1997. Due to non-functioning of Screening Committee several cases of logging of DEEC book related to value based licences have been pending and therefore the exporters are being denied the issue of further licences as abeyance period have already expired.

It was explained that operational Committee has already been set up by Ministry of Finance vide its Order dated 22.04.2003 with the Commissioner of Customs (Export Promotion), Mumbai Custom House as its Chairman. It is hoped that the Association problems will be taken care of by the said Committee.

[ Action :The Joint Commissioner of Customs, (Export/DEEC), Mumbai Custom House ]

(b) Under the revised policy with effect from 01/04/2002, the concept of DEEC book has been dispensed with. As such the licensing authorities are suppose to issue a certificate of discharge of export obligation enumerating therein Shipping bill number and date, description of export items with quality and FOB value. The Customs is only required to verify the correctness of the export before releasing the LUT/Bank Guarantee. The procedure adopted by the Customs at present involves creation of data as per Part F of the erstwhile DEEC book, which have to be audited before release of LUT/Bank Guarantee. This as at variance with the policy which envisages only verification of correctness of exports based on which EODC have been issued and negates the simplification brought about in the Exim Policy. It was therefore requested that necessary modification in the procedure be introduced by Customs.

It was explained that before closing of the files and discharging the Bond/Bank Guarantee, the Customs has to ensure as to whether or not the conditions of Exemption Notification availed by exporters for imports of inputes are satisfied. Earlier such examination was being under taken at the time logging. The detailed guidelines for verification of DEEC book under the Exim Policy effect from 01.04.2002 are specified in the Custom House Public Notice No. 113/02 dated 06.09.2002.

It was suggested that instead of 100% verification of such cases by Customs, some sort of cross checking system may be introduced in the Department so as to reduce the time taken in such verification. The Joint Commissioner (Export Promotion Commissionerate) is to prepare list of points for such cross-checking.

Further during discussion it was suggested that Department should maintain a register in which all the applications for redemption of LUT/Bank Guarantee should be entered so that first in and first out system could be followed.

[ Action :The Joint Commissioner of Customs, (Export/DEEC), Mumbai Custom House ]

III. Points by BCHAA (Bombay Custom House Agent’s Association)
(a) In Bombay Port MOD, STP, Fair Bassein and uncleared W/H is linked through Radio Link. Frequent disruption of radio link leads to hold up of clearances. It was confirmed in the last meeting that EDI connectivity is through optical fibre cable connectivity, which appears to be untrue. The Department clarification is therefore sort on the connectivity of EDI and resolving the Radio Link problem on war footing.

It was stated that the Department stand on the optical fibre cable connectivity issue is clear as optical fibre cable was disrupted some time in October 2002 during digging operation by Mumbai Port Trust since then the Department EDI connectivity is through Radio Link. When ever vessel, crane, or any opstacles come between the antina link at two places the frequency is disrupted, thereby the Radio Link fails. The Radio equipment is also old. However the efficiency of wireless net work system (Radio Link) is being monitored on day to day basis and efforts is being made to keep this radio link up and improve it further. It was further stated that the Additional Commissioner of Customs (EDI) should monitor the failure of radio link on a regular basis for at list 2 months and should submit a report to the Chief Commissioner of Customs after 2 months through Commissioner of Customs (General).

[ Action :The Additional Commissioner of Customs, (EDI),
Mumbai Custom House ]

(b) Repeated failures of printer in the ports result in the Members Staff having run to MOD and timber pond to obtain printout even though the cargo is lying with the Port area.

It was explained that due to disruption of radio link, the printers also get disrupted and one hour time is taken for reviving the radio linkage and printers functioning. It was agreed that Department would pay special attention for maintenance of these printers and would consider purchasing the new printer on long term basis so that Trade needs is taken care of. However as an urgent measure it was decided that the Commissioner of Customs (General) should pay visit to the Dock area alongwith the concerned officers of NIIC, Accel Icim and few trade representatives so as to see on the spot the problems faced by the trade and should suggest ways and means to resolve those problems both on short terms and long term basis.

[ Action :The Additional Commissioner of Customs, (EDI),
Mumbai Custom House ]

IV. Points by Confederation of Indian Industries
Project Imports Regulations-The importer is required to submit a statement indicating the details of the goods imported together with the necessary documents as proof regarding value and quantity of the goods so imported in terms of the Regulation and any other document that may be required by the proper Officer for finalisation of the project. As per the written communication received by the importers, the Customs Officer requires reconciliation statement as per the format enclosed, final payment certificate from the Bank/Supplier, Custom/Bank attested invoice (Original), triplicate copy of Bills of entries.
The trade is not aware as there has been no Public Notice issued by the Customs or any amendment to the Project Import Regulations, 1986, indicating the requirement of a certificate from either the Project Import Authorities or their jurisdictional Central Excise Authorities. For the purpose of finalisation of Contract we understand that large number of Contracts registered with the Customs for earlier years are held up for finalisation for want of this certificate, which was not originally sought by the Customs. In order to avoid this kind of problem with future Contracts, it is requested that Public Notice may be issued indicating clearly the requirement of documents by the Customs.

It stated that a certificate is required to be obtained from the concerned Administrative Ministry as per the terms of the notification for registration under Project Import Regulation 1986. The production of such certificate is condition of the notification. Further in respect of Project Imports of over Rs. one crore, the plant site verification report is required from jurisdiction Central Excise Authorities and in respect of Projects below Rs. 1 crore, 10% of such projects requires certificate from jurisdiction Central Excise Authorities as per CBEC letter dated 18.02.1994.

It was agreed in the meeting that a Public Notice would be issued informing the trade about the plant site verification report so that such problem is not faced at a latter stage. Such Public Notice should also specify the documents that is required to be submitted for finalisation of Project Imports contracts.

[ Action :The Commissioner of Customs, (Imports),
Mumbai Custom House ]

(b) Re-exports under Section 74 :
The Trade is facing tremendous problem in settlement of drawback claims in respect of goods returned to the supplier under Section 74. These problems is acute wherein the goods do not bear identification no./sr. no. etc and re-export is only a part/component of the goods originally imported. In many cases the valuation of the goods also become a matter of dispute particularly when imported goods has sustained some damage during importation or subsequently thereafter. It is therefore suggested that the Customs must issue guidelines for settling such drawback claims in time bound manner.

It was explained in the meeting that in order to claim drawback under Section 74, the identity of the export goods has to be established with the imported goods. This identity could be established with identification no./sr. no. part no. etc. and it is not possible to provide specific guidelines to match the identify of the exported goods with the imported goods. The trade should anticipate the problems that they are likely to face for establishing the identity of the goods and should keep records properly. In doing so they should anticipate customs requirements so that the concerned officer is satisfied with the identity. It was further stated that the Department will not risk its accountability of establishing the identity as it has faced some of the audit objection on this issue in the past. It was further decided that Shri V.K. Verma, Additional Commissioner of Customs (in charge of drawback), Mumbai Custom House should collects the details of re-export cases under Section 74 and should prepare a study report as to how these cases were solved in the past and should accordingly submit a paper so that if required the problem could be further discussed in a workshop.

[ Action : Shri V.K. Verma, Joint Commissioner of Customs,
(Export Promotion), Mumbai Custom House, ]

(c) Accelerated Custom Clearance Procedure :
The trade welcomes the initiative of the government in simplifying and speeding up the clearance procedure through the adoption of self clearance procedure. However, the procedure, as announced, does exclude clearance of goods against bonds/LUTs/Bank Guarantees/Licenses. Aslo for some reasons, bearings have also been kept out of the purview of this scheme.
Since clearance of spares for maintenance of life saving medical equipment, import of goods for export production has to be faster than in other cases and in all these cases bonds/Bank Guarantees/LUTs or Licenses are involved, the trade requests the Customs to include such goods also under the ambit of the self appraisal procedure.

It was stated that Department is experimenting the Accelerated Custom Clearance Procedure only in respect of certain goods and importers and it is too early to expect the scheme to be made applicable to all situations. Only after efficacy of Accelerated Custom Clearance Procedure is proved, its coverage could be extended for clearance of goods against Bonds/LUTs/Bank Guarantees/Licenses etc.

V. In addition to the above points received for discussion, the following points were raised:
(a) Verification supplementary DEPB:
It was stated that one of the exporter has received supplementary DEPB for verification in which six files have been refered to. The customs is not accepting the supplementary DEPB for verification, as they are not in a position to trace one of the files referred to in the supplementary DEPB. It was further stated that for verification of supplementary DEPB, the Department should not make re-verification as being done for the verification of original DEPB and in the case of original verified DEPB, the supplementary DEPB claim be allowed without verification. It was stated that the Ministry have issued instruction vide F.No. 605/2001-DBK dated 25.04.2003 vide which it has been clarified that if original DEPB has been verified the supplementary DEPB need not be verified again in the same manner. It was therefore agreed upon that if the Trade submits the original verified DEPB along with supplementary DEPB, the same could be verified without resorting to regular verification procedure. It was also agreed that in other cases where the exporter is not in a position to submit the original verified DEPB, the Department would check from its register of “Verified Original DEPB” if such verification was done and if so the supplementary DEPB could be verified without resorting to regular verification procedure. Further if supplementary DEPB cannot be verified on the basis of above procedure the Department could check from its own file if original DEPB was verified so as to dispense with process of re-verification of supplementary DEPB. It was also agreed to that the Department instructions based on the above would be issued by following Board’s Instructions dated 25.04.2003.

[ Action :The Addtional Commissioner of Customs, (Export/DEEC), Mumbai Custom House ]

(b) BCHAA (Bombay Custom House Agent’s Association).
It was stated that the Commissioner of Customs (Appeals) (Airport) has passed an order holding the view that refund can be claimed only when the assessment has been successfully challenged, where as the trade feels that the assessment and refund are independent process and one is not dependent on other.

It was stated that since the order has been passed by the Commissioner of Customs (Appeals) (Airport) in respect of Air Cargo Complex case, the issue may be submitted to the Chief Commissioner of Customs, Mumbai Zone-II with copy to other Chief Commissioner of Customs so as to examine the legal position.

[ Action :The Joint Commissioner of Customs, (Appraising),
Mumbai Custom House ]

4. The Commissioner of Customs (Export Promotion), Air Cargo Complex informed that recently they have started processing of Bills of Entries of 100% EOU, EPCG etc. on EDI. The trade is therefore requested to make use of this to the extend possible.

5. The trade appreciated the Departmental officers efforts in doing work on closed holidays in mid of April 2003. They also appreciated the quality of the Open House minutes that are being issued as its contains truthful version of Department and Trade as well.

6. The next meeting will be held on 2nd June 2003 at 15.30 hours. Points for the said meeting are sponsored by 23rd May 2003 positively.

( Deepak Kumar )
Commissioner of Customs/CCO
New Custom House, Mumbai Zone-I.

Copy to:

1. The Chief Commissioner of Customs, Mumbai Zone-II
2. The Chief Commissioner of Customs, Mumbai Zone-III
3. All Commissioner of Customs, Mumbai Zone-I, II & III.
4. The Additional Commissioner of Customs (EDI), Mumbai – for Website display

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