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 II, and III HELD WITH REPRESENTATIVES OF THE TRADE AND INDUSTRY ASSOCIATIONS ON 07.07.2003 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 Joseph Dominic, Chief Commissioner of Customs, Mumbai Zone-II & Shri C. Sen, Chief Commissioner of Customs, Mumbai Zone-III on 07th July, 2003 in the Conference Hall, 2nd flr., New Custom House, Ballard Estate, Mumbai.

The following officers were present:

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 Shishir Kumar, Commissioner of Customs (Export Promotion), Mumbai.
4. Shri Y.G. Parande, Commissioner of Customs (Imports), Air Cargo Complex.
5. Shri M.C. Thakur, Commissioner of Customs, Chhatrapati Shivaji International Airport.
6. Shri Deepak Kumar, Commissioner of Customs, CCO, Mumbai Custom House.
7. Shri Rakesh Sharma, Additional Commissioner of Customs (EDI), Mumbai Custom House.
8. Shri Shrikant Patil, Additional Commissioner of Customs
9. Shri Hemant Bhat, Joint Commissioner of Customs (General), Mumbai Custom House.
10. Shri Rajendra Singh, Joint Commissioner of Customs (Export Promotion), Mumbai Custom House.
11. Shri Vivek Prasad, Joint Commissioner of Customs (Imports), Mumbai Custom House.
12. Shri V. Ranganath, Addl. Docks Manager, Mumbai Port Trust.
13. Shri M.S. Hassan, Deputy Commissioner of Customs (EDI), Mumbai Custom House.
14. Shri M.B. Kazi, Deputy Manager, Mumbai Port Trust.
15. Shri R.D. More, Asstt. Commissioner of Customs, CCO, Mumbai.
16. Shri Jhamman Singh, Asstt. Commissioner of Customs, CCO, Mumbai.

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 Nihalan

2. BCHAA (Bombay Custom House Agent’s Association)
Shri Pankaj Shah
Shri Shashi Tanna
Shri Mark S. Fernandes
Shri Bharat M. Shah
Shri Nimish Desai
Shri Sorab P. Engneer
Shri Rajiv Desai

3. Indian Drug Manufacturers’ Association
Shri K. K. Thakur

4. ASSOCHAM
Shri George Joseph

5. Pesticides Association of India
Shri R.Rajasekhar

6. Sky Industries Ltd.
Rajiv Sharma

7. Maharashtra Chamber of Commerce & Industries (MCCI)
Shri H.S. Birdi
Ashish Pednekar

8. Indian Merchant Chambers (IMC)
Shri K.M. Doshi
Shri Virendra Parekh

9. Federation of Indian Chamber of Commerce & Industries (FICCI)
Ms. Ivy Chakraborty

10. SRTEPC (Synthetic & Rayon Textile Processing Committee)
Shri A. Ravindra Kumar

11. Shri Rajiv Gupta, Member of the Public

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

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 02.06.2003 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) Commputerization and Error-rectification
We have been given to understand that, in case an Exporter commits a mistake in the documents presented for exports, such error will not be allowed to be rectified. For e.g. when an Exporter exports 5000 M/T of a particular item but unfortunately due to error 500 M/T are inadvertently mentioned then the Exporter would not be allowed to make the requisite correction. As per the Customs Department it is assumed that the Exporter has exported only 500 M/T and not 5000 M/T – which have actually been exported.

The above dispensation is in vogue as, as per the Systems Directorate at the Headquarters, the Exporter is precluded from making any amendment in case of error. This is because the related software is designed accordingly. Sometimes, an error is committed by Customs or Customs designated terminal operator while keying-in the requisite data. A third scenario is when faulty information is reflected due to reasons such as a Software bug etc. In all the above three scenarios, till recently, Customs were allowing the necessary corrections and issuing a manual shipping certificate.

However, recently it has been brought to our notice that such a practice of issuing a manual shipping certificate has been done away with in case of errors committed by the Exporter. This is most unfair and detrimental to Export Promotion. As a matter of fact this type of anti-trade dispensation reflects a mindset which is authoritarian and undemocratic. Errors are part of life and a software system, which does not provide for any correction, is dangerously faulty and needs to be rectified immediately.

It was explained that exporter is given the opportunity of making corrections in the S/B at the time of its filing and then again before the let export order is given and therefore normally there should not be any mistake in the S/B, which needs to be corrected. Further EDI System do not accept any correction in its data after actual shipment and therefore issuing shipment certificate at variance with the EDI data may create some problem in future. It was therefore suggested that trade should ensure that complete corrected S/B is filed and if any mistake has occurred it should be corrected before the let export is given. However if inspite of that any mistake remains in the S/B in the rarest of the rare cases shipment certificate will be issued with the approval of the Commmissioner of Customs only where collateral evidence is available with the Government Agencies or in the bank realisation certificate or in AR-4 etc. It was also informed that a reference is being made to System Directorate so as to provide for corrections in the EDI data in case any mistake remains even after actual export.

[ Action : All Commissioners of Customs]

(b) Management of customs files:
At a previous metting a Joint Commissioner of Customs, Group VII, had mentioned that certain DEPB files could not be accessed easily as they were kept in gunny bags due to shortage of filing racks and storage space. This is most unfortunate, to say the least. This matter needs to be looked into immediately and corrective measures resorted to.

We believe that this most unfortunate practice by Customs needs to be looked into in a broader perspective of introducing better management practices at Customs. A very major analysis of these areas, even may be, with assistance of some Management Experts, is required immediately. We believe that faulty management of documents at Customs is one of the principle causes of harassment and corruption.

It was stated that the Custom House is fully aware of the problems of the Management of the records and is taking steps for proper storage and filing of old records and files.

[ Action : All Commissioners of Customs]

II. Points by Maharashtra Chamber of Commerce & Industries
(a) Out of charge of first check bills of entry
After payment of Duty the out of charge is given in the Docks. This causes a lot of inconvenience and many a times takes half a day to get out of charge. The appraiser in Docks in usually busy in examinations and will attend to such work when he sits for computer. To avoid this time consuming process it is suggested that out of charge should be given in Customs House itself as it was being done in the case of manual Bills of Entry. After payment of Duty the out of charge should be generated in the concerned group. This will be quick and save a lot of operational time.

It was stated that it is not possible to give out of charge from the Custom House itself in case of first check Bill of Entry as after assessment importer has to pay duty and has to get the printout of the Bill of Entry from the Dock. In this background it was informed that Department will ensure that out of charge is given from the Docks on top priority basis and instruction to this effect will be issued.

[ Action : All Commissioners of Customs]

III. Points by Indian Drug Manufacturers’ Association
(a) EDI Shipping Bills under DEPB Scheme
In the EDI shipping bills corrections of errors, if any, is not possible. Due to this the verification of DEPB licences gets held up for months together.

To cite an example, if the DEPB amount in respect of a particular shipment is erroneously mentioned in the EDI shipping bill, the verification of the licence is not done unless the error is not corrected even though with reference to the quantity exported and rate applicable, the DEPB credit granted by the Licensing Authorities is correct. The passing section, however, do not permit corrections and as a result, the process of verification remains pending.

A suitable solution to the problem needs to be found so that such problems could be sorted out without compromising on revenue interest.

Same as point No. (a) of All India Importers & Exporters Association.

(b) Non-availability of TRs
As a matter of practice, the EP copies of EDI shipping bills are generated only after all the criteria for finalising the shipping bills, including availability of TRs wherever required, are satisfied. While based on EP copies of EDI shipping bills released to exporters, the DEPB licences are obtained, in some cases, at the time of verification, the exporters are required by the verification section to produce TRs as, according to them the shipping bills are provisionally passed pending the availability of TR. Since the original TR is already released by the DYCC, at the time of generating the EP copy, for issue of the duplicate, a written request is insisted upon by the DYCCs office. As a result, prolonged delay occur in completion of verification of DEPB licenses.

To remedy the situation, a co-ordinated system, needs to be put into place so that in respect of EDI shipping bills where the EP copy has already been released, there is no need for exporter to produce TRs which would have already been verified before issuing the EP copies.

It was stated that associations understanding that EP copies are not generated if test report is pending, is not correct. In fact system generates the EP copies even in cases where test report is pending, so as to enable the exporters to get DEPB licence issued. Therefore it is necessary to see the test report at the time of verification DEPB licence. Since sometime there is delay in feeding of test report leading to delay of verification of DEPB license, it was stated that steps would be taken for expeditious feeding of test report in the System and if possible a terminal will be provided to chemical examiner for feeding the test report in the system directly.

[ Action : The Commissioners of Customs (General), Mumbai Custom House
The Addl. Commissioners of Customs (EDI), Mumbai Custom House]

(c) Numbering of Cartons serially – Problems in respect of multiproduct consignments originating from different locations.
While preparing invoices in respect of export consignments comprising more than one product, the cartons are given separate serial Nos. for each product. For example, in a consignment of two products each comprising of ten cartons, to ensure correct identity at the time of examination, the cartons are numbered one to ten for one product and again as one to ten for another. However, the EDI system as it operates presently, requires numbering all the cartons sequentially as one to twenty. At the time of examination if the sample from, say, carton no. 16 is called for which is non-existent as per the numbering followed by the shipper, problems arise.

Further, in case products in a multi product consignment originate from factories at different locations, the numbering of consignments in the shipping bill has also to correspond to the numbering followed in the ARE 1 for the purpose of satisfying the Central Excise Authorities.

In view of the above, numbering the cartons serially, as is to be followed under the existing EDI system, is problematic. While the position is explained to the operating officers who also understand and appreciate the position, the matter becomes subjective each time. It is, therefore, necessary to allow numbering the cartons serially for each export product in a consignment separately rather than sequentially for all products. The system also needs to be modified accordingly.

It was stated that it is not possible to provide for all contingencies in the EDI system. However in the present case the problem could be resolved if the exporter trader allots serial numbers to various factories from where he is procuring the goods for export. This will ensure that the entire consignment is serially numbered without any duplication.

IV. Points by SRTEPC
(a) Problems faced by exporters of High Value Fabrics:
It has been brought to our notice by exporters of High Value Fabrics that during examination procedure certain portion of fabrics are cut and taken out by the concerned examining officer for the purpose of testing. These fabrics are costly items and are tailor-made as per specifications and requirements of the overseas buyers. And when it is cut partially it becomes unsuitable for the buyer and as a result such items are rejected. For example one mtr. fabric is taken out from every consignment. If piece length packed are of 6 mtrs, it becomes 5 mtrs after cutting and therefore not useful to the buyer.

Acknowledging the need for examination and testing of items meant for exports by customs, it is suggested that one full piece may be drawn from export cargo for testing and exporters may be advised to bring one extra piece for the purpose so that the procedure followed by Customs in this regard becomes exporter-friendly.

(b) Difficulties faced by exporters of Made-up items:
As mentioned in point No. 1, exports of made-up items also face similar problems. In this case, during examination procedure, certain number of made up items are taken out by the concerned examining officer for the purpose of testing. As a result, the overseas buyer finds shortage in quantity and deducts some amount from the exporter’s invoices. This also damages the image of our country as a reliable supplier in the overseas markets.

It is suggested that exporters may be advised to bring extra pieces of samples of items covered under shipping Bills which can be used to replenish when samples are drawn out for the purpose of testing by the concerned Officer.

Points (a) and (b) - It was explained that the samples should be representative and as such it is not possible or desirable to allow any additional quantity, outside the consignment, to be accepted as sample. It was further stated that the samples are rarely being drawn by Customs. However if the trade notices that excessive quantity of the samples are being drawn the same should be brought to the notice of the Assistant Commissioner.

[Action : Synthetic & Rayon Textile Processing Committee]

(c) Price Verification by JPC:
From time to time, Customs Department sends samples of textile items to JPC for verification of the value declared on the Shipping Bill. In such cases, exporters are required to furnish documentary evidences such as raw material invoices, labour charge bill etc. Invariably, in all the cases prices are reduced by JPC for the purpose of DEPB or DBK. However, although the declared value is reduced, no justification is given for such reduction.

It is suggested that JPC, in their orders on prices, should also give sufficient reason to justify their decision.

It was agreed to that JPC would give reasons for its decision and calculations made by it will be disclosed.

[ Action : The Commissioner of Customs (Imports), Air Cargo Complex ]

V. In addition to the above points received for discussion, the following points were raised.
(a) Points by Shri Rajiv Gupta
Shri Rajiv Gupta stated that he has raised certain points vide its letter dated 03.06.2002 for the monthly Open House meeting.
It was stated that he may advise his importers, to whom he represent, to meet any of the representatives of the trade associations, who are member of the Open House Meeting, so that their points are internally discussed in the Trade Association before it is brought to this house for discussion. He was advised that in future he should route his points through any of the Trade Associations, who is member of the Open House Meetings.

(b) Points by Bombay Custom House Agent’s Association
It was stated that the officers of the Customs in the Dock have not been provided with the telephone connection as a result the Trade Association, Importers and Exporters are not able to communicate with them.

The representative of the Mumbai Port Trust stated that user exchange connection would be provided to Customs Officers stationed at various locations in Mumbai Port.

[ Action : Mumbai Port Trust,
The Commissioners of Customs (Export Promotion) Mumbai Custom House,
The Commissioners of Customs (Imports), Mumbai Custom House]

(c) Issue of Public Notice relating to Transfer Release Advice.
It was informed that the Public Notice issued on Transfer Release Advice is being modified. The modified draft Public Notice was read out in the meeting and the various Associations unanimously agreed with the same.

[ Action : All Commissioners of Customs]

4. The next meeting will be held on 4th August 2003 at 15.30 hours. Points for the said meeting be sponsored by 25th July 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 & Zone-III
2. All Commissioner of Customs, Mumbai Zone-I & II
3. The Additional Commissioner of Customs (EDI), Mumbai – for Website display.

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