Coordinate when aiming to reform

Last November, the Central Board of Excise and Customs (CBEC) instructed Electronic Data Interchange (EDI) enabled Customs Houses to do away with printing of the exchange control copy of a shipping bill (SB) and the export promotion copy.

This caused some difficulties. The Customs House at Navi Mumbai’s Jawaharlal Nehru port (JNCH) has since clarified a few issues but exporters still face some unnecessary problems.

CBEC Circular 55 dated November 23, 2016, said one way to make cargo clearance easier was to reduce the use of paper and to introduce electronic messaging and paperless processing. After the Appraiser grants an LEO (Let Export Order) in the system, a printout of the SB is generated in triplicate, i.e (i) customs copy (ii) exporter’s copy (iii) exchange control copy. The fourth, an ‘export promotion copy’, is generated after sending the Export General Manifest (EGM).

Further, with regard to the SB, it said: (a) a detailed copy is not required by the Authorised Dealer (AD). It is enough if a summary copy is printed (b) CBEC provides copies of a digitally signed SB to the Directorate General of Foreign Trade (c) the SB data is integrated with the EDPMS (Export Data Processing and Monitoring System) of the Reserve Bank (RBI). Given all this, said CBEC, printing of the exchange control copy and export promotion copy does not serve any useful purpose.

The trade represented that only two copies of the SB then remain: (i) Customs copy and (ii) exporter copy. The former is retained by the Customs after issue of the LEO. The exporter gives its copy to the shipping line as proof of Customs clearance. That document is again sent to the Customs by the shipping line as part of the Export General Manifest (EGM).

So, the exporter is left with no copy of the SB for his record, audit and other business purposes. In any case, when the SB is processed in the system, all the details relating to clearances, including the LEO ones, are available in it and can be referred to. Therefore, no useful purpose is served by the Customs retaining the ‘customs copy of SB’. So, JNCH has now decided that Customs will not retain this ‘customs copy of SB’ at the time of issue of LEO. That should be given by the exporter to the shipping line as proof of Customs clearance. Which in turn will be given by the shipping line to Customs as part of the EGM. The exporter may retain the exporter copy of the LEO for records or future reference or later audit, etc.

The problem, however, is that the RBI Master Direction on ‘Export of goods and services’ still requires the exporter to send the duplicate of the exchange control copy of the SB to the Authorised Dealer (AD) within 21 days of export. So, the exporters pressurise the Customs Brokers to make a special request to the Customs to get the exchange control copy. CBEC has said that printouts may be provided on demand, if the exporter insists. However, this increases unnecessary work, rather than improving the ‘ease of doing business (EDB).’

CBEC and RBI should coordinate better. RBI should modify its Master Directions immediately and instruct the AD to accept a summary copy of the SB from Customs and proceed with accepting the export documents from the exporter. That will better serve EDB objective.