Undervaluing imports could trigger 1-2 years of extra obligations

Importers found to be under-declaring the value of shipments will face additional obligations for at least one year and no more than two years, for first instances of such violations, the Central Board of Indirect Taxes and Customs (CBIC) has proposed.

Following through on an announcement in this year’s Budget, the Board has also proposed a mid-term review of such obligations during this period, so as to determine if the extra burden on importers may be lifted earlier or extended further than initially announced.

To address the issue of undervaluation in imports, this year’s Finance Bill introduced amendments to the Customs Act of 1962 to empower the CBIC to impose additional obligations for importers for goods where it has ‘reason to believe that the value may not be declared truthfully or accurately’. The obligations for specific goods where such undervaluation is believed to be taking place, could entail extra checks and declarations for consignments of such goods. 

The examination of the evidence in each case and the period for which the obligations must be imposed, where the Board is convinced of malfeasance, will first be by undertaken by an evaluation committee that includes senior officials from the Directorates Generals of Valuation, Revenue Intelligence. Their conclusions will be reviewed by a screening panel before being taken up by the CBIC.

As per draft rules issued on Tuesday on which the CBIC has sought feedback till October 14, the Board shall identify goods for such probes based on ‘a written reference made to it electronically by any person having reason to believe that the value of any class of imported goods or subset thereof may not be declared truthfully or accurately’.

While private persons making such references will have to disclose their full identity and co-ordinates, Commissioners or Additional Director General-rank officers in the Customs department or a person representing any other Government department may also flag suspicions of goods being undervalued at the time of imports for availing lower customs duty charges.