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Leg up for exports: Government plans green channel clearance facility for traders
September, 08th 2011

A new green-channel customs facility that will allow hassle-free and expeditious clearance of India's $600-billion trade will be in place soon, helping bring down transaction costs for traders.

Consignments will be cleared by customs officials based on self declaration by traders after payment of duties, a system followed in many countries, including China.

In the current system an inspector verifies the cargo, decides the duty and finally clears it, making the process cumbersome and prone to abuse. As with any self assessment system, the new regime will have stringent rules and random checks to prevent abuse.

"The idea is to move towards a trust based customs control... Risk-based techniques have to be fine-tuned to meet this objective," said a finance ministry official. India Inc has frequently complained about the high trade-specific transaction costs that impact their global competitiveness.

A task force, set up the commerce ministry earlier had monetized transaction costs at $12-15 billion, which was around 7-10% of total exports valued at $160-165 billion in 2009-10. Exporters in South East Asia and China face much lower transaction costs of about 3%-3.5% of their exports, negating some of the advantages that India enjoys such as cheap labour.

The government had in the last budget introduced the provision of "self assessment" that had put the onus of filing the correct declaration on the trader.

The CBEC has now directed customs officials that declaration filed by an importer or exporters will be verified by an officer only when it is picked up by the risk management system.

In cases where there is no system generated alert, or interdiction in technical terms, there will be no cause for the declaration filed by the importer to be taken up for verification and such bills of entry could be straightaway facilitated for clearance without assessment and examination, on payment of duty, if any.

"If the self-assessment is found to be incorrect, the duty may be reassessed," a CBEC circular said. The reassessed duty will include penalty and the assessing officer will have the right to open declarations going back five years.

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