Customs - Technical Matters: (1) Our reference No. 100411 dated 10.10.10
(2) 070403 dt. 01.07.2010  100405 dt 1.11.11
Grievance in brief
Our Ref. No.100405 Dated 1.11.11.
Subject: Exploitation of the consumers and Evasion of huge Duties on import of packaged commodities made possible by Customs Shed officials allowing pasting of individual stickers or without implementing any of the provisions of Legal Metrology Act 2009 read with provisions of the Legal Metrology (Packaged Commodities) Rules, 2011.
1. The subject matter is brought to the notice of the CBEC that Section 18 (1) states that “It shall be illegal to manufacture, pack, sell, import, distribute, deliver, offer, expose or possess for sale any pre-packaged commodity unless the package is in such standard quantities or number and bears thereon such declarations and particulars in such manner as may be prescribed.” and Rule 6(3): of LM(PC) Rules, 2011 specifies that “It shall not be permissible to affix individual stickers [labels] on the package for altering or making declaration required under these rules.”
2. The imported packages are intentionally pasted with removable individual labels which after customs clearance are removed and replaced with another sticker to sell at higher MRP and also to get any one or more of the following benefits. (a) The importer pays only a pittance of the duty by pasting a label declaring very low MRP which he replaces with another after clearance. There is huge loss of revenue to government in Customs Duty CVD and VAT even to the extent of 2000 percent. Benefited by the low tax incidence the frauds put up a tough competition against the fair trader of indigenous products by selling at lower price and eventually push the indigenous manufacturing industries to down their shutters.(b) False description of goods or false Country of Origin are declared on individual MRP labels and pasted on packages to overcome import licensing restrictions. This also helps the frauds to evade Anti Dumping Duty. These consignments often get facilitated in the RMS without any assessment examination or inspection.(c) Smuggled or spurious goods are pasted with bogus MRP stickers and sold in the market as if they are imported or genuine goods thereby cheating consumers.
3. Further there is no mechanism to check whether the same individual MRP stickers pasted on the packages at the time of Customs Clearance continue to be there on the package at the time of sale. The month and year of import mentioned in such labels is insufficient to conclusively prove that the packages were imported under a particular Bill of Entry. Taking advantage of this, many traders are engaged in this fraud by making the declaration on a sticker, paste it on the package, get customs clearance and then replace it with another label with whatever details they wish before putting up for sale.
4. Customs Shed officers should stop granting clearance of import packages on which the declaration is made by pasting individual stickers or labels contrary to law. Since import of packaged goods in contravention of Sec. 18(1) ibid is a prohibition under the Customs Act, 1962, all such goods are liable to be absolutely confiscated. Suitable instructions may please be issued to the Customs field officials in the interest of the government exchequer and in order to safeguard the interest of the consumers at large. We shall be much obliged if a line in reply is received from you.
from firstname.lastname@example.org via nic.in
date Tue, Nov 1, 2011 at 9:47 PM
subject Online Grievance registration
Your Grievance has been registered vide Registration number CBOEC/E/2011/01065
Please quote the same in your future correspondence.
Your Registration Number is : CBOEC/E/2011/01065
(2) Section 28 C of Customs Act, 1962 needs to be amended:
01. A lacuna is noticed in the wording of s.28C of the Customs Act, 1962 because of the phrase ‘ at the time of clearance of the goods’. S. 12 A of the Central Excise Act, 1944 and s.28 C of the Customs Act, 1962 were inserted simultaneously, and are worded almost similarly though the word clearance has different connotations in Central Excise and Customs. Central Excise assessees prepare sale invoices commonly known as Central Excise Invoice on strength of which the goods are cleared out of the factory whereas the importer gets the goods on customs clearance. Sale, if any of the imported goods does not happen at the time of clearance but only after the customs out of charge is granted. As such s.28 C needs to be amended to read as ‘Notwithstanding anything contained in this Act or any other law for the time being in force, every person who is liable to pay duty on any goods shall, prominently indicate in all the documents relating to assessment, sales invoice, and other like documents, the amount of such duty which forms part of the price at which such goods are sold.’
02. In this regard, in the interest of the government, we submit the following grievance also.
03. Importers who apply for refund of Special Additional Duty - SAD are required to enclose sales invoices and other documents. On account of the Explanation to the definition ‘retail sale price’ in the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and under s.4A of the Central Excise Act, 1944 that the maximum price shall include all taxes - in respect of refund of import duty of SAD paid on (1) goods covered under RSP based assessment and (2) packaged products on which MRP is to be declared as per the Standards of Weights and Measures Packaged Commodities Rules, 1977 read with DGFT Notification No. 44 dated 24th November 2000, sale invoices to the ultimate consumer has to be enclosed. However, the importers do not actually enclose any sales invoice with the Refund Application for SAD as required under Serial No. 9 (g)of Customs Series Form No. 102 Part A.
04. Even though CBEC has not issued any instruction exempting the requirement of s.27(1)b, s.28C or s.28D, the field officers ignore the statutory condition which was brought about after persistent effort and debate. It had been quite a long journey that made the Audit Para to take shape as s. 28 C of the Customs Act, 1962 and s. 12 A of the Central Excise Act, 1944. The whole effort of the Audit and the PAC has become futile. Kind attention is drawn to the debate in the Lokh Sabha at the time of insertion of s. 12 A of the Central Excise Act, 1944 and s.28 C of the Customs Act, 1962 which is readily available in the website parliamentofindia.nic.in. However, till date ineligible persons are receiving the refunds without enclosing sales invoices wherein the duty element is declared. Customs has to return such application to the applicant, pointing out the deficiency as per instructions contained in Para 3 of Chapter 15 of CBEC Customs Manual. But the field officers issue acknowledgements as if the sale invoices were enclosed with the application and ultimately make huge ineligible refunds of SAD neglecting the statutory requirement of s.27(1)b, s.28C and the presumption of s.28D.
05. The law enforcement officials are expected to abide by law in implementing it. We hope your honour would countenance the above as worthy matters for issue of suitable instructions to the authorities for urgent action. We shall be much obliged if we are notified with the action taken please.
Response received from Government
Registration No. DORVU/E/2010/00070
It does not pertain to Revenue Headquarter.Deptt. of Revenue.
Current Status: Closed.
Date of Action: 2 Jul 2010
(1) Baggage Declaration - Different versions - authority:
1. Customs Series Form No. 37 Form of Baggage Declaration is prescribed u.s. 81 of the Customs Act, 1962.
2. Para 3 of Form No.37 says that no free allowance will be granted unless the quantities and value of the articles are declared fully. But duty exemption benefit is extended to air passengers who declare only the No.of packages and value.
3. Proviso in Para 3 says that the articles are not for sale. Whether the relaxation contained in Circular No. 63_95-Cus. F.No. 605_74_95- DBK dated 7-6-95 is available for regular passengers also. If so the CBEC instruction reference No. may please be provided to us.
4. Para 4 says that the items listed therein in limited quantities are entitled for exemption. Moreover it is required that personal effects not listed must also be fully declared.
5. Para 5 says that duty is charged on the value of the goods in India including cost of importation.
6. There is an instruction that the description of goods has to be filled up by the passenger under Column 1 of the Baggage Declaration.
7. Articles not belonging to the passenger or which are for sale etc. are required to be declared separately.
However shorter versions of declarations are being used where the above instructions are not followed and the information are not declared. We are not able to locate in the CBEC website the authority under which these shorter versions are notified or whether the Form No.37 is modified or cancelled. The information may please be provided to us so that the authority may be noted in our Guide to the Customs Manual published as a service to the public and officers in our website www.rightinformer.com.
Response received from Government
Status as on 30 Sep 2011
Registration Number :CBOEC/E/2010/00495
Name Of Complainant :Right Information International Forum
Date of Receipt : 11 Oct 2010
Received by : Central Board of Excise and Customs
Forwarded to : Joint Secretary Customs, CBEC
Officer name : Shri S M Bhatnagar
Officer Designation :Joint Secretary
Contact Address :CBEC, Department of Revenue, North Block, New Delhi110002
Contact Number : 011-23092978
Current Status : UNDER PROCESS
Date of Action : 20 Jan 2011