Faceless Assessment Scheme in Customs to Help India in Ease of Doing Business Rankings

The government of India introduced various measures to increase the ease of doing business in India. Based on its international commitments, amongst many other measures, Faceless Assessment is the latest one.

India is ranked 63 among 193 global economies in the ease of doing business. This ranking is indexed according to the latest World Bank annual ratings. In 2019 the rank of India improved to 63 from 77 which was in 2018.

The ranking of ease of doing business index amongst countries against each other is based on:

• How far the regulatory environment is conducive to business operations, and
• Protection of property rights.

Central Board of Indirect Taxes and Customs (CBIC)

CBIC is a wing of the Department of Revenue functioning under the Ministry of Finance.

Earlier it was known as The Central Board of Excise and Customs (CBEC). Then, after the introduction of Goods and Services Tax (GST), it was renamed the Central Board of Indirect Taxes and Customs (CBIC) in 2018.  

“Turant Customs“

To increase ‘ease of doing business’ CBIC introduced “Turant Customs” program in India. It aims for the reduction of direct interference of taxmen with the tax-payee.

The kay elements of Turant Customs program are faceless, contactless, and paperless customs clearance process. 

This includes:

• faceless or anonymized assessment,
• self-registration of goods by importers,
• automated clearance of Bill of Entry, and
• digitization of Customs documents.

Faceless Assessment of cargo is part of the initiative “Turant Customs”. It is aimed at the speedy clearance of goods at air and seaports. In turn, it will benefit the ease of doing business in India.

Objectives of Faceless Assessment

The objective of Faceless Assessment is to make the customs clearance process in India a world-class experience.

It aims for reducing the dwell time of cargo. Consequently, it improves the competitiveness of business

Speedy and uniform assessment practice is the main objective of the Faceless Assessment.

The scheme seeks to eliminate the human interface between the taxpayer and the department.

Faceless Assessment is a measure highlight approach of the Board towards ensuring ease of doing business.

Faceless Assessment will do away with lag in clearance time and bring in uniformity in assessment, which will boost India’s ease of doing business ranking.

The introduction of Faceless Assessment is certainly a paradigm shift. With this, the CBIC aims to help India become one of the top 50 countries in the World Bank’s ease of doing business rankings.

The benefit of Faceless Assessment includes it indeed supports the Paperless and Contactless Customs clearance processes, which is a notable reform.

Reforms Before Faceless Assessment

Earlier, in India, when goods were imported, it was assessed for customs duty by the jurisdictional customs officers based on physical documents.

In 2005, the Board introduced the Risk Management System (RMS). This system enables a major portion of the cargo to be cleared through the green channel. Assessment and examination were also proposed for risk-prone cargo under this system.

The Customs Act was amended in 2011 to introduce the concept of a self-assessment system.  Accordingly, the assessment was done by importers or exporters themselves, and physical checks by customs officers.

Principles Concerning Faceless Assessment

Faceless Assessment is a mega reform for the ease of doing business in India. The program has been launched in Bengaluru and Chennai as a first phase. All India roll out which will be completed by 31^st December 2020.

Faceless Assessment made a vibrant entry into the area of customs duty after successfully introduced the said scheme in the income tax system in India.

Under the Faceless Assessment, the assessing officer is the proper officer under S. 17 and 18 of the Customs Act, 1962. The customs automated system assigns the proper officer for assessment of the Bill of Entry.

This proper officer may, physically located in a different jurisdiction other than the port of import. The scheme empowered him to assess the bill of entry of the import made at a different custom station or port of import.

With the introduction of faceless assessment, for the verification of self-assessment, the customs department proposes to replace physical interaction with an online interface

Faceless Assessment is expected to be a gamechanger in the post covid era. It could also become the new standard procedure in customs assessment.

Legal Provisions Regarding Faceless Assessment

CBIC has initiated numerous measures to facilitate the customs clearance process and reduce transaction costs.

• CBIC issued a circular no. 28/2020 dated 5^th June 2020 for 1^st phase of All India roll-out of Faceless Assessment.
• Circular no. 34/2020 dated 30^th July 2020 for 2^nd phase of All India roll-out of Faceless Assessment.
• Circular no. 40/2020 dated 4^th September 2020 for all India roll-out of Faceless Assessment at all ports of Import for all import goods in phase-wise.

National Assessment Centres (NACs)

Circular no. 28 as stated above made provisions for the formation of National Assessment Centres (NACs). NSAs are constituted with the mandate to monitor the assessment of imported articles across Customs stations. They are also empowered to suggest measures to bring about uniformity and enhanced the quality of assessments.

The Board has constituted 11 National Assessment Centres (NACs) across India. Each NAC shall be headed by the Principal Chief Commissioners or Chief Commissioners of the Zones as the case may be.

A nodal Principal Commissioners or Commissioners shall be nominated for each NAC. The Principal Chief Commissioners or Chief Commissioners, having jurisdiction over the Zones nominate the above nodal officers.  

Accordingly, specific Principal Commissioners or Commissioners of Customs would act as Nodal officers. The NACs have a significant role in the successful implementation of Faceless Assessment.

The Faceless Assessment guidelines mandate NACs to work in a coordinated manner. They are expected to ensure that all assessments are carried out on time. There should not be any scope for delay or hold up of the import cargo.

The NACs would also oversee the assessment of imported goods across customs stations. This is to bring about uniformity and enhanced the quality of assessments.

Where a necessity to physically examine the imported goods, the NAC can seek the help of jurisdictional port Commissionerate in the respective custom stations.

According to Circular no. 40/2020 dated 4^th September 2020, the important responsibilities of the NACs shall include the following:

1. Monitor the assessment practice for enhancing uniformity of classification, valuation, exemption benefit, and compliance with import policy conditions.
2. Assess the application of Compulsory Compliance Requirements (CCRs) and ensure uniform practices as per the relevant Statutes/Legal provisions.
3. Study audit objections and take corrective actions regarding assessments, wherever necessary and provide inputs to the concerned ports of import.
4. Analyze the RMS facilitated Bills of Entry of Chapters falling under their purview and advise the Directorate General of Analytics and Risk Management regarding possible interventions or review of risk parameters.
5. Liaise with Principal Commissioner or Commissioner of Customs as the case may be at ports of import about interpretational issues on classification, valuation, the scope of exemption notifications, and trade policy conditions.
6. Interact with sectoral trade and industry for inputs, and on issues relating to assessment.
7. Function as a knowledge hub or repository for those particular Chapters;
8. Examine the orders or appellate orders concerning the assessment of goods assigned to each Faceless Assessment Group and provide inputs to the Commissionerate for uniformity of assessment orders before legal fora.
9. Constitute Working Groups for matters relating to:
10. Monitoring for timely assessment of Bills of Entry
11. Valuation and related issues
12. Classification and related issues
13. Restrictions and prohibitions and Co-ordination with PGAs
14. Communication and coordination for departmental officers and trade
15. Any other matter relevant to timely and uniform assessment, as may be decided.

Conclusion

The clearance of import/export cargo is a complicated process involving multiple agencies that include:

• Port authorities,
• Terminal operators,
• Transporters,
• Railways,
• Shipping lines,
• Container freight station operators, and
• Customs brokers representing importers and exporters.

Every single time, the interests of the stakeholders are not fully in line with the goal of speedy clearance of cargo. By the introduction of Faceless Assessment in Indian Customs, the object of speedy clearance of cargo will increase rapidly. Conversely, it is going to increase India’s ranking in ease of doing business.