Guidelines regarding Provisional Assessment under Section 18 of the Customs Act, 1962.

OFFICE OF THE COMMISSIONER OF CUSTOMS (NS –I,III&V) JAWAHARLAL NEHRU CUSTOM HOUSE, NHAVA SHEVA, URAN, DIST: RAIGAD, MAHARASHTRA – 400 707. E-mail: appraisingmain.jnchimp@gmail.com. Phone No.27244979

F.No.S/22-Gen-41/2014-15/AM(I)/JNCH Dated 06.09.2016

STANDING ORDER NO. 50 /2016

                  Sub: - Guidelines regarding Provisional Assessment under Section  
                             18 of the Customs Act, 1962. 

Attention of all the Staff members is invited to the Board’s Circular No. 38/2016- Customs dated 22.08.2016 on the above mentioned subject.

The Customs (Provisional Duty Assessment) Regulation 2011 issued under Notification No. 81/2011-Customs (NT) dated 25.11.2011 were reviewed by Board in view of references from the field formations regarding guidelines on the implementation of Regulation 2 (2) and Regulation 4.

Regulations 2 (2), 3 and 4 require three elements – namely, (a) deposit of 20% of the differential duty between “provisional duty” and duty to be “finally assessed or re- assessed”; (b) execution of a bond; (c) surety or security or both, as deemed fit.

ely, (a) deposit of 20% of the differential duty between “provisional duty” and duty to be “finally assessed or re- assessed”; (b) execution of a bond; (c) surety or security or both, as deemed fit.

3.1 Section 18 of the Customs Act, 1962 defines the cases where provisional assessment may be resorted, as under:

• (1) Notwithstanding anything contained in this Act but without
  prejudice to the provisions of Section 46-

(a) where the importer or exporter is unable to make self- assessment under sub-section (1) of Section 17 and makes a request in writing to the proper officer for assessment; or (b) where the proper officer deems it necessary to subject any imported goods or exported goods to any chemical or other test; or (c)
where the importer or exporter has produced all the necessary documents and furnished full information but the proper officer deems it necessary to make further enquiry; or (d) where necessary documents have not been produced or information has not been furnished and the proper officer deems it necessary to make further enquiry,

3.2 Further, Section 18 goes on to state how a provisional assessment is to be carried out:

nformation has not been furnished and the proper officer deems it necessary to make further enquiry,

3.2 Further, Section 18 goes on to state how a provisional assessment is to be carried out:

“the proper officer may direct that the duty leviable on such goods be assessed provisionally if the importer or the exporter, as the case may be, furnishes such security as the proper officer deems fit for the payment of the deficiency, if any, between the duty as may be finally assessed and the duty provisionally assessed.”

3.3 Thus, the provisions of section 18 of the Customs Act, 1962, require that in cases where goods are to be provisionally assessed: (a) the importer binds himself for the payment of deficiency, if any, between the duty as may be finally assessed and the duty provisionally assessed; and (b) furnishes such security as the proper officer deems fit for the payment of the deficiency. 3.4 In view of the requirement that the importer binds himself to pay the deficiency, if any, between the duty as may be finally assessed and the duty provisionally assessed, it would be necessary to obtain a bond for meeting the aforesaid condition. 3.5 Insofar as the requirement of obtaining a 20% deposit of the duty provisionally assessed, the Board has decided that this conditions be dispensed, particularly, as it necessitates following the procedure of refunds in cases where final assessment is in favour of the importer. Such requirements add to the transaction costs, lead to delays in clearance and detract from the ease of doing business.

re of refunds in cases where final assessment is in favour of the importer. Such requirements add to the transaction costs, lead to delays in clearance and detract from the ease of doing business. 3.6 It was also noted that Regulation 4 required that the importer should furnish such surety or security or both, as deemed fit, alongwith the Bond. In this connection, it was felt that acceptance of a surety requires making an evaluation of the underlying asset value or of the net worth of the person executing the same. This poses difficulties to the importers as well as administrative challenges to the Department in valuing sureties.
Therefore, the Board has decided that the requirement of security needs to be met b either obtaining a bank guarantee or a cash deposit, as convenient to the importer, and that no sureties shall be obtained. 3.7 In view of the aforesaid, the Board has rescinded “The Customs (Provisional Duty Assessment) Regulations 2011” vide Notification No. 113/2016-Cus (NT) dated 22nd August 2016 since section 18 itself lays down the procedure to be followed in the case of provisional assessment. The only issue which is required to be addressed in regarding the amount of security since section 18 requires the same to be obtained as “deemed fit” by the proper officer.

rovisional assessment. The only issue which is required to be addressed in regarding the amount of security since section 18 requires the same to be obtained as “deemed fit” by the proper officer. For the sake of uniformity of practice, transparency and predictability for the tax payer, the Board has decided that the following procedure and guidelines will be followed by all Customs stations while assessing goods provisionally: 3.8 Wherever, duty is to be assessed provisionally, the importer shall:

(a) for the purpose of undertaking to pay on demand the deficiency, if any, between the duty as may be finally assessed and the duty provisionally assessed, execute a bond in the prescribed form (enclosed); and (b) furnish such security for the payment of the duty deficiency, as indicated in para 4 below. 3.9 The security to be obtained shall be in the form of a bank guarantee or a cash deposit, as convenient to the importer. 4. The following guidelines shall be followed while obtaining security where provisional assessment under section 18 of the Customs Act is being undertaken:

Sl. No. Class of Importer Amount of Bank Guarantee or Cash deposit to be obtained as “security” of the differential duty Remarks 1. Imports by Authorised Economic Operators (AEO T3) 0% (Including cases at St. No.4 to 6b) In terms of Circular No. 33/2016-Customs dated 22nd July, 2016 as amended. 2. Imports by Authorised Economic Operators (AEO – T1 and AEO-T2) (excluding imports mentioned at Sl. No.3) (a) 0% (in terms of Sl.No.

33/2016-Customs dated 22nd July, 2016 as amended. 2. Imports by Authorised Economic Operators (AEO – T1 and AEO-T2) (excluding imports mentioned at Sl. No.3) (a) 0% (in terms of Sl.No. 5(b), 6(a) and 6 (b) (2) (b) 50% (for AEO-T1) or 25% (for AEO-T2) of the applicable bank guarantee or cash deposit specified at Sl.No.4, 5(a), 5(c) 6(b)(1) In terms of Circular No. 33/2016-Customs dated 22nd July, 2016 as amended. 3. Imports by Public Sector Undertakings/Government (Central/State/UT and their undertakings) 0% (including cases at Sl.No.4 to 6b)

Sl. No. Nature of Import Amount of Bank Guarantee or Cash deposit to be obtained as “security” of the differential duty Remarks 4. Cases referred to SVB As per Circular No. 5/2016- Customs dated 09.02.2016 issued from F.No. 465/12/2010-Cus V

5 (a) Cases related to verification of origin under FTAs based on the reasonable belief that the matter involves mis- declaration of origin/value addition 100% Based upon “Operational Certification Procedures” contained in the non- tariff notifications issued on Rules for determination of Origin. 5 (b) Cases selected on random basis for verification of origin. 0%

5 (c) Cases related to verification of signatures and seals under FTAs 100% Provided that the Principal Commissioner of Customs or the Commissioner of Customs may reduce the amount of security where there are goods and justifiable reasons to do so.

FTAs 100% Provided that the Principal Commissioner of Customs or the Commissioner of Customs may reduce the amount of security where there are goods and justifiable reasons to do so. 6 (a) Cases, where the importer is not able to make self- assessment and has sought provisional assessment. Not applicable As this such cases will be provisionally assessed by the proper officer as deemed fit 6 (b) Cases, where the proper officer deems it necessary to order a provisional

Provided that the Principal Commissioner of Customs or the

assessment, whether for the purposes of chemical test or requirement of information or causing inquiries: (1) Where differential duty has been estimated (2) Where, despite best efforts by the proper officer, differential duty can not be computed.

100%

0% Commissioner of Customs may reduce the amount of security where there are goods and justifiable reasons to do so.

N.A.

4.1 By way of a clarification, attention is also drawn to an earlier instruction of the Ministry contained in F.No. 511/7/77-Cus VI dated 09.01.1978, to the effect that the amount of security shall be determined on the basis of duty differential and not the CIF value of the goods. 4.2 It is also clarified that provisional assessments under section 18 are to be carried out with respect to cases where the duty is in dispute.

y differential and not the CIF value of the goods. 4.2 It is also clarified that provisional assessments under section 18 are to be carried out with respect to cases where the duty is in dispute. Cases relating to execution of a bond or undertaking specified as a condition to a notification or those requiring compliance of conditions under allied acts are not to be provisionally assessed under section 18 of the Customs Act. This position had been earlier clarified by the Ministry of Law and Justice and circulated vide Ministry F.No. 353/91/74-Cus dated 28th January 1977. 5. Difficulties, if any, may be brought to the notice of the undersigned.

                                                                                         Sd/- 
                                                                           (SHRAWAN KUMAR) 
                                                          COMMISSIONER OF CUSTOMS, NS-III 

Encl: Format of Bonds

Copy to:

1. The Pr. Chief Commissioner of Customs, Mumbai Zone-II
2. The Pr. Commissioner/All the Commissioner of Customs,Mumbai Zone-II
3. All Addl. /Joint Commissioner of Customs, Mumbai Zone-II
4. All Deputy/Asst. Commissioner of Customs Mumbai Zone-II
5. The DC/EDI for uploading on the JNCH Website

er of Customs,Mumbai Zone-II 3. All Addl. /Joint Commissioner of Customs, Mumbai Zone-II 4. All Deputy/Asst. Commissioner of Customs Mumbai Zone-II 5. The DC/EDI for uploading on the JNCH Website

Bond Individual Importation (With Bank Guarantee or Cash Deposit) (To be executed by the Importer of goods with bank guarantee/cash deposit under section 18 of the Customs Act, 1962 (52 of 1962) (Circular No. 38/2016-Customs dated 22.8.2016 issued from CBEC F.No.465/01/2016-Cus-V)

KNOW ALL MEN BY THESE PRESENTS THAT We M/s ______________________________ having our registered office located at ___________________________________ and holding Import-Export Code No.________________ hereinafter called the “Importer” (which expression shall include its successors/heirs, executors, administrators and legal representatives) are held and firmly bound unto the President of India hereinafter called the “President” (which expression shall include his successors and assigns) in the sum of Rs. _____________Rupees _____________________(Please fill amount in words) to be paid to the President for which payment well and truly to be made, we bind ourselves, our successors, heirs, executors, administrators and legal representatives firmly by these presents.

Sealed with our Seal(s) this _________ day of _____20.

o be made, we bind ourselves, our successors, heirs, executors, administrators and legal representatives firmly by these presents.

Sealed with our Seal(s) this _________ day of _____20.

WHEREAS the Assistant Commissioner of Customs/Deputy Commissioner of Customs at the ________________ (Place), (hereinafter called the “proper officer”) has agreed to make provisional assessment of the goods imported by us, pending submission of furhter documents and/or furnishing information and/or completion of furhter enquiries and/or chemical test and/or other test and the Proper Officer has agreed to allow provisional assessment of the goods mentioned in the schedule hereto annexed upon the importer agreeing to furnish such bond as is herein contained; and

WHEREAS the importer has deposited with the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, at _____________ (location),

a bank guarantee

or

a cash deposit

mentioned in the schedule hereunder for the due observance of and performance of the terms and undertakings on the part of the importer and for being applied in part or full towards the indemnity hereby given or otherwise according to law. (strike out whatever is not applicable)

NOW THE CONDITION of the above written bond is such that – (1) If the importer shall within _______ days or within such extended period as the Proper Officer may allow, produce such documents and furnish such information as may be called for by the Proper Officer, and

orter shall within _______ days or within such extended period as the Proper Officer may allow, produce such documents and furnish such information as may be called for by the Proper Officer, and

(2) If the importer pays to the President, the difference between the duty finally assessed and the duty provisionally assessed in respect of the imported goods and mentioned in the Schedule hereto annexed.
Then the above written bond shall be void and of no effect; otherwise the same shall remain in full force and virtue. AND IT IS HEREBY AGREED AND DECLARED by the importer as follows:- 1. This bond and cash deposit/bank guarantee are given under the orders of the Central Government for the performance of an act which is in public interest. 2. The President through the [Deputy Commissioner/Assistant Commissioner of Customs] or other officer may recover the said sum of Rs. _____________ in the manner laid down in Section 142 of the Customs Act, 1962 without prejudice to any other mode of recovery. IN WITNESS WHEREOF the importer has herein set and subscribed its hands and seals the day, month and years first above written.
SIGNED AND DELIVERED by and on behalf of the importer at ___________ (place) in the present of :-

(Signature of Authorised Signatory and Corporate Seal)

Witnesses: 1.

Accepted for and on behalf of the President of India (Signature of the Proper Officer)

) in the present of :-

(Signature of Authorised Signatory and Corporate Seal)

Witnesses: 1.

Accepted for and on behalf of the President of India (Signature of the Proper Officer)

Schedule to Bond (Individual Importation) (With Bank Guarantee or Cash Deposit) (To be executed by the Importer of goods with bank guarantee/cash deposit under section 18 of the Customs Act, 1962 (52 of 1962)

Bill of Entry No. Date Value at which provisionally assessed Bond Value Details of security deposit or bank guarantee which ever is applicable Remarks (attach bank guarantee/cash deposit receipt in original) Signature/date/name/ designation of officer making the entry (1) (2) (3) (4) (5) (6) (7)

Bond Individual Importation (Without Bank Guarantee or Cash Deposit) (To be executed by the Importer of goods without bank guarantee/cash deposit under section 18 of the Customs Act, 1962 (52 of 1962)

KNOW ALL MEN BY THESE PRESENTS THAT We M/s ______________________________ having our registered office located at ___________________________________ and holding Import-Export Code No.________________ hereinafter called the “Importer” (which expression shall include its successors/heirs, executors, administrators and legal representatives) are held and firmly bound unto the President of India hereinafter called the “President” (which expression shall include his successors and assigns) in the sum of Rs.

ors and legal representatives) are held and firmly bound unto the President of India hereinafter called the “President” (which expression shall include his successors and assigns) in the sum of Rs. _____________Rupees _____________________(Please fill amount in words) to be paid to the President for which payment well and truly to be made, we bind ourselves, our successors, heirs, executors, administrators and legal representatives firmly by these presents.

Sealed with our Seal(s) this _________ day of _____20.

WHEREAS the Assistant Commissioner of Customs/Deputy Commissioner of Customs at the ________________ (Place), (hereinafter called the “proper officer”) has agreed to make provisional assessment of the goods imported by us, pending submission of furhter documents and/or furnishing information and/or completion of furhter enquiries and/or chemical test and/or other test and the Proper Officer has agreed to allow provisional assessment of the goods mentioned in the schedule hereto annexed upon the importer agreeing to furnish such bond as is herein contained; and

NOW THE CONDITION of the above written bond is such that – (1) If the importer shall within _______ days or within such extended period as the Proper Officer may allow, produce such documents and furnish such information as may be called for by the Proper Officer, and (2) If the importer pays to the President, the difference between the duty finally assessed and the duty provisionally assessed in respect of the imported goods and mentioned in the Schedule hereto annexed.

e importer pays to the President, the difference between the duty finally assessed and the duty provisionally assessed in respect of the imported goods and mentioned in the Schedule hereto annexed.
Then the above written bond shall be void and of no effect; otherwise the same shall remain in full force and virtue. AND IT IS HEREBY AGREED AND DECLARED by the importer as follows:- 1. This bond is given under the orders of the Central Government for the performance of an act which is in public interest.

The President through the [Deputy Commissioner/Assistant Commissioner of Customs] or other officer may recover the said sum of Rs. _____________ in the manner laid down in Section 142 of the Customs Act, 1962 without prejudice to any other mode of recovery. IN WITNESS WHEREOF the importer has herein set and subscribed its hands and seals the day, month and years first above written.
SIGNED AND DELIVERED by and on behalf of the importer at ___________ (place) in the present of :-

(Signature of Authorised Signatory and Corporate Seal)

Witnesses: 1.

Accepted for and on behalf of the President of India (Signature of the Proper Officer)

) in the present of :-

(Signature of Authorised Signatory and Corporate Seal)

Witnesses: 1.

Accepted for and on behalf of the President of India (Signature of the Proper Officer)

Schedule to Bond (Individual Importation) (Without Bank Guarantee or Cash Deposit) (To be executed by the Importer of goods without bank guarantee/cash deposit under section 18 of the Customs Act, 1962 (52 of 1962)

Bill of Entry No. Date Value at which provisionally assessed Bond Value Remarks (if any) Signature/date/name/ designation of officer making the entry (1) (2) (3) (4) (5) (6)

Continuity Bond (With Bank Guarantee or Cash Deposit) (To be executed by the Importer of goods with bank guarantee/cash deposit under section 18 of the Customs Act, 1962 (52 of 1962)

KNOW ALL MEN BY THESE PRESENTS THAT We M/s ______________________________ having our registered office located at ___________________________________ and holding Import-Export Code No.________________ hereinafter called the “Importer” (which expression shall include its successors/heirs, executors, administrators and legal representatives) are held and firmly bound unto the President of India hereinafter called the “President” (which expression shall include his successors and assigns) in the sum of Rs. _____________Rupees _____________________(Please fill amount in words) to be paid to the President for which payment well and truly to be made, we bind ourselves, our successors, heirs, executors, administrators and legal representatives firmly by these presents.

rds) to be paid to the President for which payment well and truly to be made, we bind ourselves, our successors, heirs, executors, administrators and legal representatives firmly by these presents.

Sealed with our Seal(s) this _________ day of _____20.

WHEREAS the Assistant Commissioner of Customs/Deputy Commissioner of Customs at the ________________ (Place), (hereinafter called the “proper officer”) has agreed to make provisional assessment of the goods imported from time to time by us, pending submission of furhter documents and/or furnishing information and/or completion of furhter enquiries and/or chemical test and/or other test and the Proper Officer has agreed to allow provisional assessment of the goods mentioned in the schedule hereto annexed upon the importer agreeing to furnish such bond as is herein contained; and

WHEREAS the importer has deposited with the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, at _____________ (location),

a bank guarantee

or

a cash deposit mentioned in the schedule hereunder for the due observance of and performance of the terms and undertakings on the part of the importer and for being applied in part or full towards the indemnity hereby given or otherwise according to law.

e due observance of and performance of the terms and undertakings on the part of the importer and for being applied in part or full towards the indemnity hereby given or otherwise according to law. (strike out whatever is not applicable)

NOW THE CONDITION of the above written bond is such that – (1) If the importer shall within _______ days or within such extended period as the Proper Officer may allow, produce such documents and furnish such information as may be called for by the Proper Officer, and

(2) If the importer pays to the President, the difference between the duty finally assessed and the duty provisionally assessed in respect of goods imported from time to time and mentioned in the Schedule hereto annexed.
Then the above written bond shall be void and of no effect; otherwise the same shall remain in full force and virtue. AND IT IS HEREBY AGREED AND DECLARED by the importer as follows:- 1. This bond and cash deposit/bank guarantee are given under the orders of the Central Government for the performance of an act which is in public interest. 2. The President through the [Deputy Commissioner/Assistant Commissioner of Customs] or other officer may recover the said sum of Rs. _____________ in the manner laid down in Section 142 of the Customs Act, 1962 without prejudice to any other mode of recovery. 3.

oner of Customs] or other officer may recover the said sum of Rs. _____________ in the manner laid down in Section 142 of the Customs Act, 1962 without prejudice to any other mode of recovery. 3. This bond and the cash deposit/bank guarantee shall remain in force from the date hereof and the obligation and liability of the importer shall be a continuing one in respect of all goods imported from time to time by the importer between the period of ____________ and the payment by the importer of the difference between the duty finally assessed and the duty provisionally assessed in respect of the goods imported from time to time. IN WITNESS WHEREOF the importer has herein set and subscribed its hands and seals the day, month and years first above written.
SIGNED AND DELIVERED by and on behalf of the importer at ___________ (place) in the present of :-

(Signature of Authorised Signatory and Corporate Seal)

Witnesses: 1.

Accepted for and on behalf of the President of India (Signature of the Proper Officer)

) in the present of :-

(Signature of Authorised Signatory and Corporate Seal)

Witnesses: 1.

Accepted for and on behalf of the President of India (Signature of the Proper Officer)

Schedule to Continuity Bond (With Bank Guarantee or Cash Deposit) (To be executed by the Importer of goods with bank guarantee/cash deposit under section 18 of the Customs Act, 1962 (52 of 1962)

Bill of Entr y No. Dat e Value at which provisiona lly assessed Bon d Valu e Balan ce of bond value Details of security deposit or bank guarante e which ever is applicabl e Balance of security deposit or bank guarantee which ever is applicable Remarks (attach bank guarantee/ cash deposit receipt in original Signature/date/ name/ designation of officer making the entry (1) (2) (3) (4) (5) (6) (7) (8) (9)

Continuity Bond (Without Bank Guarantee or Cash Deposit) (To be executed by the Importer of goods without bank guarantee/cash deposit under section 18 of the Customs Act, 1962 (52 of 1962)

KNOW ALL MEN BY THESE PRESENTS THAT We M/s ______________________________ having our registered office located at ___________________________________ and holding Import-Export Code No.______________ hereinafter called the “Importer” (which expression shall include its successors/heirs, executors, administrators and legal representatives) are held and firmly bound unto the President of India hereinafter called the “President” (which expression shall include his successors and assigns) in the sum of Rs.

ors and legal representatives) are held and firmly bound unto the President of India hereinafter called the “President” (which expression shall include his successors and assigns) in the sum of Rs. _____________Rupees _____________________(Please fill amount in words) to be paid to the President for which payment well and truly to be made, we bind ourselves, our successors, heirs, executors, administrators and legal representatives firmly by these presents.

Sealed with our Seal(s) this _________ day of _____20.

WHEREAS the Assistant Commissioner of Customs/Deputy Commissioner of Customs at the ________________ (Place), (hereinafter called the “proper officer”) has agreed to make provisional assessment of the goods imported from time to time by us, pending submission of furhter documents and/or furnishing information and/or completion of furhter enquiries and/or chemical test and/or other test and the Proper Officer has agreed to allow provisional assessment of the goods mentioned in the schedule hereto annexed upon the importer agreeing to furnish such bond as is herein contained;

test and the Proper Officer has agreed to allow provisional assessment of the goods mentioned in the schedule hereto annexed upon the importer agreeing to furnish such bond as is herein contained; and

NOW THE CONDITION of the above written bond is such that – (1) If the importer shall within _______ days or within such extended period as the Proper Officer may allow, produce such documents and furnish such information as may be called for by the Proper Officer, and (2) If the importer pays to the President, the difference between the duty finally assessed and the duty provisionally assessed in respect of goods imported from time to time and mentioned in the Schedule hereto annexed.
Then the above written bond shall be void and of no effect; otherwise the same shall remain in full force and virtue. AND IT IS HEREBY AGREED AND DECLARED by the importer as follows:- 1. This bond is given under the orders of the Central Government for the performance of an act which is in public interest. 2. The President through the [Deputy Commissioner/Assistant Commissioner of Customs] or other officer may recover the said sum of Rs. _____________ in the manner laid down in Section 142 of the Customs Act, 1962 without prejudice to any other mode of recovery.

ssioner of Customs] or other officer may recover the said sum of Rs. _____________ in the manner laid down in Section 142 of the Customs Act, 1962 without prejudice to any other mode of recovery.

This bond shall remain in force from the date hereof and the obligation and liability of the importer shall be a continuing one in respect of all goods imported from time to time by the importer between the period of ____________ and the payment by the importer of the difference between the duty finally assessed and the duty provisionally assessed in respect of the goods imported from time to time. IN WITNESS WHEREOF the importer has herein set and subscribed its hands and seals the day, month and years first above written.
SIGNED AND DELIVERED by and on behalf of the importer at ___________ (place) in the present of :-

(Signature of Authorised Signatory and Corporate Seal)

Witnesses: 1.

Accepted for and on behalf of the President of India (Signature of the Proper Officer)

Schedule to Continuity Bond (Without Bank Guarantee or Cash Deposit) (To be executed by the Importer of goods without bank guarantee/cash deposit under section 18 of the Customs Act, 1962 (52 of 1962)

Bill of Entr y No. Dat e Value at which provisionally assessed Bon d Valu e Balance of bond value Remarks (if any) Signature/date/name/ designation of officer making the entry (1) (2) (3) (4) (5) (6) (7)