CUSTOMS (VERIFICATION OF IDENTITY AND COMPLIANCE) REGULATIONS, 2021
Customs area according to the Customs Act, 1962 is defined as the area of a customs station [or a warehouse] and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities. On April 5, 2021, the Central Board of Indirect Taxes and Customs (CBIC) introduced the Customs (Verification of Identity and Compliance) Regulations, 2021. These regulations are to be applicable to Importers, Exporters and custom brokers who are newly engaged in import or export activity. The mandate furnishing of documents or information on Common Portal by person selected for verification of identity. However, these regulations will not apply to the Central and State Government and Public Sector Undertakings.
LEGAL HISTORY AND RECENT CHANGES
The regulations were introduced with the intent of simplifying and making the rules of custom more precise. Some of the most important key changes brought in by the regulations are:
- This regulation applies when the Commissioner of Customs selects any person who may have engaged in import or export activity or availed or claimed the benefits. These benefits include sanction of refund; sanction of drawback; exemption from duty or any benefit arising out of import or export or engaged as a Customs Broker in such activity or in availing or claiming such benefits prior to the commencement of these regulations..
- The person selected should be informed about his selection immediately through the Common Portal or through such means as deemed appropriate by the Commissioner of Customs.
- The person selected for verification is required to furnish the following documents or information on the Common Portal within fifteen days of such intimation of selection-
1. Document of incorporation: (in case of persons other than individuals)
- In case of Limited Liability Partnership: Certification of Registration issued by Registrar and LLP Agreement
- In case of company: Certificate of Registration issued by Registrar and Memorandum of Understanding and Articles of Association
- In case of trusts or foundations: Certificate of Registration and Memorandum of Understanding and Articles of Association
- In any other case: any document evidencing constitution
2. Document evidencing appointment of authorised signatories, if applicable.
3. Permanent Account Number
4. GST Identification Number
5. Document such as bank statement, Income Tax Return etc. evidencing financial standing of the person:
- On furnishing of documents or information stipulated in sub-regulation, every individual, managing director, karta, whole time director, member of managing committee of association, partner, board of trustees, authorised representative, authorised signatory, shall, within the prescribed time, perform on the Common Portal:
1. authentication of Aadhaar; and
2. verification of Permanent Account Number
- Further, it has been provided that a person who is newly engaging in import or export activity after the commencement of these regulations shall furnish the said documents not later than thirty days of engaging in such activity.
- Further, it has been provided where the authentication of Aadhaar cannot be completed due to its non-assignment or technical reasons, the person to be verified shall furnish a notarised copy of valid passport or electoral photo identity card for verification on Common Portal.
- On submission of documents or information , the proper officer or an officer authorised by him is required to physically verify the address provided in the principal place of business within forty five days from the date of submission of the documents and evaluate the financial standing of the person.
- The Commissioner of Customs is required to, on the basis of the report of verification submitted by the proper officer, and other evidence as deemed necessary, determine the outcome of the verification within fifteen days and cause its entry on the Customs Automated System. This outcome of the verification shall be informed to the person concerned on the Common Portal within a period of seven days from the date of determination.
- The Commissioner of Customs can order suspension of any or all of the benefits i.e. sanction of refund; sanction of drawback; exemption from duty or any benefit, monetary or otherwise, arising out of import or export and inform such decision to such person in case he-
1. Failed to comply with the aforesaid requirements; or
2. Submitted incorrect documents or information.
- This is to be done after recording reasons in the Customs Automated System. The Commissioner of Customs, is required to, within a period of fifteen days from the date of such suspension, give an opportunity of being heard to such person whose benefits are suspended. Based on this, he may pass such order as he deems fit, either revoking the suspension or continuing it, within a period of fifteen days from the date of hearing granted to such person. The benefits suspended shall be restored when the person concerned complies with the requirements or furnishes correct document or information required.
- A person who is aggrieved by any order passed by the Commissioner of Customs under regulations 7 or 9, may prefer an appeal under section 129A of the Act to the Customs, Central Excise and Service Tax Appellate Tribunal, established under sub-section (1) of section 12 of the said Act.
- The Commissioner of Customs is given the power to impose a penalty not exceeding fifty thousand rupees on a person who contravenes any provision of these regulations or who fails to comply with any provision of these regulations.
The above mentioned regulations are some of the newly introduced aspects through the Customs (Verification of Identity and Compliance) Regulations,2021.
The new Customs Regulations, 2021 intend to address the ambiguities around the issue of customs area and other custom related issues. The rules have not come into force yet, however, it is clear that they will pave the way towards clearer procedures in custom related cases. Furthermore, the regulations can prove to be a progressive measure as it introduces legal recourse for those alleged to have committed custom related crime and requires proper authentication and verification of the individuals. The regulations do not apply to Central, State and Public Sector undertakings which could prove to be a debatable provision. In conclusion, the regulations are a welcome move and will make the law more precise and easy to follow.