The adoption of the Faceless Assessment Program by the Indian Customs, under the umbrella of the efficient (Turant) Customs framework, is one such initiative which is showing great promise to improve the Ease of Doing Business in India. India plans to roll out the nationwide faceless assessment program in all Customs ports for imports beginning 31 October 2020, after a sustained period of pilot testing in the stations of Chennai, Bangalore, Mumbai and Delhi. Faceless assessment is part of the Customs 2.0 reforms being introduced to make the administration more modern, efficient and professional. The authorities aim to introduce continuous digital based clearance with no direct interaction between the importer and Customs authorities. Faceless assessment enables an assessing officer, who is physically in a particular jurisdiction, to assess and give out-of-charge to a Bill of Entry (BOE) pertaining to imports made at a different Customs station, whenever such BOE has been assigned by the Customs automated system.

On the other hand, the Customs authorities have recently introduced, from 21 September 2020, the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR 2020). CAROTAR 2020 seeks to address long-standing infractions relating to import of goods under Preferential Trade Agreements (PTA) where the preferential tariff is claimed subject to the fulfilment of ‘originating criteria’ laid out in the respective PTA.

Till date, submission of Certificate of Origin (CoO) was deemed a proof of fulfilment of originating criteria. However, the CAROTAR 2020, read with the appropriate Sections of the Customs Act, places an additional onus on importers to provide originating criteria (by making appropriate declarations while filing Bill of Entry [BOE]), preserve appropriate information (for five years) on origin of input material, production process of imported goods, direct consignment, etc. In addition, CAROTAR 2020 gives elaborate powers to the Customs authorities to verify the originating criteria (both from importers and/or CoO Issuing Authorities, as required) in case of preferential tariff claims are suspect and shifts the responsibility on the importer to furnish requisite information as and when sought, regarding imported goods.

So, is there a contradiction between this onerous requirement to possess/ submit voluminous additional information and the adoption of automated digital processes designed for faster clearances through faceless assessment? In our view, the adoption of less humanized and more automated systems must not come at a cost of compromising risk management protocols, which are of great importance for developing appropriate techniques for outlier identification and implementation of measures needed to facilitate legitimate trade, simultaneously limiting exposure to revenue leakage.

To maintain harmony between the two requirements and philosophies, Indian Customs has made elaborate arrangements within the Indian Customs EDI System (ICES) to streamline the flow of information between the importer and the administration. The Single Window System (E-Sanchit) to submit documents for filing BOE(s) has been modified to capture mandatory declarations of CAROTAR 2020 through document codes.

CoO certificate can now be uploaded electronically and a Document Reference Number (IRN) will be generated to be parsed into the system against each item entry of imported goods. PTA notifications, Origin Criteria and even Self-Declarations by importers have been assigned individual document codes which can be mapped against the description of the goods being imported and the information type filed as part of the BOE statement.

The Customs authorities have even made an online repository to store the signature/seals of the CoO issuing authority of various PTA countries to facilitate additional online checks, in case the same is required as part of the additional verification mandated by CAROTAR 2020. In essence, the Customs officer has all the required information digitally available in the system, when he is in the process of giving clearance to the imported goods, without additional intervention of the importer in normal circumstances.

To sum up, the adoption of faceless Customs assessment to improve Ease of Doing Business and reduce duty evasion is a response to a long-standing industry demand to facilitate, improve and streamline control procedures. The present Customs administration has stepped up adequately to maintain their core values even in the face of legislation that requires submission of voluminous information by adopting appropriate technological triggers balancing regulatory requirements with technological enhancement. This would go a long way to reduce trade transaction costs in the interface between businesses and the Government.

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