Vision

Vision
Customs Administration Reform Plan
When it is time to retire let us not discover that we never really served.
(Nobody important)
For Chairman Central Board of Revenue
Ashir Azeem DC
M. Irfan Sarfraz DC
Iftikhar Ahmad DC
Fawad Ali Shah AC
Amir Thaheem AC
August 2002
To our families and friends for putting up with us
Prologue:
As Civil Servants we are in habit of reading the last few lines. We just don’t have the time to
get into the nitty-gritty of things, but this raises three questions, 1. Who is supposed to get into the
nitty-gritty? 2. What are we so busy at, if not our own work? 3. Can an effective decision be made
without getting into the nitty-gritty? As far as one and three are concerned the answers are obvious it
is basically two that needs an answer. Even the answer to two is known, we are busy addressing
everything, which is other than our primary task. In short we are always Fire Fighting.
Machiavelli said that in the beginning a disease is difficult to diagnose but easy to cure, later it
is easy to diagnose but difficult to cure. Unfortunately in the Civil Services, we address issues only
after they have blossomed into full-fledged problems. Somehow we never see them coming until its
too late, we are unable to intercept them as they brew. Our work starts as the first file arrives at our
desk, we are only aware of that which is placed before us; we have no knowledge of that which is
fermenting in some file somewhere, this results in a number of aberrations; the administration is
inverted; decision making slips from top to bottom since now the lower staff is in a unique position to
decide as to what gets done, merely by presenting it or keeping it from the decision maker. In such an
environment the officers are unable to see their work in totality; we see things in shape of separate
disjointed individual files moving in a haphazard manner, we are like huge cumbersome outdated
cameras seeing things in still frames one at a time in isolation of each other, the entire picture never
complete. We are unable to see relationships; we repeat the same mistakes over and over, we are
unsure of the information before us it may or may not be correct, insufficient or doctored. Our
workload is unrealistic and unclear, we don’t know as to what is really important and needs our
immediate attention, most of the time we are just bogged down in acting as post offices, reporting
endless data in one format or the other for the supposed urgent consumption of some other office.
Most of our time is spent in being postal officers, statistical officers and very little as being custom
officers. This is an atmosphere where adhocism reigns, things are individualized, every body has a
vague idea, nothing is clear, nobody is responsible, and the buck is passed. Sounds familiar……….
It is our humble effort to try to create a system in which we can be Customs officers most of
the time, where everybody is clear about the DOs and DONTs, our workload is calculated and
realistic. In short we wish to emerge from the mist; to create clarity from amidst confusion………
When it is our time to retire we want to know that we served, we mattered, we improved or at
least that we did try.
Note: Certain sections of this report are of restricted nature, these include sections that relate
to the inner functioning of the department and are not for public consumption.
Table of Contents
Role of Customs 1
Time study existing procedures
Clearance of Goods 2
Examination 5
CARP (Customs Administration Reform Plan)
Examination 6
Advanced filing of IGM & schedule of departure 8
Inbound Cargo 8
Outbound Cargo 9
Port 10
Concepts regarding Exports 12
Copy of import documents to be inside the container 14
Airports 14
Transit and Transshipments 15
Automation 17
Assessment 18
Auctions 21
Refunds 28
Duty Drawbacks 29
Law Branch 29
Adjudications 32
Securities 34
Recovery of Arrears 37
Warehousing 41
Customs Lab 43
Customs Agents Licensing 44
Post Transaction Audit 46
Legal Changes 48
Annexure
Stats
Flow diagrams (Flow 1 ~ 9)
Layouts (LO 1 & 2)
Forms (Form 1 ~ 5)
Computer Screens Illustrations (CS 1 ~ 16)
References
International parallels (Ref. 1 ~ 14)
Relevant Standards of Kyoto Convention
Relevant Standards of ICAO & UN/ECE Conventions
Abbreviations
Restricted
Customs Administration Reform Plan 1
Raison d’être:
While certain things are designed in one go, others evolve with time, their ultimate shape
unclear. Where as design is a process of speed, evolution takes time, where as design is by
deliberation, evolution is a reactionary process, one of hit and trial. Where as design progresses as
per pre defined, pre set standards, evolution just progresses.
Imagine a village with no specific pre set, pre designed, building & road, sanitation, electrical
standards. The village evolves, each household constructing as it requires. When the son grows up a
new room is constructed, when sewerage is blocked a new drainage is dug, if somebody is injured by
a speeding tonga a speed breaker is constructed. The village evolves not by design but as a reaction
to changing circumstances. Along the way it becomes ugly, smelly, polluted, disorganized, confusing.
This state of the village is most inconvenient to the villagers themselves.
It is our desire to design our village, this process may be painful since certain structures may
have to be bulldozed, it may be expensive since certain structures would have to be constructed, we
may run into conflicts, but for the sake of everybody this is necessary and has to be done. With the
yard sticks of logic and impartiality let us proceed to measure each structure and decide its fate……
Let us make a few simple assumptions:
1. That there is one Customs department all over the country.
2. That the Customs Laws and Procedures are uniformly applicable throughout the
country.
These assumptions may seem superfluous; let’s just keep them in mind in any case!
Role of Customs
Public perception is that the major role of Customs is anti smuggling; nothing could be further
from truth. Anti smuggling deals with trade that operate outside the Customs system. Certain people
are of the view that the role of Customs is to collect Revenue, even this is not totally correct. A more
refined view is that Customs deals with the clearance of goods in accordance with the law, this is its
primary task and in order to accomplish this it has to indulge in all other functions like examination,
assessment, valuation, adjudication, auction, acquisition of securities, running of bonds, maintenance
of documents etc. Customs in totality does just the following:
Clearance of Goods as per Law
All other processes are by products of the above
In the following pages we suggest a paradigm shift in perception as well as procedures so
that a more efficient system is evolved for the clearance of cargo. We have also attempted to
establish that such a shift is imperative, both for the nation as well as for the department. Let’s
examine things as they stand today.
2 Customs Administration Reform Plan
Clearance of Goods
Raison d’être:
If I was to import a container of something, say Second Hand Clothing in Pakistan, I know in advance
the person who will examine my container as well as the one who will assess it. If I could somehow control these
two individuals, I could breeze through the system. In reality, I could even decide the name of the examining
official.
Should a system be so predictable and personalized?
Isn’t this predictability and personalization the essence of malpractices?
Stats: Since clearance of cargo is the core Customs function, let us examine our
performance on this front.
Clearance Speed
Total number of containers imported during the year 2001: 219836.
Days. Count cleared %age Cum %age
0 352 0.16 0.16
1 3710 1.69 1.85
2 7596 3.46 5.30
3 11771 5.35 10.66
4 17377 7.90 18.56
5 20071 9.13 27.69
6 24035 10.93 38.62
7 20478 9.31 47.93
8 20511 9.33 57.27
9 18584 8.45 65.72
10 75352 34.28 100
Total 219836
Average Clearance Time: 08 Days.

Since this is the time taken by the cargo in negotiating all the processes / formalities between
landing at the berth and exiting out of Customs Gates, certain elements within the department feel
that it is unfair to attribute the entire time to Custom functioning, their view is that Customs is only a
small player in this field and that numerous processes and formalities extraneous to Customs are
responsible for the delay. We however maintain that Customs is the key player and predominant
delay in the clearance of goods is directly attributable to our processes. Our views are based on the
study of data of time lapse between the filing of B.E and final passing out of goods from Customs
area.
Report showing the time lapse B/W “B.E filing & Out of Charge”
Through Normal HC, during 12/11/01 to 22/11/01.
Total B.E’s 1399.
Days. Count %age Cum %age
0 10 0.71% 0.71%
1 125 8.93% 9.64%
2 197 14.08% 23.72%

3 172 12.29% 36.01%
4 206 14.72% 50.73%
5 195 13.93% 64.66%
6 151 10.79% 75.45%
7+ 343 24.51% 100%
Only half of the requests are disposed by 5th day from date of filing.
Through EASY HC, during 12/11/01 to 22/11/01.
Total B.E’s 284.
0 1 0.35% 0.35%
1 27 9.50% 9.85%
2 67 23.59% 33.44%
3 37 13.08% 46.52%
4 32 11.26% 57.78%
5 58 20.42% 78.2%
6 24 8.45% 86.65%
7+ 38 13.35% 100%
th
Only half of the requests are disposed by 5 day from date of filing.
For TP, during 12/11/01 to 22/11/01.
Total B.E’s 163.
0 21 12.88% 12.88%
1 43 26.38% 39.26%
2 33 20.25% 59.51%
3 28 17.18% 76.69%
4 12 7.36% 84.05%
5 8 4.91% 88.96%
6 9 5.52% 94.48%
7+ 3 4.91% 100%
rd
Only half of the requests are disposed by 3 day from date of filing.
Through RISE, during 12/11/01 to 22/11/01.
Total B.E’s 138.
0 33 23.91% 23.91%
1 65 47.10% 71.01%
2 20 14.49% 85.51%
3 7 5.07% 90.58%
4+ 13 9.42% 100%
Cost to Trade:
Inventory Cost @ 10% interest (8 days) Rs. 474.06 M
Demurrage Cost Rs. 568.0 M
Grounding Charges Rs. 219.38 M
Cost to Business Rs. 1261.38 M
The above information may appear incorrect to some, especially in the light of our claim that we
examine and assess the Bills of entry on the same day as presented to us. The question is; are we
not responsible for the prerequisites that precede our processes? After all we have designed those
prerequisites.
Is our claim realistic in an atmosphere where it takes one full day for an importer to just get
his entry Machine Numbered?
The Process of Clearance of Goods comprises of two basic subsidiary processes;
(i). Determination of description of goods. (Examination)
(ii). Determination of value. HS Code and importability of goods. (Assessment)
This is a picture of the office of

Principal Appraiser North Zone at East
Wharf Karachi. This office has been
containerized for over five years. So
much for section 14-A! Our clients wait
under the scorching sun, without access
to shade, water, bathrooms etc.
Every few days the owner of the
containers gives notice to Customs to
vacate these containers. The
temperature and the space constraints
inside the containers ensure that no
office automation product can be used.
A typical examination pattern,

where multiple containers are de-stuffed
and re-stuffed simultaneously and adjacent
to each other under thoroughfare
conditions.
There are numerous reports of
cargo being switched from one container to
another, during and after working hours.
Echoes surface that it is possible to
remove entire containers without ever
being examined by Customs.
Examination:
Raison d’être:
Imagine if every day at 0830 Hrs, the Traffic Police of Karachi blocked the entire Sharah-e-Faisal
because it wanted to check the documents of vehicles plying in the city! Sounds preposterous….
Well we have been doing this every day since time immemorial. Entire cargo that arrives or departs from
the ports of this country is stopped and checked by Customs.
Is it necessary to ground and examine all containers?
Can’t we come up with some risk criteria?
Let us appreciate a few realities regarding Examination of Goods.
It is the inherent right of Customs to ascertain the description of the goods that are arriving
into, or departing from the country. For this purpose Customs can stop and examine whatever goods
they may deem necessary, but is it necessary and logical to stop and examine all the goods? Does
such a policy increase or decrease the effectiveness of the department? We are of the view that by
shifting our focus on to everything, we basically end up with focusing on nothing.
Detections:
• Cases at ports: 6234
• Cases of Weight & AV~DV: 6163
• Other cases at Port: 71
Present Procedure of Examination:
0~12 Hrs. Vessel arrives, goods off-loaded and stacked.
+24~120 Hrs. Documents arrive. (Machine numbered, presented to group, group decides 1st or 2nd
Examination).
+24~48 Hrs. Entry is presented at the shed where it is registered and the P.A decides who is to
examine the consignment.
+24~192 Hrs. 100% Containers are grounded for 5% exam of each.
+24~192 Hrs. Due to limited space grounding is staggered over a number of days.
+24~192 Hrs. Goods are examined yet PCT is not confirmed by examination.
+48~192 Hrs. Customs processing, (Min. 62 steps and 34 verifications)
+24~192 Hrs. Weighment on delivery, where required.
Pros & Cons

The basic strength of the existing system is that it has lasted so long; in all fairness, it was an
adequate system under the circumstances, however circumstances have radically changed over the
past few years. Until about five years ago the custodian for almost all cargo was KPT, being a
government organization, KPT had a rigid, inflexible, inefficient and an elaborate procedure like
ourselves. Hence, an elaborate Customs Examination Manual.
Today KPT is custodian for less than 15 % of all cargo. All containerized cargo whether at the
West Wharf or the East Wharf is in the custody of private terminal operators, even a portion of LCL
cargo is being handled by the private terminal operators at Pak Shaheen and AICT, suddenly our
Examination Manual is no more relevant. There is a need to tailor our systems to the changed
realities. Today, the custodians of non duty paid cargo are private organizations, private security
agencies are deployed for safe custody of the cargo; pilferage is rare, online statistics regarding
container locations and their movements are available, online weighment of containers while off
loading from the vessel through modern ship to shore gantry cranes is a reality. Our existing
procedures are not only irrelevant and out of step, they are impeding the clearance speeds which are
now achievable.
Our existing system suffers from inherent defects and omissions:
It is not proactive; we wait for inputs from somebody else before we do anything. If an
importer never files an entry we are happy with never knowing the contents of a consignment or a
container. That is why, of the 9000 odd lots pending auctions at our ports over 2/3rd have never been
examined and as result we are unable to arrive at disposal values or decide what to do with them in
time. The KPT Final Outturn Report is awaited for three months after which the job of Manifest
clearance is started; even this outturn report is accepted unquestioningly. The rep of the importer or
the exporter has to personally carry each document to each Customs desk, if he stops, the work
stops.
Our waiting to be approached policy is the corner stone on which the structure of malpractice
is built. Since we are to be approached we can negotiate, the continuous contact between the tax
payer and tax collector facilitates on spot settlements. The system is so well suited to the Clearing
Agent as well as Customs that all efforts at trying to break this contact are bitterly resisted and
ultimately shelved for one excuse or another. While Customs officials are able to get something for
the services rendered, the Clearing Agents enrich themselves on the difference between what they
may or may not pay to Customs, and what they charge from their clients in the name of Customs.
Clearing agents in cases of risky cargo are known to present their B.E’s to the relevant sections, only
on days when their favored staff is available. In these conditions the law abiding and exchequer
suffers.
At present, Customs as policy, does not allow examinations unless the Clearing Agent is
present. The presence of clearing agents in the examination area facilitates collusion; the generating
of fictitious, vague, incorrect examination reports and shifting of cargo from un examined containers to
examined ones, bypassing the entire process of examination.
The samples forwarded from the shed areas are manipulated since the clearing agents carry
the same to the groups themselves. Similarly all samples en-route to the labs for testing are
personally carried and handed over to the testing official hence perpetuating the philosophy of
contact.
Although the examination staff is physically looking at the goods, the responsibility of
determining the PCT and the value even for second hand goods rests with the Group; as such
responsibility is passed on, shared and diluted.
All the containers are grounded for examination; all seals are broken even if only marks and
numbers are to be tallied as in case of ELF consignments.
Is it necessary to decide on every B.E whether, first or second examination is required? Do
we not already know which cargo is risky in terms of importers, port of shipment declared products
etc? Is it necessary to examine and ground all twenty containers of a homogenous product which is
being imported from the same port, from the same supplier by an established importer for the
umpteenth time? Can’t we randomly pick the 10th, 17th and 5th for example, or none at all?
Note: The procedure proposed below does not place any restriction on the right of Customs to examine any
consignment; the attempt is to provide a device which would enable us to focus on that which we consider to be
important.
CARP
(Customs Administration Reform Plan)
The system proposed in the following pages is designed in a sequential manner; the system flows with
the flow of Goods. Like all systems this system has certain minimum requirements. The system will function most
effectively at those Custom stations which have a certain minimum automation level and its ports have certain
minimum technological and security features that the system draws on, to work effectively. At present no Custom
station in the country has sufficient automation to run this system; a few ports though have the requisite facilities.
These ports are KICT and QICT at Karachi. As other ports develop the necessary infrastructures, facilities
available under this system can be extended to them as well. In this sense our system will act as an agent for
change. At present this system will work in its entirety at Custom House Karachi and at the Port of KICT. But
since this is about 20% of the national import this is considered to be adequate to test out our model, when we
are tried and tested we can extend nationwide.
Examination
-24 Hrs. IGM to be filed electronically at least 24 hrs prior to the arrival of the vessel by the
relevant shipping line, in the format as specified in Annex Form-1, the estimated time
of arrival and that of subsequent departure of the vessel is also indicated. Cargo to be
discharged at the port of arrival is distinctly marked from the cargo that is to be
transshipped / transited to other ports, both domestically and internationally.
-24~ Hrs. The Superintendent port allocates an EGM number, and communicates the same
electronically to the line. The IGM is scrutinized by the AC/DC in charge of the port on
basis of risk criteria, and is accordingly selected for detailed examination. All cargo,
except multimodal and that bound for a foreign port and not in ATTI will be subject to
above selection and examination. For details regarding AC/DC’s computer interface
for selection of cargo please refer to Annex CS-1. In addition to the above the AC/DC
port will also scrutinize the Shipping Bills filed during his shift pertaining to various
EGM’s and will take decisions regarding risky and non-risky cargo according to the
risk criteria, these decisions will be locked in the port server and will be released only
after the goods have passed into the Customs area pending departure.
-03 Hrs. The list of risky (To be examined), and non-risky inbound cargo (not to be examined)
is communicated to the terminal operator electronically at least three hours prior to
the arrival of the vessel. The only proviso to this list is that a container whose physical
weight differs from its manifested weight beyond a certain extent is added to the
containers that are to be examined by Customs. All consignments of outbound cargo
that are to depart on the vessel at hand and are passing into the custom area will be
taken custody off by the terminal operator at the pass in gate. The consignments
taken over by the terminal operators will be complete in all respects according to the
slip issued to the shipper at the time of filing of the shipping bill at the front office.
Once the consignment has passed into the Customs area the decision regarding
examination of the consignment will be open and disclosed to the terminal operator
by our gate staff and the consignment will be accordingly taken either to the vessel or
the examination area. No outbound consignment, except listed perishables, will be
allowed in the port area by the terminal operator unless it is presented at least prior to
six hours of the departure time of the vessel.
0~06 Hrs. On arrival of the vessel the terminal operator will unload the consignments as per the
IGM, all containers being off loaded from the vessel will be automatically weighed
during the process of off loading and this weight will be available on line at the AC/DC
port’s computer terminal. The terminal operator will stack the containers that are not
to be examined in a distinct area marked for the purpose. Containers that are to be
examined will be grounded straight to the examination area and their numbers and
location will be communicated to Customs, this will also contain the container
numbers and location of outbound cargo. The terminal operator will also report
electronically, any discrepancy in the actual number of the packages unloaded from
the vessel as compared to the manifested packages. Such a vessel will have to
obtain specific clearance from the Collector of Customs before leaving the port.
0~06 Hrs. All the containers to be examined will be randomly marked by the computer to the
examining staff.
06~12 Hrs. The examining staff will proceed to the containers allocated to them and will examine
the same; the custodian will provide all necessary facilities for the process like
provision of labor, de-stuffing and stuffing facilities etc. Custodian will also be
responsible for any theft loss of cargo etc. If any samples are drawn, the same will be
allowed by the custodian under a proper receipt issued by Customs. All LCL cargo
will be examined in the examination area prior to de-stuffing. The packing list and the
invoice of the cargo in case of inbound cargo, will be available in a polythene
package pasted on the inside door of the container. These documents will be
retrieved by Customs during examination in the presence of the custodian who will
stamp and sign it. In the case of outbound cargo the terminal operator will present the
documents collected from the shipper at the gate to the Customs examination staff in
the examination area. These documents will be attached to the examination report,
which will be written on a pre-formatted form. After completion of examination the
container will be re-stuffed by the custodian and sealed with a post examination seal
in presence of the examining staff. These seals will be checked by Customs at the
exit gates.
12~18 Hrs. The examination report along with the relevant documents will be forwarded to the
assessment section at the port area along with samples if any, after feeding the same
in the computer at the examination sheds.
12~18 Hrs. The port staff will be responsible for confirming the PCT classification of the goods.
The value of second hand goods will also be confirmed by the MSA and the same will
be duly assessed in the computer at the examination sheds.
In case the packing list and invoice are not present in the container, the importer after an
opportunity of being heard will be fined an amount that may extend upto Rs. 100,000/- the container
will then be examined 100% by an officer not below the rank of Assistant Collector of Customs.
Port staff will be available for work in three shifts of eight hours daily and will be on duty for
365 days an year. Each shift will be headed by an AC/DC. Their will be no segregation of staff on
basis of inbound / outbound cargo.
Some important concepts
Documents: There is a growing tendency among the unscrupulous element to conceal the original
import documents and to present fake and locally fabricated documents to Customs; this possibility
will be eliminated by the system proposed above.
Representation of importer/shipper: Client will be liberated from the requirement of being present
at the time of examination, unless specifically required by Customs. This will also obviate the
possibility of collusion, theft and other involvements in the examination area.
Needless examination of non-risky cargo will be eliminated.
The process of weighment will act as an indicator of dubious consignments.
Port congestion will be eliminated.
Inventory cost of trade will be reduced.
Cargo of each vessel will be cleared within 24 Hrs of its arrival.
Collusion will be very difficult, since different containers of the same consignment may be examined
by different examining officials due to random distribution of work, time limits on completion of
examination report and non presence of Rep of importer. Similarly the phenomenon of replacement of
cargo from one container to another within the port area will also disappear.
Advanced Filing of IGM and schedule of Departure of Vessel:
The shortest run of a vessel to Pakistan from a foreign port is 36 Hrs. The port is Bandar-
Abbas. It is apparent that the shipping lines are aware of the manifest of all vessels that are to report
to Pakistan at least 36 Hrs. in advance of the arrival of the vessel. This is confirmed from the fact that
KICT has a complete list of the containers that are to report at their terminal 24 Hrs. in advance of the
arrival of the vessel, so that they can devise an unloading plan. This information is called BAPLI (Bay
Plan Imports and Exports).
Along above lines the shipping lines will file an advanced IGM to Customs at least 24 Hrs.
prior to the arrival of the vessel along with a schedule of departure of the vessel. Within one hour of
the receipt of this the Superintendent of Customs Port will communicate the EGM number allocated to
the vessel on departure and will transfer this information to the server of the Lines Annex Flow-1. AC/
DC of Customs Port will scrutinize the IGM and will identify the risky cargo that needs to be examined.
International Parallels: It may be observed that it is generally the carrier who declares
goods to Customs, further the concept of advanced IGM and examination on random basis as per
Risk Criteria, without the presence of rep. (see Kyoto below) may be seen in the Customs processes
of Canada, APEC countries, US and Australia. (Annex Ref.2-6). it may be seen that US Customs is
seeking container information 24 Hrs, prior to the loading of the container in a vessel bound for US.
(For details regarding risk criteria see restricted).

Inbound Cargo:
The advanced IGM received from the Lines will be available to the Customs officer incharge
of the Port area, on his terminal as per CS-1. The officer will make a decision regarding the
containers that need to be examined as per the laid down risk criteria. The examination decision,
hence forth referred to as “examination requisition” will be directly transferred to the server of the
Terminal Operator through the Customs server at port, henceforth referred to as the “Port Server”
three hours prior to the arrival of the vessel. There would be one proviso to the above decision; if the
variance between the manifested and actual weight of the container is more than a certain given
percentage the container will be brought to the examination area by the yard operator, not
withstanding the original examination requisition. Commodities that are cleared on basis of weight will
be indicated to the T.O so that an accurate weight of the same through the weigh bridge is conducted
before bringing them to the examination area or the delivery area.
The Ship to shore Gantry cranes of the terminal operators are to be equipped with load cells
so that during offloading of the containers the actual weight of each container (within reasonable
accuracy) is recorded and patched to the Port Server which will automatically update the earlier
examination requisition. The terminal operator will remove the containers straight from the vessel to
applicable following areas as per designation in the manifest and examination requisition.
Transshipment container’s Area.
Transit container’s Area.
Examination Area.
Delivery Area
(Note: Afghan transit cargo will be brought to the examination area).
The updated examination requisition will be presented to the AC/DC port through his screen
whereby he will segregate the “to be examined” containers that are to be examined by technical
appraiser and those that are to go through normal examination. The port server will accordingly mark
the work to the technical appraiser and randomize & evenly distribute the remaining containers to the
examination staff on their terminals as per CS-2.
On receipt of work from the port server the technical appraiser and the examination staff will
proceed to the indicated location and examine the allocated container. The staff of terminal operator
will be present at the examination area and will be responsible for:
Breaking the seal before the examination officer.
Procuring the packing List and invoice from within the container, stamping it and handing it to
the examination officer.
De-stuffing the container as required by the Examination officer.
Be responsible for the custody of the cargo, so that nothing unauthorized, can either be
removed or added to the cargo.
In case anything is to be removed from the container for purposes of sampling or lab testing
the custodian will allow the same under proper receipt from the examination officer.
Re-stuffing the container after examination.
Re-sealing the container with post examination Customs seal in presence of examination
officer.
The Examining officer will record his examination report on a printed form as per Form-2. He
will attach the packing list and invoice that has been recovered from the container to this examination
report and after feeding the relevant information into the port server from his office against the task
allocated, will forward the documents to the Document center in the assessment hall. The port server
will assign the task of assessment of consignment randomly to an assessing officer, who will proceed
to assess the goods as per the assessment procedure. (see assessments)
When a Bill of Entry (SAD form) is filed in the Front Office, the assessment of examined
containers will already be available on the server. Assessment procedure explained under the
relevant head.
Outbound Cargo:
Filing of Bill of Export (SAD form) starts when an EGM number has been allocated by the
Superintendent Port and communicated to the shipping line through the port server. Bills of export
against an EGM are filed at the front office and the Port server continues to present it before the
AC/DC Port for decision regarding “To be Examined” or “Not to be Examined” as per the laid down
risk criteria through his CS-1. The AC/DC port will decide the examination aspect on all the Bills of
export, presented to him by the server through CS-1 during his eight hour shift in office. These
decisions will be locked in the server and cannot be accessed by any other person including a
superior officer or any other department.
The server also assigns the Bill of exports simultaneously to the assessing officer for
assessment, who will proceed to assess the bills as per the assessment monitor. There are certain
commodities like rice, cotton, fruits, vegetables, meat etc. where certain other documents by other
departments / associations, besides just packing list and invoice, are seen by Customs prior to
allowing exports. At the time of filing of Bill of export the exporter is expected to file all the documents
that are essential for his export. The server will indicate the documentary requirement based on the
type of commodity on the screen of assessing officer, who will assess the goods as per the laid down
criteria and will indicate any discrepancy in terms of documents pertaining to other departments. The
exporter or his rep will be issued a slip on the spot at the time of filing of shipping bill as per Form-3.
At the time of passing in of outbound (export) goods at the port gate, Form-3 will be presented to the
terminal operator by the exporter, who will take over the goods along with the documents as indicated
in Form-3 from the exporter. The Custom official at the gate will receive from the terminal operator the
documents as indicated on Form-3, the computer terminal at the gate will now interact with the port
server confirming that goods pertaining to a particular shipping bill have arrived in the custom area,
the decision of the AC/DC port regarding examination of this particular will now be available, to the
server of the TO and the terminal of the custom official at the gate, who will intimate this to the rep of
the terminal operator. The rep of TO after handing over all relevant documents to the gate official duly
stamped, except for packing list pertaining to the To be examined consignment, will take the goods
either to the delivery shed or the examination yard through the weighbridge, where required in the
examination decision.
The port server will also assign the work, to the examination staff & DEC as per examination
requisition and the location indicated by the TO server. The examining officer will proceed to the
shipment as per the location indicated by his terminal and will receive the packing list duly stamped
from the rep of the TO on the spot. The examination staff will examine the goods and write his report
as per Form-1. This report, the examination officer will feed into his terminal and after doing so will
forward it along with the packing list to the document center in the assessment hall. The port server
will assign this work to the Assessing officer for confirmation of their earlier assessment in the light of
the now available packing list and examination report. In case of “not to be examined goods” the
earlier assessment will be final. It would be the responsibility of the exporter to file any short shipment
with the front office before the pass in of goods. The exporter if he so wishes may file a copy of this
duly received short shipment certificate to the TO at the time of the pass in of goods, in such cases
this certificate will also be handed over to the Custom official at the gate.
At the time of loading of the goods on the vessel, the relevant Customs official will allot MR
numbers to each consignment, through his terminal; these will be printed along the examination report
on the shipping bill before it is finally handed over to the exporter. Pass in of goods cannot be later
than -6 Hrs of the departure of the vessel. Port server will not accept such consignments.
With the above procedure in vogue Customs will be able to clear an entire vessel within hours
of her arrival and legitimate trade would be spared the loss of time, effort, demurrages and the huge
inventory costs that it is forced to endure presently.
Port:
Our concept of the Port is similar to that of the Airports.
Anybody who doesn’t need to be there is not there.
A passenger completes his travel documentation before entering the Airport and not after
wards.
The reporting time prior to the departure of the aircraft is to be respected, and in case this is
not done the passenger is responsible for missing the flight.
It is manned 24 Hrs a day and 7 days a week.
These concepts are necessitated for the following reasons:
Custom Operational Areas to be access restricted: At present the ports are free for all,
external labor, shipping agent, clearing agent, whose consignments may or may not be at the port,
anybody who is able to say that he wishes to examine goods that will be auctioned by Customs
someday in future. At present, anybody who wishes to be anywhere can be there. Customs examines
consignments both of imports and exports and then leaves. These consignments which may or may
not be containerized are lying open at the port to be stuffed after examination into their own
containers or whatever other container their owners may wish. Since 100% of the goods are to be
examined, irrespective of what Customs literature may say, the Customs official is neither present at
the time of opening of seals nor at the time of de-stuffing or re-stuffing.
In reality the clearing agent arrives at the port, registers his entry for examination, gets the
name of the examination officer from the PA, (granting the CA’s choice in naming the examination
official is not an unknown phenomenon), after reporting to the examination officer, the CA proceeds to
the container breaks its seal, de-stuffs and arranges the goods for examination, at times with private
labor brought from outside the port. After arranging the goods the CA reports to the Examination
official that the goods are ready, he generally brings the broken shipper seal in his pocket as
evidence, the examination official examines the goods if he deems necessary, if he is busy or trusts
the CA he may write the examination report without leaving his desk. When examinations are
conducted, the presence of the CA on the spot facilitates expeditious resolution of irregularities that
may be apparent. After the examination report has been written, the CA re-stuffs his containers and
locks them with a personal lock. He is now able to come back to his container when ever he desires
and can take or place any articles from the container that he may so desire. An interesting feature is
that TO’s normally receive requests on daily basis from CA’s for adjacent spaces to their containers in
the examination area, since number of containers are being re-stuffed and de-stuffed, at pre and post
examination stages one cannot really vouch whether the goods as being examined are the same that
came out of this container, or that will ultimately leave the port area in the same container, or whether
these goods are being examined for the first time, or that if there are some goods that have been
switching containers and have never been seen.
The writer once questioned the watch and ward staff of shed no 4 at East Wharf, whether
after examination the CA’s are authorized to shift goods from one container to another? The watch
and ward which comprises of a chowkidar simply stated that if the CA has the key then it his container
and he has a right to do as he pleases, and in case he has the keys to numerous containers then they
are all his and he has rights on all of them. The repercussions of free for all ports in export
consignments can be very grave.
International Parallels: Please see (Annex Ref.7-9) of the CMR (Cargo Management Re-
engineering) Australian Customs legislation.
Based on the foregoing we recommend that the only viable option is that all custom examination be
on random basis and without the presence of the importer / exporter or their rep. In short all
operational custom areas, be access restricted.
Kyoto Convention Standard 3.36
8.4 Presence of declarant at the examination of goods
The Customs shall consider the request by the declarant to be present or be represented at the
examination of goods. Such request shall be granted unless exceptional circumstances exist.
In many instances Customs examines goods without the declarant being present, especially when
it is necessary to carry out examination on a random basis such as at the place of unloading. In these
cases it is not practical to inform the declarant in advance or to delay the examination and release the
goods until the declarant could be present.
Customs can refuse a request by the declarant to be present at the examination of goods when
they have the knowledge or the suspicion that the goods are not those that were declared or where the
examination will be performed in connection with the investigation of an offence.
The presence of Importer/Exporter or their rep. during examinations springs from Customs fear
that if the importer / exporter are not represented during examination then Customs will be susceptible
to allegations of pilferage of cargo, or that somehow a detection of mis-declaration would not be
supported under the law. These fears are not well founded; one Customs is not the custodian of
goods and as such has no responsibility towards the security of the cargo, secondly if internationally
Customs cases are upheld in the absence of importers / exporters or their rep. then why not here?
Another factor that needs to be appreciated is that up until a few years ago there were numerous
complaints by Importers and Exporters regarding pilferage of their cargo within port area.
In 1998 with the entry of organized private sector enterprise in the field of Terminal Operations,
like KICT with their own private security agency, the complaint of pilferage has virtually disappeared.
Customs can now easily abandon its self abrogated role of taking responsibility of the security of
cargo and can safely concentrate on its primary task of clearance of goods on those ports where such
terminal operators are functioning.
Concepts regarding Exports:
Timing: In case of exports it is recommended that there should be a cut off time by which all
containers meant for a vessel are passed into Customs area. This time is proposed to be latest by -
6Hrs of the departure of the vessel, or whatever is the policy of the concerned line subject to the
condition that the time is not less than -6 Hrs. This time will not be applicable to perishable
commodities. Further an export container should only pass into the Customs area when it is
completely ready for shipment; Customs area should not be used as place for completing of
formalities, what is meant is that goods should pass in after they have received all certifications etc
from all the departments and associations that are required before passing in.
Merger of Import and Export Work: It is

felt that the Customs functioning is identical
in clearance of goods, whether inbound or
outbound, (see Examination &
Assessment). As such there is no need for
the separation of work along these lines.
Duty Draw back procedure: (See
examination & assessment) it is apparent
that the entire process of export has been
reduced to one window, including the
sanction of duty draw back. After the
allocation of MR number the consignment is
exported, it has already been examined and
assessed; there is no need for filing of a
rebate claim separately since the SAD form
is envisaged to be an application for draw
back as well. The SAD form when handed
over to the exporter after allocation of MR
number is a complete document where the
FOB values have been calculated and the
draw back entitlement of the exporter is
already computed according to the PCT of
the product exported. The SAD form now is
the calculation sheet as well as the sanction
of duty draw back from Customs and on
presentation to a bank is an entitlement for
issuance of a check.
Export Tariff: The concept of a separate export tariff is fantastic. It is amazing to notice that
our exports are presently conducted without the use of HS codes, making computerization and data
management impossible. (Annex-Ref.-1)
The need for a separate export tariff springs from the following:
To accommodate the extensive slabs of duty draw back on export goods
Above is the only reason why we have not been able to give HS codes to the export goods.
Obviously Pakistan is neither manufacturing nor exporting anything which is not already described in
the existing HS codes, yet since our slabs of duty draw back are so extensive we cannot
accommodate the various categories in the existing headings, as such we are attempting to create
extensive local headings to accommodate extensive slabs of duty draw back. This is totally illogical,
instead of creating new headings we should concentrate on reducing our slabs. There is no need to
have a separate PCT for Footballs; of pure leather, of artificial leather, with tubes, without tubes etc.
Footballs are footballs and should be classified as such with a single slab of draw back rate, the
difference in features are already built into the product in the shape of difference in values, as such
3% on 10 Rs. and 3% on 1000 Rs. are different amounts in any case. This scheme of working with
one variable that is the value and keeping the rate fixed is working satisfactorily all over the world.
Even for imports in our country do we have separate headings for 14”, 15”, 21”, 25”, 29” TVs? The
difference is already built into the value. Simplification of slabs will improve the entire range of export
processes, from automation to rebate calculation.
Work of other Departments & Associations: We are of the view that in exports our role has
become confused with time, tasks which are predominantly those of Customs have been abdicated to
others and those task which are beyond Customs purview are being performed by Customs. At
present Customs scrutinizes the following documents prior to allowing export: It may be appreciated
that Customs takes the blame for delays caused because of the following although Customs has
essentially nothing to do with these.
MMD’s certificate Quality
QRC / REAP certificate Quality
APTMA’s certificate Value
EPB’s certificate Value
PASPIDA’s certificate
PHYTO certificate Quality
DG Health’s certificate Quality
Wild Life Department’s certification Quality
Pak origin certificate Origin
Form-E Banking requirement
EDS Banking requirement
Plant Protection Department’s certificate Quality
Animal Quarantine certificate Quality
Provincial bureau of supplies Value
It is apparent from the fore going that Customs besides being responsible for its own task,
which is ensuring that goods are as per declaration, correctly priced and per Import & Export policy, is
also responsible for every body else’s task.
Valuation: Valuation is a Customs function and although the same is not ascertained in
isolation but based on research of the market, consultation with trade bodies etc, yet there is a forum
through which a value becomes applicable for assessment that is evidential etc. This forum within the
department is the controller of Valuation. It is proposed that all value certificates among the above be
abolished and that the controller Valuation may ascertain the requisite values in consultation with the
trade or whatever other means available under the law and then these values be placed for
application on the Customs server. The present mechanism of certification of value on each individual
consignment by APTMA, EPB and Provincial bureau of supplies may be abolished.
Quality: Customs is responsible for ensuring that the goods passing through Customs are
physically identical to that which is declared in the documents and that the same are not prohibited /
restricted under Customs law. Nowhere in the world is Customs used as an instrument of quality
control. Example: An exporter declares on his documents that he is exporting broken Rice, the
consignment presented to Customs comprises of broken rice, there is no restriction under the law for
such an export; Customs has to allow the export and cannot be held accountable for any subsequent
complaints by the importer that the actual contract between the buyer and seller was for Basmati. The
sole responsibility for such an act rests with the exporter only he should be taken to task, under
whatever law is available on the subject, which in any case is not the Customs Act. Customs would
only share responsibility if the goods are declared as Basmati but are actually broken, however this
would be an issue of incorrect examination, mis-declaration and collusion but not a quality check
function. Every effort has been made in this report to ensure that Customs functioning is fair, without
bias and corruption free, hence Customs is to examine goods on its own and where it encounters a
situation which is beyond its technical capacity Customs is free to seek advice from the experts of the
relevant field, this means that the initiative rests with Customs. The system of giving quality
certificates on basis of each consignment needs to re-thought, formalized and organized. In any case
if it is deemed necessary that the certification on basis of individual consignments is necessary and
cannot be done away, then the process of this certification should be completed before the
presentation of goods for the purposes of shipment, so that Customs can concentrate purely on its
own task and is not detracted by extraneous functioning.
Banking requirements: These functions again, are primarily non Customs functions. It is
proposed that the requirement of form-E for Customs be abolished. Customs will provide data of all
exports conducted, their value, description, declared bank and the NTN of the exporter, to the State
Bank. The State Bank must then devise its own mechanism to account for the foreign currency aspect
of the issue.
Copy of import documents to be placed inside the container:
Since Customs would be examining the goods on basis of risk profiling, without the presence of
the Importer / Exporter or their rep and without waiting for the BE to be filed, it is necessary that
imports documents be present inside the container to enable the process of examination. A fringe
benefit of this practice would be that at present a lot of illegitimate trade is perpetuated on the basis of
fictitious documents that Customs is unable to question or check; the most common phenomenon is
that dubious importers present locally fabricated invoices to the department. To eradicate this practice
it is proposed that packing lists and invoices be present inside the containers of import. Further the
invoice must contain the information regarding the buyer and seller, the date of contract, the terms of
delivery, complete description of the products including specifications, HS Code and origin and the
value of the goods product wise. It may be appreciated that Invoice is the basic Customs document
(Annex. Ref-17) and we have the right to demand that such information be provided in the invoice.
That the same should be recovered from within the container by Customs in the presence of the TO at
the time of breaking the shippers seal on the container. These documents should be stamped by the
TO on the spot and are to become part of the examination report. It is not understood as to why this
practice is being ignored at the sea ports while it is well entrenched on all airports. It may be
appreciated that major importers including multinationals have been contacted in this regard and they
have no objections in placing a copy of their documents within the container, most large importers are
already voluntarily adhering to this practice. One of the questions that need to be addressed here is
regarding the definition of Customs declaration, this question arises in cases where discrepancies/
mis-declarations may be detected during examination, prior to filing of B.E. It is felt that such
situations will not arise it would be foolhardy for an importer to place cargo in a container that does
match the documents within, in any case even if such a situation does arise, it is felt that the concept
of Customs declaration goes beyond the filing of Bill of Entry, B.E is not the only Customs document;
that Bill of Lading, Invoice, Packing List, etc are all Custom documents and that a mis-declaration in
any of these documents is sufficient to attract mischief as defined under the law.
Airports
Airports are the showcases of Customs department; unfortunately our showcases are the worst
and are responsible for most of the public outrage that is directed towards the department, even today
these formations are procedural nightmares. We had an occasion to visit the cargo complex of
Karachi airport during the compilation of this report, the moment we approached the cargo terminal a
swarm of dubious characters descended on us, the scenario closely resembled the situation that is
prevalent outside passport offices. It is a distasteful experience giving an impression of
disorganization, wheeling and dealing. One can imagine how the passengers are trapped here and
what impressions they must be carrying from here. Unfortunately Customs repute is eroded.
It is learnt that no auction has been held at the airport for past three to four years; that
numerous goods that are ripe for disposal are just lying, being wasted. To the public mind Customs is
to blame. The person responsible it appears is the CAA contractor at the gate, who does not allow
anything out of the area unless the custodian charges are paid, he is unable to appreciate that the
bidder is not responsible for the payment of custodians charges, that the same are to be paid from the
sales proceeds of the auction and is an issue between two departments rather than the citizen who
has purchased the goods. The environment is that of adventurism, ad-hocism and day to day living.
At the airport are sheds where goods are cleared by Customs, unfortunately there is no
concept of clearance of goods or that of Customs. There is the Preventive, the Appraisement, the
Export and their endless friction, however no Customs. In the same shed half the goods are examined
and assessed by Appraisement since these are the consignments against which a B.E has been filed,
others are being examined and assessed by Preventive since these are the goods against which a
B.D has been filed, there are those for which people from EPZ come to examine and assess since
these are those consignments that have been imported on temporary basis, and then there are those
that are being examined and assessed by the exports since these are out bound goods. Each type of
goods have their own criteria and standard for examination, assessment and valuation, the same item
in import is worth something else than an identical product in baggage and the one in temporary
imports, although the import goods are to be entered into a computer there is no such requirement if
the same goods are imported in baggage. Hence a VCR in imports enters a computer and has an
evidential value; another VCR three feet away in baggage is not entered in the computer and has
another value.
Recommendations
It is recommended that functioning at airports be placed under two separate administrations,
one responsible for passenger clearance and the other responsible for cargo clearance. The
procedure for cargo clearance at the ports, to apply mutatis mutandis at the airports, with no
distinction for B.E, B.D, temporary import and out bound cargo. The cargo clearance staff of Customs
will be functioning 24 hours a day including Sundays, in three shifts. The airlines will be required to
furnish their passenger, crew, stores and provisions and cargo list electronically to Customs at the
time when the aircraft takes off from a foreign port for a destination in Pakistan. Identical procedure as
described for the ports will apply. It may be appreciated that this system at the airports will be an
invaluable tool since a profile of travelers will be built into our system, placing an effective check on
the phenomenon of khep & khepias in our country.
Transit & Transshipments:
Raison d’être:
Lets us smuggle a container of Whisky into the country:
1. Pack a container of Whisky from Dubai, in the BL declare it to
be a container of waste paper and give out some address of
upcountry, lets say some where in Lahore. Let us pay the line
till Karachi; from Karachi we will hire a bonded carrier.
2. When the container arrives in Karachi, lets us get a driver and a
truck. Hire anybody it doesn’t really matter.
3. Let’s go to some low budget carrier, even a high budget one
would do. Let us give the carrier our documents and he will file
a TP for us. Customs will allow the TP they have to; our
address is of Lahore. Even if they are informed, it doesn’t
matter they can’t open the container all they can do is pass the
information to Lahore. Thanks to our lovely CGO’s 15/89 and
12/91.
4. Let’s get our container sealed and all, the Brinks guy has to
have an activity.
5. Now that our container is out of Customs area let us take it to
our godown, don’t worry for a little incentive the driver won’t
object.
6.Get a hammer break the darned seal, get the whisky out, fill the
container with the waste paper that we already have for the
occasion. Let’s all celebrate and hurry off for the dry port.
7. Forget
Drive into Lahore dry port. What the Brinks guy the seal
is agitated it has
about ourserved
brokenitsseal?
purpose.
Curse him.
8. The Customs is making some noise about our broken seal, they say that they are already informed
about our contents. Curse them too. Everybody knows that they are corrupt and high handed.
9. What the collector wants to make a case against us? Tell him some story about how we hit a pole while
we were reversing or how we were hit by some other truck or how some kids enroute broke the seal
while the driver was having lunch or something. Tell him anything as long as it isn’t the truth. If he still
isn’t convinced tell him to examine the container 100%, this is all he can do in any case. If he still tries to
be nasty we will hire some cheap lawyer and will be out in hours from the tribunal, after all their entire
case is high handed and presumptive.
121. Transshipment of goods without payment of duty
Subject to the provisions of section 15 and the rules, the appropriate officer may, on application by
the owner of any goods imported at any Customs-station and specially and distinctly manifested
at the time of importation as for transshipment to some other Customs-station or foreign
destination, grant leave to transship the same without payment of duty, if any, chargeable on
such goods at the Customs-station of transshipment and, in the case of goods to be transshipped
to some other Customs-station, with or without any security or bond for the due arrival and entry
of the goods there at.
The above section requires transshipment of goods without payment of duties and taxes; it does
not bar Customs from examining and assessing the goods wherever and whenever Customs may
consider it to be necessary. It however restricts the concept of multimodal transport by requiring an
application in each case by the importer and seeking a formal permission to transship. More on
Multimodal below.
Since Customs would be examining cargo on the basis of its risk potential, based on the
importers profile, the shippers profile, the port of shipment, the description of goods, the manifested
VS the actual weight of the consignment etc. and since the same criteria is valid for the entire country
and since same values prevail in the entire country and since it is the same Customs every where,
there is no reason why transshipment containers be treated any differently from those that are to be
cleared at Karachi.
If the risk profile justifies it the containers would be examined at the initial port of discharge.
This is possible since in our system the packing list and Invoice are to be within the container and
since there is no requirement for the importer or his rep to be present at the time of examination. In
the event of a detection of mis-declaration or other wise the examination report will be forwarded
along with the cargo to its port of delivery through a bonded carrier at the importers expense, where
he will pay the leviable taxes, face the process of adjudication, dispute resolution etc. whichever is
applicable under the law. If a consignment is deemed to be not risky and is not to be examined this
decision will be valid all over the country. Their assessment will be done by the respective dry port but
the consignment would not be examined, unless there are specific reasons for doing so, and such
reasons are recorded in writing by an officer not below the rank of an Assistant Collector.
International parallels: It may be observed that transshipment goods are examined on the
basis of their Risk criteria by Customs inevitably on the first Port of entry into the country this
practice is en-vogue in countries like even US and Canada despite all other options available to
them in of resources and technology. (Annex Ref.10-12)
Through Bill of Entries: (Multimodal)

It is further proposed that that through Bill of entries may be allowed and be also encouraged.
Since this practice is already functioning effectively for exports, there is no reason why the same
should not be allowed in case of imports. (Multimodal procedure is proposed as below).
i. Multi-modal transport entails that the goods will be on through Bill of Lading, the
responsibility for the sanctity of the cargo will rest with the carrier till its final arrival at
its destination.
ii. The carriers responsible for transport of cargo internationally and domestically under
this scheme, will obtain serial numbered stickers and seals, from CPF for a payment
of Rs. 250/- each, and will affix the same on each transit / transshipment container
within the port area. The carrier will further generate a document in the form as
prescribed below (Form-MM). There is no restriction on the number of seals and
stickers bought by a carrier at one time. These containers will then be immediately
transported by the Line or their rep. to their destination.
iii. Carrier will be the shipping line issuing the through Bill of Lading.
iv. Form-MM will be prepared in triplicate by the Line. The E.O gate at the initial port of
discharge will sign all three copies at the time of exit of cargo and will retain the
duplicate copy for forwarding to the Import section.
v. At the time of arrival of cargo at the Dry port of destination or the cross border station,
the Custom staff will sign the original and the triplicate copy of Form-MM. The carrier
will deposit the triplicate copy duly signed by the dry port custom staff to the import
section of the initial port of entry in Pakistan within a period of thirty days from the
date of departure from the port area of the initial port of discharge.
vi. In case of loss of cargo within Pakistan, breakage of seal en-route, the carrier after
due opportunity of hearing by the Collector of Customs of the initial port of entry will
be fined to an extent of Rs. 02 million per container in addition to any other action as
prescribed under the Customs Act 1969.
vii. In case of over dimensional cargo, Serial numbers, Engine & Chassis number, weight
of the consignment (whichever applicable) will be recorded on the document as per
Form-MM.
Automation
In government parlance an office is computerized, if it has a computer. By this standard Uni-Plaza at
Karachi is one of the most computerized places on Earth; it has one of the highest concentration of computers
per square meter.
Pakistan Customs has been repeatedly computerized, first in 1992, then again in 1998. At
Karachi we are even assessing cargo electronically the process is called EASY. Unfortunately this is a
misnomer, EASY should be called “No assessment” rather than “Electronic Assessment”. The point is
our system is incapable of linking the description to PCT, so a cow is classifiable under 8450.1100,
further the system cannot compare the declared value with any other value not even the one filed just
one minute ago, what to talk of the same origin, contractual period, commercial quantity etc. Our
system is a recording and a playback system.
Our concept of Automation is “TOTAL”. Care has been taken to ensure that their should be just
one way of doing things, that alternates are not available, that each conceivable situation should be
thought out and catered for and an SOP should be available to handle it in advance; if you are not in
the system you don’t exist.
Let us imagine a typical day at work in the proposed system.
You arrive at your office; there is no file on your table just a PC, and a printer. You log on, the
system recognizes your terminal and your password; you are now in office. In the office of the
collector you are now lit on the organ-o-gram with your time of login. From this moment on what ever
you receive or send or do, will be through this PC. Any work that relates to you will blink on your PC,
and will be reflected in your window of “Jobs in hand”, anything that you forward to another office is
just sent from here. For notices etc, you type into your PC, the formats are already fed you just have
to feed your particular input, hit print the printer churns you sign, dispatch number is assigned by a
computer and your steno sends. All the information that you need to access is available on your PC,
The ACT, The SRO’s, the CGO’s, Public Notices, Standing orders you name it, all data about your
section (whatever you are responsible for) is available for you to see. For example if you are working
in Appraisement in a group all the refunds pending can be seen and sorted in all imaginable ways. All
the entries under provisional assessment that have been done or are pending can be seen and sorted
in whatever format. You don’t send statistics to anybody whoever needs whatever information
relevant to him can see it and print it through his own machine. If an assessment pertaining to your
group is made that is at a threshold that is below the policy or minimal assessable standards an alarm
beeps on your system on line. You can see the jobs in hand pending at the terminals of your
subordinates and since when. Similarly your superior can see whatever is pending with you and since
when. You remain totally current with the work of your section right up to the last cash number which
has been given by the bank, two minutes ago.
Performance evaluation is simple the system computes what you have done during your tenure
in office and can be sorted in any format. Your authority is built in your password anybody who has
access to your terminal in office and to your password can exercise all your authority, you are
responsible. Charge handing over and taking over becomes simple; each individual’s performance
can be totally quantified.
The system is designed with a non porous information pipeline, data entry and retrieval points
are specified and dedicated, data is formatted. Nothing can be concealed, nothing can be revealed,
nothing can be slowed down or speeded up, and everything has to be done when it is due, if it’s not
the terminal of the boss bleeps. Departments culture would have to change you can’t write “Please
put up”, there is nobody to put up, you get the work only if it relates to you, then it’s your work and you
have to do it yourself. You can’t be vague the system does not accept it, you cant forward the file to
an irrelevant person because the system does not accept such a course. Even if you are able to do
so, the job in hand remains in your window till the required decision is given to the system.
The concept of automation is that the system does not do the work, it merely assists and
channels the work flow, every decision is to be taken by the human authorized to take it, the system
just takes it to that human, extends all possible information that may be needed about the issue and
awaits a decision. The system does not do the selection for “2B examined” or not “2B examined” the
system just provides all necessary information to arrive at such a decision the final button has to be
pushed by the human who is responsible for and authorized to take that decision.
Assessment
Raison d’être:
When a person presents a cheque to a bank for encashment does he carry this paper personally to twenty
odd employees of the bank who may be required to give their input on the document before payment can be
made? When a person presents his documents to Customs for clearance why does he have to personally go to
twenty different persons and their offices for getting his work done? What happens if one in the chain is on leave?
What if one doesn’t like your face or the way you talk? Why can’t our system be like the bank, impersonal and
professional where a client is not bothered with the internal working of the system? Where he just approaches
one window, waits for a while and leaves when his work is done.
But would this be possible if he had no cheque and the check receipt counter was not fixed?
The process of assessment is

envisaged as follows: The basic assumption
is that all input of data is in system
compatible form and is entered at the
dedicated input point.
(i). The client will approach the front office of Customs (dedicated input point) with his import /
export documents. Lay out of the front office is as per Annex: LO-1. The requisite documents
will be presented to the Customs official on duty and a floppy that has been written on the
client end software (data in system compatible form) provided to the importers / CA.’s will be
punched into the floppy drive, thereby uploading the data into our system.
(ii). The data on the floppy drive which on printing will constitute the Shipping Bill or the Bill of
Entry will be drawn on the specifications of the Invoice, that is the items will be commensurate
to the scheme on the invoice, yet the detail of the description will be based on the document
that has more in depth description of the item, packing list or invoice. It will be attempted that
as far as possible numeral information may be acquired through the floppy and text be
minimized, for ex. CCI&E number will be acquired and the importers name will be generated
by own record, similarly CHAL No. will be acquired and name and address of the CA will be
generated by own system.
(iii). The custom official stationed at each terminal will view the particulars as fed onto the system
in the monitor before him and will compare the same with the documents furnished by the
party, he will also scrutinize the IGM / EGM and index info on screen comparing the same to
our record. In case a discrepancy is detected the declarant / importer will be allowed to
correct the mistake on the spot. Having performed the above action the custom official will
ask the importer / declarant whether this is all that the declarant wants to say, if so a duly
machine numbered S.B / B.E in the SAD form will be printed and the importer / declarant will
be required to sign the same. The signed copy will be retained by Customs a token number
will be issued to the importer and he will be able view the status of his clearance on screen. In
the SAD form the card number of the declarant signing the document will have to be given,
our system will compare this card number of the declarant with the CHAL No. of the CA, to
determine whether the rep of the CA is filing the documents to Customs or whether it is some
other person, in which case an alarm will be generated. The Customs official at the front desk
would be authorized to require a declarant to display his card as issued by the licensing
department, he would also be able to check this card number against the CHAL number. In
case of a different person other than the Licensee or his rep. filing the document a
contravention will be generated against the CA and his license will be liable to cancellation
after hearing. This measure will go a long way in detecting and curbing the phenomenon of
“SIGN Entries”. Machine numbering process will be over in less than ten minutes as
compared to three hours today.
(iv). At the time of printing of the SAD the information as declared by the client will be available to
the server, the server will ascertain the terminal of the appraiser that has the least load and
will allocate the task to the same. The official at the front desk will accordingly mark the
number of the terminal on the documents, which has been allocated by the server and will
send the same to the document center after signing and stamping each document as
presented by the client. Illustration of lay out as per LO-1.
(v). The document center will forward the documents as indicated by the front office to the
concerned terminal. The terminal of the Assessing officer is a smart terminal i.e it is linked to
information as indicated vide Flow-2. The declaration as given by the declarant will be seen
by the assessing officer as indicated vide CS-2. It may be appreciated that all conceivable
information that can be required by an official for making an effective assessment, has been
provided on his monitor, the assessing officer is able to access identical imports, similar
imports, evidences, Profile of importer, CA, WCO, Valuation advices, Classification Rulings,
SROs, etc. right on his monitor. It may further be appreciated that in about 80% of the cases
there are no disputes in terms of value or PCT; one of the reasons for this phenomenon could
be that less than 20% of the Importers, who are regular importers dealing in a particular
commodity, import more than 80% of the goods, the same is true for exports. We foresee that
this segment of the importers / exporters will need to go no further than the front office to get
their goods cleared and in less than 30 Minutes. Stats for imports at Stat-1.
(vi). In addition o the above segment of the importers / exporters it may further be appreciated that
a certain portion of goods have already been considered risky at the port, their documents
have been retrieved from the container the goods have also been already examined, the
moment the examination report and documents of the consignment are in the assessing
officer will proceed to assess the goods. This means that in almost all cases except where
there is dispute the declarant will approach just one window and that is the front office and will
complete his work in 30 mins.
(vii). On assessment of goods by the assessing officers the SAD form duly completed will be sent
back to the front office, the status display monitor will guide the declarant to the appropriate
window of return section. Here a bill of leviable duties and taxes will be given to the
declarant; if the declarant accepts the duties and taxes (estimated in excess of 80% of the
cases) he will proceed to the bank window and deposit his levies. The bank will stamp the bill
and also feed it into the computer terminal that is provided to bank; hence a cash number will
directly come into our system and the entry will stand out of charged and after signing by the
front office official will be given to the importer or his rep.
(viii). In case of dispute where the importer does not agree with his bill, due to reasons of PCT
classification, or value applied, he will opt to file a request by signing a Performa in which he
will give the reasons for his dispute. The case will now be forwarded to the terminal of the
specialist group which is dealing with the particular PCT for detailed scrutiny. The group can
either up hold the initial assessment or change it as it deems fit. It is envisaged that only
those cases will get to the group, where there are finer points in terms of description, PCT,
origin, or quantity discounts. In case the dispute is still not resolved then the matter will get to
the Assistant Collector, who will either refer it under section 81 to Valuation after obtaining
necessary security, or will maintain the assessment.
Important Concepts
The following concepts are at variance from the existing way of doing things:
So far Customs is divided into distinct commodity specific assessment format. This has been
necessitated by the fact that certain individuals have had specialized knowledge about certain
products, this has been due to the fact that our data backup support has not been strong, since we
are proposing a system in which the data backup support is extensive as such every individual is
equipped with the knowledge that has henceforth been restricted to the specialists as such everybody
is a specialist. The need for digressing from the commodity specific format is that this has lead to
personalization of the process and has yielded undesirable results.
Let us briefly examine the way in which there has been an overlap in the functioning of
Valuation and Appraisement. Wherever Appraisement was not sure of an assessment it would refer
the matter to the Valuation Department. What for? To determine the correct value on basis of market
enquiries, international publications, consultation with trade bodies, international enquiries etc. But is
this exactly not the same thing that Appraisement was also doing itself, groups in Appraisement
conduct market enquiries as a matter of routine, we decide values on basis of international
publications, scan values etc., Collector Appraisement routinely sits with trade and decides on agreed
values, we write letters to commercial councilors etc. So what is the difference between Valuation and
Appraisement? Is it basically not a duplication of the whole thing? If Appraisement has access to the
same devices as Valuation has, then why Valuation? Or why Appraisement? Is there a distinction
between pre and post clearance stages? At what point if any, should an issue move from one to
other? Has the Appraisement not been using Valuation as a device against insecurity, so that where
ever we do not want to take responsibility of an act we resort to section 81, and that too without
securities from the importer? Have we not had cases of “assessed provisionally on DV under section
81”.
We propose a clear demarcation between pre and post clearances, a system where there is
no grey area where there is no duplications, where there are no alternate scenarios. It is proposed
that Appraisement may deal only with the clearance of goods and not with the determination of
values. The task of Appraisement should be principally pre clearance stage; Appraisement should
attend to only the urgent and not research type activities. It should be Valuations task to determine
values, trends, market enquiries, foreign enquiries, agreed values with trade etc. These values should
be given to Appraisement so that goods are cleared accordingly, any and all cases that deviate from
the criterions set for values should be referred to Valuation for research, enquiry determination of
transactional value etc. In short Appraisement should restrict itself to dealing with the routine matters
of clearance and Valuation should be left to Valuation. Needless to say that all complaints of under
valuation will be enquired into and answered by Valuation, all cases in which there is a valuation
dispute at any forum will be attended to by the Valuation department all other collectorates should
restrict themselves to the task of clearing goods uniformly at the standards defined by Valuation. It is
also proposed that an effective audit and intelligence wing be also created in the Valuation
collectorate whereby Valuation should have sufficient tools to do an effective task. It is proposed that
an intelligence wing be in place that should be watchful of the trends and phenomenon of the market
and if may not seem very far fetched be able to work like dummy importers and exporters obtaining
independent invoices, quotes and proforma invoices for suspected commodities. They also may be
able to conduct test imports and exports and generate credible evidences. In short intelligence should
be proper intelligence deep and invisible, a professional and covert organization that specializes in its
work and is not just another routine arm of the department.
It is proposed that in cases where the value of the goods does not differ by more than 30% of
the evidences available and the AC concerned is satisfied that certain ambiguities necessitate a
scrutiny by Valuation, the AC group may, after recording those ambiguities and after obtaining
security for the balance amount forward the case to Valuation under section 81. The preferred mode
of security is a pay order or a demand draft; this will simplify the process of return of security to the
party in case Valuation department is not able to finalize the case within 180 days. The action under
section 81 will be in electronic form, generating two outputs, one for the BG cell to collect the security
for purposes of safe custody, and the other will place the task straight on the terminal of the relevant
officer in Valuation. This job will stay on the screen of the Valuation officer till the time the matter is
disposed by him electronically. The moment the issue is finalized, the task will appear on the terminal
of the referring AC/DC, and will stay their till either the security is en-cashed or returned to the party.
In case the matter is not decided within 180 days then on 181st day the system will automatically
request the referring AC/DC to release the security to the party. The terminal of referring AC/DC will
print a notice to the party whereby they would be authorized to collect their security from the BG cell
on the specified date. In the type of cases specified above the goods of the party will not be detained
on the port, since the process is essentially of post clearance nature.
In case the value as declared by the party varies by an amount which is in excess of 30% of
evidences available, the goods will be detained and the matter will be referred to Valuation. If on
scrutiny Valuation is satisfied that the matter is an attempt of mis-declaration, a contravention will be
referred to the adjudication collectorate by Valuation. Valuation will also contest all cases of value at
all forums.
In case a party is aggrieved with an assessment decision of the AC/DC group or of Valuation
it is proposed that the party be allowed to take the matter before adjudication, which will examine the
propriety of the decision taken by the concerned Customs formation. This measure is suggested since
at present the only recourse available to an aggrieved party in case of an assessment is either the
FTO or the High Court. It is envisaged that if parties are allowed to approach the adjudication forum a
more effective mechanism will develop where errors and omissions will be expeditiously resolved.
Auctions
Raison d’être:
Imagine a store where people are able to buy imported goods at port prices, without paying the importer’s
profit, the wholesalers profit, the retailers profit.
Should this not be the most popular store in town?
What is port Price? Is it not the RP?
Why are we not able to sell at RP?
What is wrong? Two things are wrong:
Our store and our Price.
Cargo enters the stream of auctions through the following sources:
1. Overstayed goods at port, lying for more than 30 days
2. Overstayed goods at Warehouses.
3. Confiscated goods
4. Excess or unconnected cargo reported by port authorities
5. Goods taken over by Customs in Recovery process
Industrial Machines
Vehicles Aluminum Foil
Chemicals
KIA Prides Agricultural Implements

The overstayed category, which is also the

predominant category is emanating from ports
and from bonded warehouses. Hence auction
able cargo can be categorized into two distinct
legal categories, one owned by the Federal
Govt. and the other which is owned by private
individuals. The terminal operators / bonders
are the custodians for overstayed / excess
cargo and although they do not auction this
cargo themselves they have control over it,
since it is auctioned straight from their
premises. The terminal operators tend to cling
on to this cargo for a number of reasons; they
are responsible for it to the private owners,
they have their demurrages to collect and
pilferage of unclaimed cargo is the easiest.
For Customs these are the least priority
goods; nobody has filed documents, nobody
is pursuing the issue, no examination and
assessment has been done. This cargo
traditionally lies at the port for years before it
is disposed to a select few.
Auctionable Vehicle
The problems with the disposal of this cargo are:

1. Unrealistic reserve prices by Customs.
2. Sale point.
Unrealistic reserve prices by Customs: The problem with reserve prices arises basically
because of delay. Since nobody has filed documents, hence no examination and no assessment.
Further since there are no documents available regarding the consignment the process of
examination and assessment in any case is extremely difficult. Lots are created by KPT or other TO’s
and are passed on to Customs, the goods are to be examined without the aid of any declarations. The
files are sent to examiners for examination and since these people are already over burdened with
their own work this work of auctions is their least priority. After examinations the files are sent to the
group for assessment of value, even in the groups these cases fall into the least priority area and
even otherwise in the absence of any invoice, certificate of origin etc. it is a formidable task to assess
the same. The auction process is inevitably delayed. The RP’s, are calculated at the Currency
exchange rate of today and tariff rates as applicable at the time of import. Since the currency
exchange rates are increasing where as tariff rates are decreasing the RP’s calculated are ridiculous,
the problem is further compounded as the goods are already old and depreciated and because of the
predominant insecurity in the department where nobody is willing to reduce the RP’s to realistic levels.
Sale point: The sale point is the port, which is a security area. An ordinary citizen does not
have either the knowledge or the inclination to venture into this area. If he dares to venture here and
wants to see a particular lot, he has no way of knowing where to look; the staff at ports is not the
friendliest of people on earth. If one is finally able to locate a lot he has no way of knowing its price, or
when it would be auctioned. Further the vehicle that one is interested in cannot be examined; one has
no way of knowing even if there is an engine under the hood. If their is a particular instrument that I
am interested in buying, I have to buy all ten thousand of them, because somebody decided the size
of the lot and also decided that lots cant be broken for sale.
Obviously selling or buying anything in the above system is a task not suited to mortals.
Proposed Process
Calculation of RP & Shifting to Auction Yard:
The following is proposed:
1. The process of auctions starts much before the goods are handed over to the Auction
Section. It is proposed that the goods should only be handed over to the auction section after
their reserve price has been determined. This is deemed essential since determination of RP
is not essentially an auction function but rather an examination and assessment issue. The
entire scheme is facilitated where certain consignments have already been examined and
assessed on the basis of their risk profile whereas for other goods the packing list and invoice
are already inside the container. The moment our server at the port detects that there are
certain indexes against which corresponding cash / free number are not available by 31st day
of the IGM date, this consignment will be reflected on the terminal of AC port for issuance of
auction notice and in case of unexamined goods, generation of a request to the terminal
operator for grounding of the goods in the examination area. In case of warehoused goods
the moment the warehousing period expires, the server will highlight these consignments
before the AC Warehousing for issuance of Auction notice.
Initiating action in time will solve the problem of unrealistic reserve prices, since the main
factor which leads to high reserve prices is the delayed assessment. It is foreseen that the
RPs of auctionable goods will be available by 32nd day in case of goods at the port whereas
warehoused goods are already assessed. Hence the Reserve Price would now be at par with
prevalent prices of identical goods in the market.
2. For over-stayed cargo (other than confiscated and excess cargo) system-generated notices
will be issued to importer on due date i.e. 31st day of landing or on expiry of warehousing
period. System will generate pre-formatted notices which will be signed and issued, notifying
the party that in case of failure of clearance of goods within a period of 15 days their goods
will be put to auction. For cargo lying at Port, notices will be issued by AC Port, for the
warehoused cargo AC Warehousing will issue the notices and for cargo taken-over in
Recovery, sale proclamation notice will be issued by the Recovery Officer
3. The Terminal Operator will ground the goods and will intimate their location to our server
which will randomly allocate the goods to the Examining Official (see Examinations). It may
be appreciated that to the Examining Officials consignments of imports, exports and
auctionable goods are indistinguishable are just jobs-in-hand. Needless to say that
consignments already examined / assessed on the basis of risk assessment techniques will
not require examination and assessment again. However, excess cargo reported by port
authorities and cargo taken-over in Recovery proceedings will be examined and assessed to
determine their Reserve Price. Assessment will be made by Assessing Officer as per normal
assessment procedure (see Assessments).
4. In case the auctionable goods are not cleared by the owners within 15 days as stipulated in
the notice already issued, the server will intimate MTO Auctions regarding the particulars of
the consignments to be shifted from port or warehouse to Auctions Yards. Simultaneously the
terminal operator / bonder will be notified to deliver the goods to MTO Auctions
5. The above process is briefed below in terms of a time-line:
Day X List of overstayed cargo is displayed on AC’s Menu. Notice to party is sent by
AC Port or AC Warehousing. Notice is displayed on Web. TO is also
intimated regarding grounding of goods for examination, if not already
examined.
Day X+1 TO shifts the goods to the examination area. The goods are marked for exam
and assessment by the system. Such consignment will be included in the
daily job-in-hand of the examining official.
Day X+15 If consignment is not cleared and there is no stay order from a competent
forum, the goods will be shifted to the Auctions Yard.
System will intimate TO and MTO Auctions about the goods required to be
removed to Auctions Yard.
MTO will depute EOs who will escort the goods from Port/warehouse to the
Auctions Yard.
System will intimate confiscation to AC Auction automatically when an Order-in-Original
involving confiscation is entered into the system (see Adjudication):
Day X Confiscation takes place. System intimates the reference of goods (IGM,
Index and Item Number) to Terminal Operator and MTO Auctions, who will
get delivery of goods in the same manner as for the overstayed goods.
Excess / unconnected cargo reported by Port will be recorded into the system.
Day X TO intimates AC Ports about the excess cargo through system and shifts the
cargo to examination area. Server generates UNC number instead of an
index number for such cargo and adds the goods to EO’s jobs-in-hand.
Day X+1 The goods are examined and accordingly assessed against the allocated
IGM and UNC number. After assessment system intimates MTO Auctions
and TO that goods are ready for removal to Auctions Yard.
Cargo taken-over in Recovery
Day X After issuance of Sale Proclamation Notice, Recovery Officer will get the
goods examined and assessed in order to determine their RP, and will
intimate MTO Auctions who will arrange for transport of goods to the Auctions
Yard. (see Recovery)
6. MTO Auctions will be responsible to shift the cargo. Transport Companies will be contracted
for this purpose, who will make Trucks available at the requisition of Customs.
MTO Auctions will get intimated through his Menu about goods to be carried to AY. He will
depute EO for escort and will intimate the transporter to send trucks at the place of loading.
EO will get delivery of goods and will escort the goods to AY.
Port authorities or bonded warehouse, as the case may be, will give their bill of claim
regarding wharfage / demurrage or warehousing charges, as if the goods are being cleared
by the importer. These charges would be a liability on the sale proceeds as delineated in
section 201 of the Customs Act.
7. PA Auction will allocate Sheds to the goods before their arrival (Annex FLOW-3). When
goods reach the In-Gate of AY, particulars of Vehicle number, container number, Escorting
Officer and date and time of entry will be fed recorded in the system. In-Gate will tell the Shed
Number allocated to the goods. In-Gate Menu will also tell the transporter about empty
containers to be carried out from AY. EO Gate will allocate the empty container himself. Each
container will be recognized by the system as empty container after 6 working hours of its
entry in In-Gate.
At Out-Gate, EO Gate will check that an outgoing truck is carrying the empty container
allotted to the transporter.
System will thus maintain a record of vehicles incoming and outgoing. This record will be
used for calculating liabilities to the hired transporters. System will keep accounting relating to
hired transport.
Sale concepts:
8. Substantial changes are envisaged in the Auction of goods both in terms of the process and
the timing of bidding. Two modes of sale are envisaged: (Annex LO-2).
• Off-the-shelf sale
• Bidding
Off-the-shelf Sale: For Consumer Electronics and Households, it is proposed that each
article may be sold separately irrespective of the size of the total lot. This is done with a view
to attract the end-user who is likely to purchase the goods at rates in semblance to the
market. This system will have dual benefits. It will benefit the public whereby they would be
able to purchase goods at reasonable prices than the market, and will also serve in
popularizing the Auctions Yard, highlighting the theme of public accessibility. The government
will benefit in the form of quick disposal, goodwill of the people and higher revenues. It is
proposed that such goods be exhibited at a Display Center that should also act as the Front
Office of the Auctions Yard. Price tag will be available on each article on display, anybody
may buy the goods. It is proposed that the price of the goods may be the RP plus 20%.
Bidding: For vehicles and industrial goods the process of bidding is maintained but with a
difference. AC Auction will determine size of a lot. There will be no restriction that goods
imported under one Index of IGM should be sold together. From a single lot of 5 vehicles,
each vehicle may separately be sold. The concept is that sale must be at the convenience of
the buyer and for maximization of price. Another concept that must be appreciated is that in
our present system goods may have been on auction for years, however, the time during
which these were actually available to the buyer is only a few hours.
Another concept that is being changed is that the “As is where is” basis is being changed to
“As is where is and What is” basis. In the present system the bidder can see a consignment
but that’s about it, he can’t really examine the goods that he is buying. The only people who
really know what is being sold are the cartel of bidders; this is due to their private efforts and
relationships with the port staff. No other person is allowed to examine the goods, the logic
given by the port authorities is that this will increase the risk of theft.
We are of the view that the buyer should have free access to the goods on auction and they
should be able to examine the goods before they make a purchase decision. For example in
case of vehicles, it is proposed that the auction structure be like a show room where all
vehicles are presented duly serviced with their keys available on the spot so that the buyer
can see everything including, upholstery condition of engine etc, before the buyer chooses to
bid.
The process of bidding will be as under:
Receipt of bids: All goods in the Auctions Yard are on Auction. The RP of each lot, current
highest bid is displayed. Each lot will be on auction continuously for 16 hours each day (1000
Hrs to 0200 Hrs) including Sundays.
The buyer will place his offer against a lot by providing earnest money equal to 5% of his bid.
No bid less than 70% of the RP will be received. To facilitate the buyers, a bank counter will
be available in the Front Office. On receipt of a bid, the FO will issue a receipt to the bidder
after entering particulars such as name of bidder, NIC number and contact numbers. Earnest
money will be received only through a Pay Order or Demand Draft. Reference number of
such instrument will be recorded in the system.
A bid will only be accepted if it is higher than the last bid by at least one percent of the RP.
Tenders against a lot will also be received at the Front Office. The particulars of tender will be
entered into the system if it is higher than the last bid by at least 1% of RP, else it will be
returned to the sender immediately.
Processing of bids: At the close of 16 hours if a bid is acceptable to Customs, the highest
bidder will be intimated on telephone, e-mail and Auction yard display to collect his goods on
payment of the balance amount within a period of 48 hours for the goods valuing upto Rs.
1,000,000, and 96 hours for values exceeding Rs. 1,000,000. On payment of balance amount
a DO will be issued to the bidder. If the balance amount is not paid within the stipulated time,
the earnest money of the bidder will stand forfeited and the goods will be offered to the next
highest bidder subject to condition that his bid is above the RP. This process will continue for
all bids that are above RP.
Bids within 70% to 100% of RP will be referred by the system to AC Auction. Decision on
such bids will be taken by AC Auctions within two day.
The Front Office will inform the successful bidder on the given contact number and e-mail.
This information will also be reflected on our web site.
The unsuccessful bidders will collect their pay orders / DD from the front office on return of
the original receipt issued to them. They will sign for the pay order / DD on return.
Re-Auction: When bid against a lot is rejected, the lot will be again available for Auction,
website will reflect the status “on auction” and Front Office will start accepting the fresh bids
against the lot.
In case a lot is on auction for three months and no bid is received against the lot, the AC
auction will conduct a market enquiry and will determine an RP that is commensurate to the
market values. The entire process will be recorded in writing and the RP will stand revised.
Menu for entering revised assessments will be available at Auctions Yard.
Similarly, goods at Auctions Yard which become liable to destruction will be identified by AC
Auctions. After re-examination of goods if these are found fit for destruction, AC Auction will
proceed to destroy them.
On the average goods worth 25 to 30 Million are auctioned per month from Karachi, we pay 40% of this
amount to KPT / Terminal operators; ten million a month. For a rental of two million we could set up an
excellent Auction yard, for 20 to 30 we could buy a place.
Sale Point Concept:
9. Customs Auctions Yard: Customs will shift the goods ripe for Auction to a designated area
for Customs auction called Customs Auctions Yard. The area will be managed by Customs.
Auctions Yard will be operated like a warehouse and it will have all necessary paraphernalia
required for unloading, loading, stacking and removal of goods. It will have necessary staff
required to maintain the sheds. There will be Sheds and open areas where the goods will be
stacked according to their category. Sheds will be allocated to each cargo at the time of entry
according to its type. Main categories of goods are
o Industrial goods: The industrial goods will be placed according to their category i.e.
machinery and equipment, raw materials etc.
o Vehicles: Vehicles on display will be open to the buyers for inspection.
o Consumer electronics and house-hold goods.
The goods will be available for inspection to the general public during working hours.
Consumer goods will be displayed in the Display Center.
An Inventory Management System will be available for Auctions which will keep overall and
shed-wise details of incoming and outgoing cargo.
There will be a Front Office in AY where payments, refunds of earnest money and
information to clients will be provided. Bank Terminal will also be located in the Front Office.
Having a separate Customs Auctions Yard is a seriously considered idea, after having
analyzed the reasons for slow disposal of goods and phenomenon of cartels of bidders in
Auctions. These cartels have the sole business of buying goods through Customs Auctions.
They daily come to the port and get information from port and Customs staff regarding
auctionable lots. In the existing set up these bidders have more information about the location
and bidding history of lots than Customs itself. They are in fact the first to know among the
public about location of lots and auction schedule. They search for and contact the potential
buyers of the goods and purchase goods for them through Auction. Having been working at
the port since long and going through the intricate auction process every day, they have
developed definite relationship with the port and Customs staff, and they understand the weak
points the system. The industrial buyer themselves do not buy goods of their need from
Auctions directly because of uncertainty and complexity of processes spread over two
departments i.e. Customs and custodians. The buyer neither has the information nor the
access to the goods on sale, hence the need for intermediaries and cartels. The cartels are
very possessive of their domain and there are numerous instances where an independent
buyer tried to buy goods directly from our auction and the cartel succeeded in sabotaging the
whole process. They managed to get the file misplaced or just the assessment sheet in the
file, the authorized officer is lost and unable to decide the issue since this paper is the sole
source of Customs record and goods have to be re-examined and re-assessed which is again
a lengthy process. Even when they find that a bid is going to be accepted against their
interest, they write anonymous complaints to the department, and mostly succeed in
jeopardizing the process. Result of the intricate process and involvement of two departments
is that now in auctions only a dozen or so professional bidders take part. More than 9500 lots
involving billions of rupees have been stuck up and rate of accumulation is still more than the
rate of disposal.
The presence of two departments in Auctions is a big hurdle. A bidder has first to go through
the hassle of Customs processes, and then his ordeal begins when he approaches the KPT
to get delivery of the goods. When we contacted the persons who are frequent buyers from
Customs auction, they were very vocal in telling that major problem in Auction start after
getting delivery order from the Customs. The ports maintain that they are only responsible for
the number of packages and not the contents. After completing all the formalities of auction
when a bidder approaches the port authority for the delivery of his goods he discovers that
most of the goods are now either incomplete or missing, till the time he is unable to arrive at a
satisfactory arrangement with the port staff he will never be able to take delivery of the entire
goods that he paid for. Another problem is lack of coordination between the departments. On
numerous occasions goods auctioned by Customs are not released by KPT since there was a
detention or a stay against the auction of the same. Imagine the bidder’s dilemma.
Making auctionable lots available at one place will make the goods accessible to public.
Access to goods is a major problem. The goods at present are scattered in various sheds and
warehouses. The port authorities also keep shifting the goods according to their own needs.
Even Customs does not know the location of goods with certainty.
Delivery of goods: The buyer or his representative will produce DO to the relevant shed who
will arrange to load the goods on the buyer’s vehicle and will record the particulars of the
same on the DO. EO Gate at the time of exit will check delivery particulars.
Distribution of Sale proceeds: Sale proceeds will be distributed in accordance with section 201
of the Act.
Public information: Publicity campaigns will be conducted to attract the buyers to the auction
yard, highlighting features such as non stop auctions and buyers convenience. It is envisaged that
word of mouth will go along way in popularizing the concept since it is envisaged as a public place
where people can, shop and trade and enjoy themselves at the same time. The following means
will be employed:
• Web-publishing of Auctions Data: Customs Auction website will be a main and live source
of information for the bidders. Complete Auctions Rules and FAQs about the Auctions will be
displayed on the website. Data of each auctionable lot will be published on Customs Auction
Website. The data will reflect all details about the lot including description of goods, HS Code,
country of origin, year of manufacturing, quantity, reserve price and maximum bid received in
the on-going auction. When bid against a lot is accepted, the receipt number issued to the
bidder will also be reflected on the website in order that the successful bidder can get to know
the decision on website.
• Publishing in newspaper: A periodic announcement of Auctions will be given in national
dailies indicating the location of Auctions Yard and timing of Auctions and general categories
of goods put to Auction.
Refunds
The basic impediments to processing and disposal of refund claims are:
1. Lack of knowledge. We don’t really know how many cases are pending.
2. The putting up mechanism; these were never put up.
3. Low priority allocated to this area due to other pressing tasks of immediate nature.
4. Follow through; ensuring that after sanction the cheque is issued.
In reality nothing can be simpler than the processing of refunds. Let us examine the tasks involved:
The tasks are:
1. Receipt of application.
2. Placing before the appropriate authority.
3. Sanction / Rejection by the appropriate authority, this involves:
a. Determining if the claim is within time.
b. Determining whether the request is legitimate.
c. Ensuring that duplication in payment does not happen.
d. Confirming that the amount which is sought as refund was actually deposited.
e. Ensuring that no recoveries are outstanding against the claimant.
f. Ensuring that the decision taken is implemented.
A Refund case is initiated:

1. Application by the claimant
2. Court Orders / Adjudication orders.
Proposed Process
The processing of Refunds is built into in the automated environment as is being proposed:
The mechanism is envisaged to work as follows:
Since application for refunds is a prescribed Customs document as per section 33. It will be
filed in a format (Annex Form-3) and entered into the system like a Bill of Entry. The procedure of
filing this document is at the front office and in an identical manner as described for SAD. With this
step, the problem of lack of knowledge is eliminated. At present the problem is that there is no
specified dedicated input point for filing a refund claim hence a refund is filed if presented at the AC’s
office, PA’s office, Collector’s office, before a clerk wherever, further there is no unique reference
number like a machine number as such we cannot keep track of what has been filed and when and
pertaining to whom? Further we don’t even know while processing the claim, whether it was filed in
time or whether somebody has just stamped it in the back date?
The moment a refund application is filed at the front office it will appear as a job in hand at the
concerned AC’s terminal, the documents submitted along with the application are also forwarded.
(Annex CS-3). Elaborate mechanism to be written in the software. With this step the putting up
mechanism is eliminated and becomes instantaneous). We suggest that AC/DC should be the final
authority for deciding a refund claim irrespective of the amount involved. This scheme is already
available in Customs like the Sales tax; we suggest that it should be adopted in totality without
extraneous administrative checks which are futile in any case in the proposed automated
environment.
The AC has 30 days to decide the issue, unless there is delay on part of the claimant in
responding to hearing memo, filing of any missing documents etc. The issue of priority is also auto
resolved. Once the job in hand is approached the refund claim is presented on the AC’s terminal in a
Refund Processing Menu (Annex CS-4) which will assist the officer in the following areas in the
manner described:
Claim is within time: The system will compute from the date of filing (recorded when the claim
is lodged in FO) and date of payment (available in system against the IGM / EGM-Index) by
comparing it with Cash Number. The date of payment in cases not relating to IGM / EGM-
index will be specified by the claimant in his application.
Confirmation of payment: The system will confirm the payment of the amount claimed from
the Cash Number.
Confirmation of no-duplication: The system will indicate the details of any refund
claimed/granted against the same IGM / EGM-index has been earlier claimed.
Recovery Outstanding: The system will indicate if any amount is recoverable from the
claimant so that the same may be adjusted. Any notices for recovery against the claimant
received from other Collectorates/department will also be reflected, so that the same can be
legally adjusted from the amount sanctioned.
All notifications, SROs, CGOs, Public Notices and Standing Orders will be available to the officer.
If more documents from the claimant are needed, system generated Document Calling Memo or
Hearing Notice will be issued. The references of such correspondence will be recorded in the system
against the Refund Application’s Record The process is similar to that of adjudication. (See
Adjudication)
Refund Sanction Order will be computer generated which will be communicated to the claimant and to
the Accounts Section.
Refund of Sales Tax and Advanced Income Tax collected by Customs

Presently Customs is authorized to refund Sales Tax collected on import of goods but is not
authorized to allow refund of the Advanced Income Tax.
The procedure of refund of Sales Tax is laid down in Sales Tax General Order 4 of 2000 dated 1st
September, 2000. The refund of Sales Tax by Customs is often delayed due to want of confirmation
from the concerned Sales Tax Collectorate that no refund claim or input adjustment of the amount has
already been claimed by the registered person. In this regard it is proposed that the refund of sales
tax paid at the time of import may only be dealt by Customs and Sales Tax department may not
entertain such claims.
Likewise, Customs be authorized to refund excess amount of Advanced Income Tax paid on imports,
if due.
Duty Drawback
The system of duty draw back is built into the process of Examination & Assessment.
Law Branch
Law Branch carries out the following tasks:
• Lodge cases in High Court or Supreme Court
• Pursue the cases, furnish para-wise comments, replies to the Courts, attend hearings
• Appoint Standing Counsel for the department
• Coordinate with the concerned section to which the case relates.
Proposed System (FLOW-4)
1. Law Branch will approve all the Contravention Reports
2. Take up the cases before the Collector (Adjudication), the Collector (Appeals), Appellate
Tribunal, High Court and Supreme Court.
3. Maintain data regarding the law cases.
The organizational set up of the Law Branch will be as under:
• Additional Collector (Law)
• Assistant Collector (Law): 1 or 2 depending upon the workload.
• Principal Appraiser (Courts): 1
• Principal Appraiser (Appeals) 2 for Tribunal and Collector (Appeals)
• Principal Appraiser (Adjudication) 1 or 2 depending on the workload.
Document inflow
The following documents will be referred to the Law Branch electronically:
• Proposed Contravention Report from the Groups for approval and referral to
concerned Adjudicating Officer
• Hearing notices form the Adjudication Collectorate
• Orders-in-Originals from Adjudication collectorate.
The following documents will be received in the Law Branch in the hard copy form:
• Hearing Notice ( excluding those form the Adjudication Collectorate)
• Appeal Order
• Interim Order
• Appeal Memo
• Any Miscellaneous document
On receipt the necessary particulars will be entered in Doc Receipt Menu (see Annex CS-5). Each
document will be referred to Dealing Officer, if system identifies one, or to AC Law who will assign a
dealing officer in all fresh cases, however, in case of hearing notices form Adjudication Collectorate
the dealing officer will normally be the one who dealt with the contravention report at the original stage
to which the hearing notice relates. The dealing officer once assigned by the AC Law, will be stored in
the system, and will be identified with the case by the system at the time of receipt of all subsequent
documents concerning the assigned case. Therefore, all the documents relating to cases which have
already been assigned to dealing officers will be send directly to the dealing officer form the
document receipt terminal of the Law Branch while all the new cases and documents will be put up to
the AC Law for assigning to the dealing officers. The process of shunting the dak relating to already
assigned cases directly to the dealing officers would save time by reducing the unnecessary
document flow within the branch. However, all the dealing officers who have received some new
document concerning an already assigned case would put up the case before the AC Law after
necessary scrutiny and comments for informing the officer of the latest position of the case as well as
for consultation and guidance wherever needed.
Approval of Contravention Reports:
Since Law Branch is envisaged as a legal bench marking tool it therefore is essential that each
Contravention Report is issued with the approval of the Law Branch which will ensure the legal quality
and equality in all the cases which are sent to the Adjudication Collectorate resulting in saving a lot of
time wasted in thrashing out half cooked and loosely worded Contravention Reports currently being
churned out by the groups on their own.
• The PA (Adjudications) will receive the proposed contravention reports form the concerned
group incharge electronically, which will be duly reflected in the contraventions received
menu, he will scrutinize the proposed CR, record his comments in the system and forward the
same to AC (Law) along with draft show cause notice (SCN) if the PA thinks that the
proposed contravention report is sustainable otherwise reasons of quashing the same will be
recorded and forwarded to AC (Law)
• AC (Law) after evaluating the same will refer it to the ADC (Law) with his comments.
• ADC (Law) (Annex CS-6) will examine it and amend the CR and draft SCN if needed. He will
approve and refer it to concerned Adjudicating Officer and the Referring Officer( finalized CR
only) and intimation that the concerned CR and SCN has been sent to the adjudication
collectorate will be sent to the PA (law) who initially handled the proposed CR, the same PA
would be responsible for pursuing the case when hearing notice is received form the
Adjudication Collectorate unless the case is assigned by the AC or ADC (Law) to some other
dealing officer on receipt of hearing notice.
• If the proposed CR is not sustainable, ADC (Law) will record his reasons for quashing the
same. The said decision will be communicated to the Referring Officer along with remarks,
through Cases Referred Menu.
• The system will retain
o the Proposed CR
o the Approved CR and SCN
o AC Law’s comments
o ADC Law’s comments for approving or disapproving the CR.
Receipt of ONO and filing of Appeals
• All ONO’s will be referred by the concerned adjudication officer to the law branch
electronically and will be reflected in the PA(Appeals) menu, PA(Appeals) will examine the
ONO,( generate a hard copy for future record and reference?).All cases wherein the decision
is against the department partially or in toto, will be forwarded by the PA along with his
remarks for filing the appeal against the same to AC (Law). AC Law will examine the ONO
and with his remarks refer it to ADC Law for approval.
• ADC Law will both approve the same for filing Appeal and refer it to PA (Appeals) for
preparing the draft appeal which will be routed through AC Law for approval by the ADC, or
may prefer not to file appeal, by recording reasons in the system, and will communicate his
decision to the Referring Officer and the PA (Appeals).
• After the memo of appeal has been approved by the ADC Law the same will be filed by the
PA (Appeals) with the relevant forum.
• After filing of appeal the PA appeal will record the particulars of appeal in the Appeal Filing
Menu (see Annex).
• System will send the particulars of filed appeal to the concerned group for information and
would be reflected as a continuing status of the electronically received ONO in the group form
the Adjudication Collectorate
• Receipt of Appeal Orders
Appeal Orders will be received from
o Collector (Appeals)( Adjudication collectorate?)
o Appellate Tribunal
o High Court
o Supreme Court
Appeal Order will be processed as under:
• The Appeal Order will be referred to PA(Appeals) through Doc Receipt Menu who will
examine the order and send a hard copy of the order to the concerned section, and in all
cases wherein the decision is against the department, partially or in toto, he will record his
comments for filing or not filing the appeal and forward the same to AC (Law).
• AC Law will examine and, with his comments, refer it to ADC Law for decision whether appeal
before the next forum is to be filed.
• ADC Law will either approve the same for filing Appeal and refer it to PA Law for preparing
the draft appeal, or he may prefer not to file appeal, by recording reasons in the system, and
will communicate his decision to the Referring Officer, AC and PA (Appeals).
Hard copy of each Appeal Order will be sent to the concerned Group by PA (Appeals). Filing of
approved appeals has been dealt with in the section above and would be done on the same pattern.
Receipt of Interim Orders
Interim Orders flowing into the Law Branch are either
o Stay Order or
o Specific Compliance Order; (e.g. assessment on certain value till finalization of the
case)
Such Orders will be received in Law Branch, entered in the Doc Receipt Menu and will be put up to
AC Law.
• The particular of Stay Order will be recorded by AC Law in Cases Referred Menu.
• Specific Compliance Order will be referred to concerned Sections for compliance. The
operative part of Specific Compliance Order will be entered in the system. It will be available
in the PA Law’s Register, and to the concerned Section.
Hard copy of Interim Order will be sent to the concerned sections.
Hearings (FLOW-5)
Hearing Notices will be received in Law Branch, and will be referred through Doc Receipt Menu to
• AC Law in fresh cases where no Dealing PA has been appointed as yet; AC Law will appoint
a Dealing PA and refer the case to him electronically through his Cases Referred Menu.
• Dealing PA Law identified by the system.
After attending the hearing PA Law will record the proceeding in the Hearing Attended Menu. If AC
Law is required to attend the hearing, he will record the proceedings himself. If ADC Law or Collector
attends the hearing, the proceedings will be recorded by AC Law.
Adjudications
Tasks
The following tasks are carried out during an adjudication process;
• Issuing of a Show Cause Notice
• Issuing hearing notices
• Issuing Document Calling Memo
• Issuing Order-in-Original
Present System
The existing system does not provide any mechanism whereby the adjudicating office would know
• How many new contraventions are lying wherein SCN is to be issued?
• How many hearing notices have not been responded to by the party?
• How many cases are lying where ONO has to be issued?
• Whether ONO issued has been received in the relevant Section i.e. Recovery or Referring
Officer
The Proposed System
The authorized officer will receive Contravention electronically containing the following fields of
information:
Contravention Ref #
Date of referral date
Referring Officer Name and designation
Accused Name
Address
NTN
CHAL
Cargo Reference IGM / EGM No. and Index
Item No.
Brief Facts:
Section contravened
Amount detected Levy
Amount detected
Draft SCN too will accompany the CR.
Issuance of Show Cause Notice: (Annex CS-7) The Adjudicating Officer will issue Show Cause
Notice, which will be system generated. However, the following particulars will be fed manually in the
system by the concerned adjudication officer; the electronic intimation of the same would be sent and
duly displayed in the Menu of the AC Law.
Next date of hearing
Time and place of hearing
While a hard copy will be generated to be send to the defendant. The hearing proceedings will be
recorded in the system through the Hearing/Notice Menu.
Hearing Menu: Hearing Menu will show the previous hearing fixation history chronologically. The
following particulars will be entered in order to issue a fresh Hearing Memo or to enter hearing
proceedings.
• Next date of hearing
• Text field (to ask for documents etc.)
• Remarks (remarks will be for Adjudicating Officer’s personal memory, and will be reflected in
his planning menu against the particular case)
The Hearing Menu will also be used to issue Document Calling Memo. It will be sent to the party
wherefrom the information is required, i.e. Referring Officer or the accused.
ONO Menu: (Annex CS-8) Once the hearing process is over Order-in-Original will be generated by
the adjudication officer through system, and will be assigned a unique number auto generated by the
system. The ONO Menu will show all details of Contravention and hearing history.
The following particular will be entered in the system:
Particulars of amount recoverable
Person Levy Amount
Name NTN CHAL
Particulars of Confiscation
IGM / EGM Index Item No. Quantity PCT Value
Warnings / Remarks
Person Remarks in the Order-in-Original
Name NTN CHAL
The ONO will be electronically transmitted to

Referring Officer( AC Law)

Recovery Officer – Where any recovery is involved
AC Auction – where any confiscation has been ordered.
Hard copies of ONO will be provided to
The party
Office record of adjudicating officer
ONO Menu will show all Contravention contents, fixation history (see Annex).
Adjudication Officer’s Menu:
The following two menus will be provided on the computer interface of the adjudication officer to aid
him in having a quick look at the daily pending jobs as well as to plan and check the total work load in
his office.
1. Daily Pending jobs:
It will include two types of jobs (1) new Contravention Reports (2) hearing to be held today
Case Ref # Name of Name of defendant Action due Proceed
Referring Officer
SCN
Hearing
Clicking the proceed button will take him to the Hearing/Notice menu form where he can
exercise any of the following options:
o Issue SCN
o Issue hearing notice
o Record the hearing proceedings in the system
o Issue next hearing date
o Record remarks for personal memory
The tasks in this Menu will only disappear if the Proceed option is exercised.
2. The Adjudicating Officer’s Planning Menu will show a list of cases:
Case Name of Name of Amount No of Next / Remarks / Proceed
Ref # Referring defendant involved hearings last date Personal
Officer held of Memo
hearing
Double
click to see
details
Clicking the proceed button will give him option to go to

o Hearing Menu (to issue hearing memo or to record remarks); or
o ONO
This Menu will not reflect the case wherein SCN has not been issued. Such cases will be
reflected in the Daily Pendency Menu.
3. Statistics
Case received during specified period
Case disposed of during specified period
Securities
The issue of securities deals with what we commonly call the BG cell, and the problems
related and associated to it. The basic problems with securities are:
Unformatted input without dedicated input point.
Illogical Job description of BG cell.
Unformatted input without dedicated input point: As a matter of routine people complain at the
office of the collector that although they have fulfilled the prerequisites for discharge of their securities,
yet not only that the security has not been released their fresh imports have been blocked.
Dealing with these angry people is embarrassing for the department, the option generally
exercised by the collector is to de-block the importer for 15 days and hope that the matter will be
sorted within time and that the man will not return after 15 days with the same complain. This situation
arises because we have a computer program that links the date of expiry of the security to blocking of
importer and does it without fail, but the computerization stops here. The problem remains that the
prerequisite conditions are filed at any point like the group, the BG cell; the collector anywhere, the
point is that the importer is satisfied that they have intimated the collectorate, yet at the collectorate
the requisite input has not arrived where it was due. This is the same problem which is prevailing in all
facets of the department. It has been attempted that all inputs should be formatted the idea is not new
and is prevalent in most modern organizations, for example in a bank for depositing there is form, for
withdrawals there is a form, for transfers, for DDs, for opening of accounts etc. In the Air Force if you
wish to leave the base you fill a form 295, if you hire a vehicle for personal use you fill in 793. The
advantages of formatted inputs are obvious so that all the information that is needed is present and
the persons required to perform the task are geared to address the particular form meant for their use.
Numerous examples can be given here however the need for formatted inputs at dedicated points is
established.
Illogical job description of BG Cell: At present the BG Cell performs the following tasks:
Receipt and safe custody of securities.
Discharge of securities.
Recovery in case of lapsed or matured securities.
It is felt that except for the first no other task should be assigned to the BG Cell. It is obvious that the
most suitable forum regarding the release of securities is the one that accepted it in the first place.
Similarly since dedicated recovery sections are already available as such lapsed or matured securities
should simply be referred to recovery officer. (See Recoveries).
The role of Securities section is seen to be merely that of a vault. Where all valuable financial
instruments are stored and from where they are released to other section as needed.
Securities and there types:
It may be pertinent here to briefly examine the concept of valuable financial instruments. “A security is
collateral required by the Customs to ensure that the declarant discharges any obligations undertaken
to Customs. The primary aim of securities is to secure the payment of duties and taxes. In other
instances security may also be required to secure the fulfillment of any other obligations that the
declarant or operator may have in regard to a Customs procedure or practice or any other
requirements that may be specified by Customs”. (Kyoto Convention-Chapter 5 of General Annex).
Kyoto Convention further observes “The form in which the security is usually provided is the deposit of
cash or the negotiable securities, or given by an appropriate surety (generally a bank or an insurance
company). It may also be given in the form of a bond or, in exceptional cases such as importation by
public institutions, government departments or local authorities, by a simple undertaking”. (Notes to
Standard 5.1). From the foregoing it is apparent that securities are only the following documents:
Cash deposit
Negotiable instruments
Bank Guarantees
Insurance Guarantees
Indemnity Bonds
Simple undertaking (Only from Govt. or Public/Local bodies)
It may further be appreciated that Customs has the right not to accept a security “Customs always
retain the right to refuse approval of the guarantor or the type of security proposed where they have
reasonable doubt that the obligation will be discharged within the prescribed period” (Kyoto
Convention-Notes to Standard 5.1). It is clear that Customs should only accept those securities where
by we are absolutely sure that the same will not be defaulted, this will relieve us of the problem of
ending up with mature and expired securities that cannot be realized, thereby avoiding unnecessary
future recovery efforts.
Proposed Procedure
Securities are required by Customs in following cases:
- Provisional assessment
- Prescribed securities (SRO Conditions)
- General securities
Provisional assessments: In such cases the form of security is not prescribed under the law, this is
decided on case to case basis by the authorized officer accepting the security. It is proposed that it be
the primary responsibility of the authorized officer accepting the security to ensure that the security
being sought is sufficient under the circumstances and keeping in view the profile of the operator or
declarant. Undertaking will only be accepted in cases of Government, public sector organizations or
local bodies. In all other cases a safer form of security should be accepted. Post-dated cheques
should not be accepted as security. A mere undertaking from a commercial importer is also
unacceptable.
Prescribed securities (SRO Conditions): In such cases the form of security is prescribed in the
notification / SRO. Even in such cases the notifying authority must take all precautions that only
enforceable forms of security are prescribed.
General Securities: These are the securities which are obtained from clients like, Customs Clearing
Agents, Shipping Agents, Warehouse Operators, Bonded Carriers etc. Principles as described above
to apply in such cases as well.
Furnishing of Securities
In cases of prescribed securities (SRO Conditions) the amount of security is determined at the time of
assessment by the Group. The B.Es in such cases will be filed at the relevant group rather than the
front office. The Group after assessment will refer the matter electronically along with the documents
and recommendations to the authorized officer for decision.
Assistant Collector’s terminal will reflect it in Menu as security pending decision. It will be disposed of
when Assistant Collector takes a decision.
In cases of provisional assessments the AC will specify the acceptable form of security at the time of
accepting it. (see Assessments)
When the client / declarant furnish the requisite security, its particulars will be entered in the system
by the group. The particulars will include:
- Form of Security
- Particulars of security
- Expiry date
- Value of security
- Surety (Bank
- Department / Collectorate wherefrom Consumption Certificate or Installation Certificate.
- Complete address and contact address of the client reconfirmed at the time of furnishing of
security.
When a security is accepted, it will be added to the list of securities accepted by the concerned
Assistant Collector and simultaneously the same will be reflected in the Menu of In charge Securities.
The original documents of security will be handed over to In charge Securities and copy of them will
be retained in the record of the Group. In charge Securities will acknowledge the receipt of the
documents in his Menu.
Verification of Security
As soon as a security involving a Surety e.g. a Bank Guarantee is accepted, a letter to the concerned
Surety / Bank will be issued by Authorized Officer for its verification. In case the same is not verified a
prosecution case will be initiated against the importer/exporter.
In charge Securities’ job description:

Job of Principal Appraiser In charge Securities will be
- to receive the securities duly accepted by the Authorized Officer;

- to keep the securities documents in safe custody;
- to release the security on discharge by the authorized officer to the client
- to hand over the matured securities to the Recovery Officer when required.
Release of Security
The documents for release of security will be filed at the Front Office. A prescribed Security Discharge
Form (From-4) will be submitted along with the supporting documents. System will intimate the
concerned Assistant Collector by reflecting the relevant SDF in his jobs-in-hand.
In cases where installation / consumption certificates are required for discharge of a Security, it is
recommended that such certificate should clearly mentions the two points:
- the import / export reference (IGM / EGM and Index) and
- whether the goods installed/consumed / re-exported in full or in part.
The client may file more than one SDF e.g. when he receives an Installation Certificate for a part of
machinery. All such documents will be recorded in the system and will be available to Authorized
Officer.
The AC will scrutinize the matter. If the documents are sufficient for release of security, the security
will be released. If any further information or clarification is required, a Document Calling Memo or
Hearing Notice will be issued to the party.
Recoveries, if any, against the client will be made / adjusted before release of Security. This scenario
is envisaged in cases of cashable securities generally of section 81. The job in hand Menu will
disappear when the security is released by the authorized officer.
It may be appreciated that now a Security will be discharged by the section who accepted it at the first
place. In the existing system one officer, AC BG Cell, is required to discharge the securities accepted
in various sections / branches of the Collectorate. He has to study and work out the whole case ab
initio and for clarifications he has to refer the matter to the Group / section to which the matter relates.
It has resulted in duplication of work and hence delays. In the proposed system the securities will be
discharged by the section which accepted the securities, familiarity with the background of the issue
will result in expeditious decision making.
Another important feature of automation will be that the prescribed format of Securities Discharge
Form and its filing at the Front Office will immediately intimate the authorized officer to take necessary
action. He will not be dependent on the uncertainty of the putting up process.
Pre-maturity Automated notices:

Advance notices to the client will be issued where an act is to be performed by the operator / client for
release by the security.
If by 60th day prior to the date of expiry of the security, the required documents in SRO cases are not
received the issue will be reflected in the Menu of AC concerned to send a notice to client intimating
that his security is lapsing on X date and that unless a request for extension is available within X-30
days no request for grant in extension will be entertained.
On day X-30 i.e. 30th days before expiry if still no documents have been filed or still some documents
are required, system will again proceed to generate notices to the clients.
Extension in validity period

Request for extension in the validity period of a security will be filed in the FO on the prescribed
format (Form-5) reflecting
- Security Ref # (IGM and Index)
- Reason for extension
Such requests will be reflected in the Menu of the Authorized Officer.
Request will be processed and disposed of, and if extension granted, it will be recorded in the
computer, Security profile is accordingly updated
- Extended by (authority)
- Reference of order (in case of Board)

- On (date)
- Up to (date)
If extension is granted by the Board, the details will be entered in the system, and data will be
accordingly updated.
Matured / Lapsed Security
If a security is matured due to non-performance of operator / client, the matter will be referred to the
Recovery Officer.
When in a provisional assessment case, the time period for finalization of assessment expires, the
security deposited will released by the system. The operator / client will be intimated by the AC who
accepted the security.
Recovery Cell
Tasks
The Recovery Cell has to do the following tasks:
• to initiate recovery action when an ONO is issued against the client wherein some recovery of
government dues has been ordered;
• to initiate recovery action when matter is referred from some other organization / Collectorate;
• to initiate recovery action when Securities deposited by client lapse/mature and Securities
Cell refers the matter to Recovery Cell;
• Keep complete profile of each Recovery case and each defaulter, the amount realized, stayed
(or stay withdrawn);
• Keep personal profile of assets and businesses of defaulters and keep liaison with relevant
authorities;
• Statistics
Present System
Although the statutory provisions and the Recovery Rules made thereunder are quite exhaustive but
they remain the most lukewarmly implemented law, resulting in almost complete data and legal chaos.
However following are some of the major flaws in the current system of recovery:
• Recovery Registers is not being maintained, in computer database or manually. Only a few
defaulters’ list has been fed into the system whose transactions are blocked;
• Customs stations are not linked. A person declared defaulter at on Customs station may get
his goods cleared from any other Custom station.
• A defaulter may get his goods cleared under any other name by getting a duplicate import
registration;
• Order-in-Originals are not fed into the system. Legal process is not linked to the Recovery
Cell, hence legal stay (or its withdrawal/expiry) is not recorded properly into Recovery
database;
• There is no on ground mechanism for attachment, sale, appointment of receiver, searches or
seizures of property of defaulter where required;
In fact there is no complete data of recovery available. At times it has been updated but due to
absence of any mechanism of its automatic validation / updation, it has become obsolete and
unreliable.
Proposed System
In view of the prevalent problems in recovery branch the emphasis of new system is on data flow
control and data storage relating to recovery. Since, the proposed goods clearance system is based
on post-transaction audit , it will be necessary for such a system that completes profile of each client
and Customs agent is maintained, resulting in maintenance of a data-rich system. Whenever a
recovery becomes due in such a data-rich system the whereabouts of the defaulter will be traced
easily and knowledge about the business premises, assets, his partners, guarantors will be readily
available in Customs profile of such a defaulter thus facilitating the whole recover process.
Recovery process involves the following procedures:

• Issuing Recovery Notices to the client
• Issuing Notices for deduction and recovery to other departments
• Embargo of business transactions
• Sealing of business premises
• Appointing Receiver on the business
• Attachment of assets
• Sale of assets
• Arrest of the defaulter
The above steps will be carried out as follows:

• A recovery will only accrue when
1. a proper Order-in-Original is issued through the system; or
2. a Security lapses; or
3. a notice from other offices of Customs, sales tax, central excise or income tax is received
and entered into the system.
• System will refer the matter to RO (Recovery Officer), and the case will appear in RO’s Menu
(CS-12)
• A Reference Number will be assigned to the case which will be quoted in all future
correspondence. System will link the case to (1) consignment reference number IGM/EGM and
index and (2) client/agent’s profile. The system will identify profiles of all other persons associated
/ partners to the defaulter.
• Day X (date of receipt of case to Recovery Officer)
Recovery Notice will be issued to defaulter through the system mentioning therein the last
date of payment i.e. the day X+30. (CS-13 AC Recovery processing menu)
In case of lapsed Securities, notice to guarantor Bank will be issued for encashment of
guarantee.
Meanwhile, details of the assets of the defaulter and his associated persons and guarantors
will be gathered through intelligence and entered into the system;
• Day X+30
If an amount is yet recoverable, notices for deduction and recovery will be issued to all
Recovery Officers of Customs, excise, sales tax and income tax. Copy of the same will be
given to the defaulter;
System-blockade of import and export transaction of the defaulter
Embargo / Sealing Notice will be issued through system, mentioning therein that on Day X+45
embargoes will be enforced and business premises will be sealed.
• Day X+45
The blocked goods at port or warehouse will be shifted to the Auction Yard for sale by
Auction, and notice will be issued to the owner that goods will be auctioned in 45 days if
amount due is not paid.
If an amount is yet recoverable, Embargo and sealing of premises will be enforced and details
thereof will be recorded in the system.
Attachment / Receivership Notice will be issued, mentioning therein that on Day X+60 day
attachment / appointment of receiver will be made.
RO will send a Warrant of Attachment to the defaulter;
• Day X+60
If an amount is yet recoverable, Warrant of Attachment will be issued or Receiver will be
appointed; the assets of the client will be attached, and details of assets attached will be fed
into the system. (CS-14. PA recovery processing menu) The movable and salable property
will be either removed to the Auction Yard or will be sold in situ;
On attachment the case will be referred to AC Auction for sale. AC Auction issues a Sale
Proclamation Notice and on day X+90 (or in the next Auction date after day X+90) the
attached assets will put to sale by public auction or tender.
The running business of the defaulter will be taken over by the RO and a Receiver (a
Superintendent Customs, Principal Appraiser or any other person appointed by the RO) will
be appointed for management of business and recovery of government dues.
• Day X+75
If the amount remains un-recovered because the business of the defaulter is closed or for any
other reason; then warrant of arrest will be issued in the name of the defaulter. Presently the
arrest warrants are issued only as a last resort and that too extremely rarely. Still it is felt that in
the given social setup it remains probably the most effective method of effecting recovery and
should not remain as the last method written in the statue which is never put to practical use.
At the same time recovery notice to associated persons and guarantors of the defaulter will be
issued.
• Day X+90
Blocked goods and moveable property, if any, in the Auction Yard are put to auction.
Stay and withdrawal of stay: The process will only be stayed when RO stays the recovery process.
The reasons will be recorded in the system and validity period of stay will also be specified;
The authority of stay (Collector, Board or judicial forum i.e. Tribunal or Court) will be recorded in the
system.
Date of stay order and date of expiry of stay will be recorded in the system; the assets of the client will
be attached, and details of assets attached will be fed into the system; The movable and salable
property will be either removed to the Customs Auction Yard or will be sold in situ;
Six months from the date of stay the system will automatically expire the stay, unless further extended
by any other system. On expiry of stay, the system will continue the process onwards and will reflect
the task in RO’s pending jobs
Recovery, waiver or writing of: Each amount recovered, waived and written-of will be recorded in
the system. Payment will be recorded against the Recovery Case Reference number.
Recovery Menu:
1. Daily Pending jobs

Case Ref # Defaulter Action due Proceed
2. The RO’s Planning Menu will show a list of cases:
Case Name of defaulter Amount recoverable Nature of Stay, if any, till Action due on See
Ref # recovery date date details
3. Details of the recovery

Case Reference #
Referring Officer
Case referred on (date)
Nature of recovery
ONO number and date
Security Ref # and date
CHAL #
Defaulter’s name, address and NTN
Known properties of the defaulter

Associated persons
Summary of government dues

Levy Net payable
CD
CED
ST
IT
Surcharge
Additional Tax
Penal surcharge
Fines
Penalties
Personal penalties
Licence fee
Other
Total
Recovery details of each levy (chronological)
S. Levy Date Initial Payment Addition Waiver / Net Reference

No. due written-off payable
Recovery actions taken
Sr. No. Action Reference Exceptional Proceed to

Status withdraw
Recovery Notice -1 Issue Ref # /date
Notice to other Deptts
Embargo Notice
Sealing of premises
Attachment
Appointment of Receiver
Referred for Sale
Action taken against associated person

Sr. Action Reference Exceptional Proceed to Date of
No. Status withdraw expiry of
withdrawal
Recovery Notice -1 Issue Ref # /date
Notice to other Deptts
Embargo Notice
Sealing of premises
Attachment
Appointment of Receiver
Referred for Sale
Attachment details
Property details date of attachment Attachment Officer
Receiver appointment details

Property details date of appointment of Receiver
receivership
4. Attachment Officer’s / Receiver Menu:

The Menu will provide a form to enter details of assets attached / taken-over
Name of Officer / person
Property details
Immovable _____________
Movable _____________
5. Statistics Menu
Recovery outstanding at start of specified period
Added
Recovered
Net recoverable
Warehousing
The basic purpose of warehousing is to store non-duty & taxes paid goods of different kinds
of importers. The Customs job is to grant licenses to warehouses under the prevalent laws, to monitor
the appropriate storage of goods and to ensure the safeguard of legitimate government revenue
involved. The Subject of Warehousing is dealt under section 12, 13, 84 to 119 of the Customs Act
1969 and under rules 342 to 363 of Customs Rules 2001 along with different CGOs & SROs issued
and amended on the subject from time to time.
Warehouses can be broadly divided into following five categories:
1) Public bonded warehouses (for storing non-duty and taxes paid goods of general
importers)
2) Private bonded warehouses (for storing non-duty and taxes paid goods of a
specific importer)
3) Manufacturing bonded warehouses (for storing non-duty and taxes paid goods of
manufacturers- cum-exporters)
4) Common bonded warehouses (for storing non-duty and taxes paid goods of general
importers & meant for manufacture of finished goods
by the SMEs or indirect exporters)
(5) Diplomatic bonded warehouses (for storing non-duty and taxes paid goods meant for
sale to staff of foreign diplomatic missions and
privileged persons)
The proposed computer based procedure is, divided into two major steps:
a) Licensing
b) Storage
This procedure will be applicable to all kinds of warehouses.
Licensing:
The proposed process of obtaining a warehousing license is given at (Flow-7) and
briefly explained here. Application for a warehousing license will be submitted on the prescribed
format electronically under the relevant rules at the Front Office (FO) along with relevant paper
documents under receipt. The application will be submitted to concerned bond section electronically
by FO along with relevant documents. PA (bonds) will verify the documents and Assistant / Deputy
Collector will visit the premises to verify the plan. After required verification, application for license will
be submitted to the ADC and Collector electronically along with relevant paper documents duly
verified by PA & AC/DC. AC/DC will also submit a Performa regarding documents verification
electronically to ADC and Collector as per Computer Screen (CS-9).
The Collector will give final approval of license or otherwise on the same Performa electronically and
print out the Warehousing license on standard format and sign the same. Paper documents will be
kept in record of bond section and signed license will be forwarded back to FO for delivery to the
applicant within prescribed time under the rules. The details of all licensees will be available to AC/DC
bond section as per (CS-10).
Storage:
The process of storing goods in a warehouse can be broadly divided as:
a) Into-Bonding
b) Warehousing period calculation
c) Ex-Bonding or export whichever applicable.
The proposed process is shown in Flow Chart (Flow-8) and briefly explained below:
i) An Into Bond B/E will be filed by importer.
ii) In case of blocking due to any reason by bond section, B/E will not be processed and
importer will be asked to contact AC/DC bond section for dispute resolution.
iii) Under the proposed examination procedure, goods will be examined as per p - list &
invoice found inside the sealed container and that can be done before filing of B/E, as
the case may be.
iv) The assessment officer, or concerned Appraisement Group, if required, will
electronically assess the consignment.
v) The importer will pay the warehousing surcharge @ 01% of assessed value or any
other rate for the time being in force, after which consignment will stand out of
charged.
vi) Escort officer of Customs will nominate the escorting staff on computer for the
consignment mentioning the location of consignment, vehicle No., and name &
address of the bonded warehouse. No escort will be required in case of a
manufacturing bond.
vii) Customs examining officer posted at the concerned warehouse, except
manufacturing bond, will receive the consignment and verify the particulars after
which consignment will be allowed storage. From this date, warehousing period will
start for the consignment. The EO will send acknowledgement receipt of consignment
to the bond section and escort officer.
viii) The EO posted at warehouse will be responsible to keep inventory of the warehoused
goods updated as per (CS-11).
ix) The bond section will also maintain inventory of the warehoused goods.
x) If the goods are overstayed beyond the warehousing period, an Ex – bond B/E will be
blocked until condoning of delay by the competent authority or payment of penal
surcharge, as the case may be, otherwise the goods will be referred automatically to
AC / DC Auction Menu for auction.
xi) An Ex – bond B/E will be filed by the importer and a Bill of Export by a licensee of a
manufacturing bond at the FO.
xii) The assessment officer, will confirm the TD & ST and amount of penal surcharge, if
chargeable.
xiii) After payment of the duty, taxes & penal surcharge amount in the bank, importer will
go to the concerned warehouse for delivery of goods in presence of EO.
xiv) Licensee & EO will acknowledge the same to the bond section after delivery.
xv) All monthly, quarterly or annual returns required from a licensee by Customs under
relevant rules will be electronically submitted by licensee at the FO under receipt
before the expiry of time limit.
xvi) Bond Section will tally the periodical returns with inventory maintained by it and take
appropriate action in case of any difference observed.
Customs Lab
The problem with the lab is the same as with all other facets of Customs; Lack of data. It has never
been studied and as such no data is available:
• What all has ever been tested?
• How many reports are available regarding a PCT Heading?
• How many vague reports were conveyed by the lab, with what implications and why?
• How much time is taken by the Lab in carrying out a test, how much time does the test
require?
• Whether there is consistency in our lab reports for the same product?
Another observation is that no stock of equipment is maintained in the laboratory. An electron
microscope which cost Rs. 2.6 million in 1992 is still awaiting installation. The management of the
Collectorate while deciding as how to make best use of the budget available is not in a position to plan
as to what should be purchased since it is unaware of what is most frequently tested? Or if something
was purchased if it was ever used. Similarly we are unaware of what could not be tested and why, so
that, if frequent, may be we could buy the needed equipment.
At present the client decides the urgency of testing, normal or urgent, and pays accordingly, hence
the client also knows the individual carrying out the test. The entire system of our lab is ridiculous. It is
felt that lab testing is a part of Customs examination, therefore Customs should decide what needs to
be tested and by when? Further Customs should pay its own bill. The client does not even need to
know if his goods were tested. Sending samples to lab and obtaining a report is an internal
transaction and should not involve the trader.
In the proposed system Customs laboratory will also be linked to the system. The most logical place
for lab is the port, as most of the samples are generated at the port. A system for the automation of
Customs lab has been created whereby every transaction and its results to and from the lab are
logged.
Proposed Process:
Samples will be forwarded from Sheds or Assessment Group to Laboratory through the system. A
copy of invoice and packing list will be sent along with the Sample. Sample reference number will be
IGM / EGM, Index and item number.
When a sample is referred to the Lab, it will be reflected on the Lab incharge’s Menu who will mark it
to Chemical Examiner. A job will be added to Chemical Examiner’s Menu who will perform the test
and enter the report in the system. If a test cannot be carried out, the reasons thereof will be
mentioned in the shape of an inability report (see CS-15).
A stock register indicating details of all equipment will be maintained in the laboratory. Lab Examiner
will record the equipment used while feeding the Test Report (see CS-16)
Thus in the system all Test Reports will be recorded which an Assessing Officer or any authorized
officer will be able to view by HS Code or by Manufacturer or by specific TR number.
The maintenance of electronic stock register and inability report will help the management to assess
what equipments are required for the lab and so to purchase the same while upgrading. Availability of
data in this manner will help in the evaluation of lab and its functioning. Inefficiencies and
inconsistencies will be highlighted hence accountability and responsibility.
Sending samples to other laboratories
In cases where Customs laboratory furnishes an inability report, the matter may be referred to any
independent laboratory. The department may contract reputed independent labs and pay for the same
from our allocated budget. It is important to note that in the existing system the trader is asked to pay
for the tests referred to independent lab; hence he is again aware of the identity of the one testing his
product.
Customs Agents Licensing

Task of Licensing Section
- Issuance of License
- Maintain profile and history of agents
- Adjudication and legal proceedings of cases
- Blocking and de-blocking of license
Present System
In the present system all the above tasks are being done manually. The computer has just the basic
data of License number, name, address, name(s) of contact person and working status (active or
blocked). For effective monitoring the Licensing Authority needs the following:
- How many deadwoods are there?
- How many adjudication cases are lying pending?
- Whether the particulars are being updated timely?
- How many licenses are expiring in 30 days?
- Is the license blocked / de-blocked on whose authority?
- Is there any recovery outstanding against the Agent?
- Statistics regarding transaction made by a particular Agent.
Since at present the Licensing authority is instantaneously ignorant of all of the above and need time
to obtain any information through our cumbersome filing system as such either the agent or the
department suffers. The following is proposed:
Profile updating
System will maintain a profile of each Customs Agent which will contain all relevant information about
the agent. Transaction data in the profile will be updated automatically in real-time as a declaration is
filed by the Agent. Changes in his business profile during the last 5 years will be maintained in the
system and be used as risk profile input.
Renewal
Procedure for renewal of license is as under:
- Advanced Reminder: of 90 days: before the expiry of license, an entry in Licensing Authority’s
Menu will be created- notice to party for renewal is required. Licensing Authority will issue a notice
to the agent.
- Application for renewal of license will be filed at the Front Office on a prescribed format, wherein
the list of documents attached with the Application will be given and any changes in the
particulars of licensee will also be mentioned.
- The Application will be referred by system to Licensing Section, which will scrutinize and refer the
same to the Licensing Authority. Document calling memo will be issued by Licensing section if
any other document is required– as per standard DCM.
- The Licensing Authority will examine the Application and profile of the agent showing his previous
compliance level and magnitude of transactions.
- Renewal intimation to the agent will be through a sys-generated notice issued by the Licensing
Authority.
License and Permit
Application to grant permit will also be on a prescribed format, and will be submitted at the Front
Office, which will go directly to the terminal of the Licensing Authority. Permit to transact business will
be system generated issued by Licensing Authority.
Changes in particulars
Application for change in particulars will be filed on prescribed format in the Front Office. System will
refer such Applications to the Licensing Authority who will decide on it, and will refer the same to the
Licensing Section. Licensing Section will update the record when change is allowed by the Licensing
Authority and posted to Licensing Authority electronically and available to him in the Menu.
Payment of fee
System will know the payment particulars of deposits made by an agent. The amount deposited by an
agent will be reflected in his profile.
Adjudication and Legal Proceedings
Licensing Authority will adjudicate the cases relating to Customs Agents referred from any section
electronically or on his own action. Standard Adjudication Menu will be available to Licensing
Authority (see Adjudications). Cases in Appellate Tribunal and Courts will be dealt by Law Cell (see
Law Cell).
Blocking and de-blocking
Licensing Authority will be given authority in the system to Block and de-Block transaction by some
Customs agent, and none else.
When a blocking request is referred to Licensing Authority from any section, it will be reflected on the
Menu of the Licensing Authority, who may take necessary action.
Blocked Licenses will be reflected in Licensing Authority’s Menu. System keeps a log history of all
blocking and de-blocking operations.
New entries
Application for Customs Agents License will be received in the Front Office on prescribed format. It
will be referred to Licensing Authority.
Customs Agent’s Profile
C. H. A. L. # _________________________ Working status: Active / Blocked

Title _________________________
Address _________________________
Corporate Status _________________________
Tel. _________________________
Fax _________________________
e-mail _________________________
Personnel data
Name NIC #
Directors / Partners _________________ _____________________
Authorised signature of _________________ _____________________
Permit holders _________________ _____________________
License particulars
Issue date _________________
Valid upto _________________
Local/country-wide _________________
Legal proceedings
Ref # Penalty imposed Recovered
Decision passed ___________ ____________ _________
Any contravention or ___________ ____________ _________
inquiry under process ___________
Transactions data
Nos. Value
Last financial year _______________ _______________
This financial year _______________ _______________
Commodities, dealing in
PCT heading Value Custom Station
Imports ___________ __________ ____________
Exports ___________ __________ ____________
History of Blocking
From ___________ to __________
From ___________ to __________
Post Transaction Audit.

Common sense dictates that post transaction audit is not a magical phrase, that in order for
audits to work the pre-requisites are:
Effective documentation of trade
Standardized accounting practices
Since the above requisites in our country are at a nascent stage, it would be unrealistic to
place too much reliance on Post Transaction audit. Keeping this aspect in view we have built a
system of assessment and examination which while be very facilitative and expeditious checks all the
essential details of the consignments that may so require on the basis of risk criteria. As such if our
perception of a post transaction audit is that further scrutiny of just a Bill of Entry or Exports, or trade
documents will reveal something new at a later stage, then this is unlikely to happen. To unearth
deeper malpractices at a subsequent stage we would have to analyze the entire financial structure of
a business and detect malpractices based in the cracks in the viability of a dubious structure, yet to be
able to do this we have to return to the same pre-requisites as are listed above.
According to Kyoto the businesses which are suitable for a post transaction audit are those
that are following GAAP (Generally Accepted Accounting Principles). Since majority of businesses in
Pakistan may not qualify, especially those that are considered to be risky as such it is unlikely that our
Post transaction audit enquiries will get very far.
In such cases the mode of Post transaction enquiry will be more in the shape of an
intelligence enquiry regarding the trade, its practices; it’s pricing, sale of its commodity etc, rather than
just a scrutiny of its unformatted, un-standardized books.
As we approach the end of this report, we realize that a lot may still be left, that this report
may be deficient in some areas, yet as the Chinese say, the journey of a thousand miles begins with a
single step; we have attempted to ensure that this step is on sound footing and in the right direction.
Somewhere during this journey we will by joined by others, those of greater wisdom and competence,
those who will build on what we start. We have a long way to go and by the time the
recommendations of this report are implemented we would have further evolved in our own ideas and
thoughts. This is just the beginning on which things are to built, a foundation for improvement. By the
time this report is on ground a lot more issues than those discussed above would be a part of this and
hopefully so would we.
We foresee that this report and the system proposed herein will have a very positive domino effect on
other institutions and organization that interact with Customs, our procedure will work as an agent for
change requiring other organization like Terminal Operators, Customs agents, Shipping Agents,
Trade Bodies etc. to improve and stream line their processes, to the ultimate benefit of our citizens
and legitimate trade.
Legal Changes
Form of import The Board to specify the format of Import General Manifest under section 45(1)
manifest of the Act.
Pre-arrival cargo Sections 43 and 44 of the Act to be amended to provide for pre-arrival delivery of
manifest cargo manifest, that is
1. in case of sea cargo, master of the vessel will deliver manifest to
Customs electronically twenty-four hours prior to the arrival of the
vessel;
2. in case of air cargo, person-in-charge of aircraft will deliver manifest to
Customs electronically soon after his departure from a foreign port to a
port in Pakistan;
3. in case of land cargo, as decided by the concerned Collector of
Customs.
Examinations Change in the ACT abolishing the provisions regarding request for first
examination except prior to filing of declaration.
SRO regarding the rights and responsibilities of the Shipping Lines
SRO regarding rights and responsibilities of Terminal operators.
CGO as per proposed procedure superceding of all previous instructions
regarding methodology of examination.
Transshipment Chapters XII & XIII of Customs Act and to be amended to allow multi-modal /
combined transport and examination at first port of entry where warranted on
basis of Risk Management.
Functions of SRO 371(I)/2002 dated 15-06-02 regarding function of appropriate officers to be
Appropriate amended.
Officer
Auctions Section 201 of the Customs Act to be amended to provide that Customs shall
take custody of goods liable to be sold by Customs.
New Auction Rules are to be issued as per proposed procedure.
Chapter V of Customs Rules, 2001 on Auction to be withdrawn and substituted
by procedure laid down in the Report.
Refund Customs Refund Rules to be issued as per proposed procedure.
Amendment in section 148 of the Income Tax Ordinance, 2001 and
corresponding amendment in Customs Act to provide that Customs officer will
be empowered to refund excess collected advanced income tax.
Previous instructions on refunds e.g. Standing Order 10/95 (Appraisement) to be
withdrawn
Duty Drawback Chapter XII, sub-Chapter II of Customs Rules, 2001 to be substituted with
procedure as proposed.
Chapter XIII, Customs Rules, 2001, rule 53 to be amended as per proposed
procedure.
SROs regarding rates of duty drawbacks to be amended in order to remove
difference slabs within a PCT heading.
Recovery Chapter XI of Customs Rules 2001 to be amended as per proposed procedure.
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Customs Administration Reform Plan

For Chairman Central Board of Revenue

Average Clearance Time: 08 Days.

2 197 14.08% 23.72%

This is a picture of the office of

A typical examination pattern,

Pros & Cons

(For details regarding risk criteria see restricted).

8.4 Presence of declarant at the examination of goods

Merger of Import and Export Work: It is

Transit & Transshipments:

Through Bill of Entries: (Multimodal)

The process of assessment is

KIA Prides Agricultural Implements

The overstayed category, which is also the

The problems with the disposal of this cargo are:

A Refund case is initiated:

Refund of Sales Tax and Advanced Income Tax collected by Customs

The ONO will be electronically transmitted to

Referring Officer( AC Law)

Clicking the proceed button will give him option to go to

In charge Securities’ job description:

- to receive the securities duly accepted by the Authorized Officer;

Pre-maturity Automated notices:

Extension in validity period

- Reference of order (in case of Board)

Recovery process involves the following procedures:

The above steps will be carried out as follows:

1. Daily Pending jobs

2. The RO’s Planning Menu will show a list of cases:

3. Details of the recovery

Known properties of the defaulter

Summary of government dues

Recovery details of each levy (chronological)

S. Levy Date Initial Payment Addition Waiver / Net Reference

Recovery actions taken

Sr. No. Action Reference Exceptional Proceed to

Action taken against associated person

Receiver appointment details

4. Attachment Officer’s / Receiver Menu:

Customs Agents Licensing

Customs Agent’s Profile

C. H. A. L. # _________________________ Working status: Active / Blocked

Post Transaction Audit.

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