Govt Proposes Time Limit for Customs Assessments

New Delhi, Feb 2 (PTI) The finance ministry in the Budget has proposed to fix a two-year time limit, extendable by one year, for finalising provisional assessments of export and import consignments with an aim to reduce uncertainty and costs for exporters.

Currently, the Customs Act, 1962 lacks a fixed timeline for finalising provisional assessments, causing delays and uncertainties.

The new provision mandates finalisation within two years, extendable by one additional year, ensuring greater predictability for businesses, economic think tank Global Trade Research Initiative (GTRI) said.

For the move, a new clause would be inserted in the Customs Act "to provide a time limit of two years for finalisation of provisional assessment", according to the Budget documents.

The time limit can be extended by the Commissioner of Customs for a further period of one year if sufficient cause is shown.

"It further provides that, for the pending cases, the time limit shall be computed from the date of assent of the Finance Bill, 2025," it added.

Hailing the move, Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said by establishing a clear two-year time, businesses can anticipate the resolution of provisional assessments within a defined period, reducing uncertainty in financial planning and operations.

"Timely finalisation of assessments ensures that any refunds or additional duties are settled promptly, helping businesses in managing their cash flows. Implementing a specific time limit aligns India's customs procedures with international standards, potentially enhancing the country's ease of doing business and attractiveness to global traders," Sahai said.

The ministry has also proposed to incentivise voluntary compliances under which exporters and importers can voluntarily declare material facts post-clearance and pay duty with interest but no penalty.

The move is aimed at improving compliances and reducing disputes.

GTRI Founder Ajay Srivastava said this new voluntary compliance scheme allows importers and exporters to declare material facts and pay any additional duties with interest after goods clearance, without incurring penalties.

"However, this provision will not apply if an audit or investigation has already been initiated by customs authorities," he said.

Further to enhance export competitiveness, the finance ministry has extended the time limit for utilising imported inputs from six months at present to one year.

Additionally, importers would now only need to file quarterly statements instead of monthly filings, easing compliance requirements.

To boost handicraft exports, the duration for export of handicrafts manufactured from duty-free inputs by bonafide exporters is being increased from six months to one year, further extendable by three months.