UPSC Interview IRS Customs Special

Fellow IRS (C&CE),

As of now, we have this draft list of questions about our service which can be asked in the Interviews. Some answers are from our discussions and some from useful links on the web...

The Batch Profile - We are the 66th batch of IRS (C& CE) with a total strength of 230. We are undergoing training at two academies as the batch has been split into two. The Customs Module and Excise module are being conducted at NACEN, Faridabad and MCR, Hyderabad respectively.

Overview of the Customs Module- This encapsulates the basic concepts of Customs, a detailed study of the various sections of the Customs Act 1962, the nuances of interpretation of law, the features of our Foriegn Trade Policy etc.

Highlights of the attachements. As of now, we have been sent on Port attachments to various parts of the country. There we were give the practical exposure of how Ports operate, how Customes personnel perform their functions at the Airports, how the Air Cargo Complexs works and who all are the stakeholders in the overall process of import and export. Some of us also got the opportunity to see land Customs Stations like that in Petropol, West Bengal. Besides we also got a bird's eye view of various other sections like Airport Intelligence Unit(AIU), R&I and Marine Preventive.

The ABC of GST!

Go through this article for now, Click ME!

Facts and data about Indirect Taxes . Coming Soon. Till then...Click Me!

Some relevant sections of the Customs Acts 1962 that we should remember! 
Sec 5 - Powers of  Officers of Customs
Sec 11- Power to prohibit importation and exportation of goods.
Sec 12 - Dutiable Goods.
Sec 14 - Valuation of Goods.
Sec 17 - Assessment of Duty.
Sec 26 - Refund.
Sec 57 - Appointing of Public Warehouses.
Sec 74- Drawback on re-export.
Sec 75- Drawback (General)
Sec 100-110 - Search, Seizure and Arrest.
Sec 127A - Settlement Commission.
Sec 128 - Appeal to Commissioner(Appeals)
Sec 129 Appellate Tribunal

The Concept of Duty Drawback. The concept of Duty Drawback pertains to those cases where duty on certain imports is given back in lieu of certain exports. This means that if you have paid duty on some of the imports which you have used to manufacture something and then if you export your product, you are entitled to get back the duties paid. You can also get back the duties in case you re-export the product without using.

What are the various export promotion schemes?
Here is the EPIC link for Schemes ...Click Me!

Service Hierarchy?
Hoping that we all know what lies above us. The confusion is always what lies beneath.
Assistant Commissioner
Superintendent\ Appraising Officer
Inspector\Preventive Officer
Tax Assistant\Sub Inspector
Head Hawaldar
Hawaldar

What can you do in Customs for Trade Facilitation? Better infrastructure, Latest technological innovations, ICT framework for all modules of Customs, More efficient integration of all stakeholders in the process of export and import, One Window Clearance, Simplification of Rules and Procedures and Inculcating a Service- Oriented approach.

What are the features of the New Foreign Trade Policy? Click Me

What are the IT innovations of your department? The two big IT innovations of our department are the systems of EDI (Electronic Data Interchange) and RMS (Risk Management System). The former facilitates the online filing of Bill of Entry and Online payment of duty. It also allows the online Bill of entry to flow through the hierarchy thus fastening up the process. The later is a feed based model which prompt which part of consignment to be taken for examination. The logic is based on several paramets and has been working very efficienty. Although the main goal of RMS is trade facilitation only. Also, it is not pratical to check all the incoming and outgoing consignments.

Beside these as per the New FTP, several new IT innovations are in the pipeline and nearing completion. These include: Msg Exchange System between DGFT and Customs; Online issuance of  Export Obligation Discharge Certificate (EODC); Mobile Apps for FTP; Online payments for all sorts of payments.

What are various types of duties in Customs?
Counter Veiling Duty(CVD)- This is to counter the subsidies given by an exporting nation into India.
Anti-Dumping Duty- If a foreign company is selling their product at a price lower than that of the country of origin, then anti dumping duty can be imposed. But the condition is that this must be hurting the domestic players.
Special Additional Duty (SAD)- This is to offset the taxes paid by th local products like Sales Tax, Octroi etc.
Safeguarding Duty- When there is a sudden surge in the import quantity of a certian product, this duty is imposed to save the local manufacturers.


What is WCO? How is it different from WTO?

The World Trade Organisation (WTO) is a regulator.  It was set up in 1995 to establish a permanent organisation for implementing international trade agreements and setting up a dispute settlement body.  Its origins go back to 1948 when the General Agreement on Tariffs & Trade (GATT) first started.  It became the WTO on 1^st January 1995 and currently has 159 member countries (March 2013). It deals with the regulation of international trade by providing a framework for negotiating and formalising trade agreements.  The dispute resolution process is aimed at enforcing participants' adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments. 

The World Customs Organisation (WCO) is an administrator.  It is the only international body dedicated exclusively to international customs and border control matters. It was founded way back in 1952 (1^st meeting January 1953) as a Study Group of the General Agreement on Tariffs & Trade (GATT).  It was originally called the Customs Cooperation Council (CCC) and became the WCO in 1994.  It currently has 179 member countries (plus the EU as a group) and its primary objective is to enhance the efficiency and effectiveness with regard to customs facilitation and control of its members.  Its instruments and best practice guides are recognised as the basis for sound customs administration throughout the world.  They maintain the international Harmonised System for commodity classification (tariff numbers) and also administer the technical aspects of WTO Agreements such as the ones covering Customs Valuation and Rules of Origin. 

(Source :http://import-export-training.blogspot.in/)

Tell us some of the basic baggage rules ?

1. Baggage means accompanied and unaccompanied both.
2. In accompanied, the upper limit is 45000 beyond that 35% duty. There is a provision of Green Channel and Red Channel. In case you have nothing to declare, you can come out from the Green Channel. Permissible limits on Gold and Silver are 1kg and 10kgs respectively.
3. In unaccompanied baggage, one has to declare the details of his baggage.
4. The items of Annex I are not included in the 45000 limit like Firearms, Cartridges, Cigarettes exceeding 100, Alcoholic Liquor in access of 2 litres, Gold or Silver and Flat Panel Television.
5. Stuff taken from the "Duty-Free" Shops is considered as normal accompanied baggage.
6. This 45000 limit is only when stay abroad is more than 3 days. Otherwise the limit is 17,500.
7. These limits are different in case of Nepal, Bhutan, China and Myanmar due to the proximity and cost benefit analysis.
8. In case of Household items coming as unaccompanied baggage, depreciation would be applicable for items more than 03 months old. And maximum depreciation given is 70%. It is computed quarterly.
9. Different provisions for professional and in case of Transfer of Residence.
10. For Crew, the limit stands at 1500 with no liquor included in it.
11. The baggage of a deceased person would be passed duty free given a certificate from the embassy in present.

What is the role of DGFT? DGFT is an agency of Ministry of Commerce and Industry. It has zonal and regional authorities spread over the country. Functions are...

1. DGFT entrusted with the responsibility of implementing various policies regarding trade for example, Foreign Trade Policy.
2. DGFT is the licensing authority for exporters, importers, and export and import business.
3. DGFT can prohibit, restrict and regulate exports and imports.
4. DGFT has important role to issue Notifications, Public notices, Circulars, etc.
5. DGFT grant 10 digit IEC (Importer Exporter Code), which is a primary requirement to Import Export
6. DGFT introduces different schemes from time to time regarding trade benefits throughout the country.
7. DGFT has introduced ITC (HS CODE) schedule-1 for import items in India and Schedule-2 for Export items from India.

What is "Unjust Enrichment" in Customs? For this you must first understand the concept of Refund. When an importer has paid duty in excess of what should have been charged, he can apply for a refund from the Customs. But meanwhile if he has passed on the burden of this extra duty paid to the customers in the forms of increased price, then that exporter will not be eligible for claiming refunds as that would amount to unjust enrichment of that importer.

Describe in brief the entire process of export and import quoting all the stakeholders?

Imports: IGM--Arrival--Entry Inward-- Landing of  goods--Bill of Entry Filled-- Assessment(Classification, Valuationa and Prohibition)--Payment of Duty--Examination--Clearance--Out of Charge--Removal from Customs Area.

Exports: Registration of Goods-- Shipping Bill/Bill of Export--Examination--Stuffing--Bill of lading--Let Export Order(LEO)-- EGM.

Describe the mechanism to settle disputes in Customs issues? For all orders passed by officer below the rank of Commissior, the appeal can be made to Commissioner(Appeals). Post that, it moves to CESTAT, then to HC and lastly SC. For orders passed by Pr.C/C/C(A), CESTAT is approached exclusing the cases of Baggage and Drawback. These can be then challenged HC and eventually in SC. In all these cases, pre deposit needs to be given.  Also, appeal on cases of Rate of Duty or Valuations from cestat will directly go to Supreme Court. SC can also admit SLP in this regard.

Describe the concept of Warehousing? Warehousing is the mechanism for the deferred payment of duty. Warehouse is a commercial building used for storage of goods. The board has delegated the power for declaring places to be warehouses to the Chief Commissioners.The period of warehousing starts when the goods are actually placed in the warehouse. For Capital Goods it is 5 years and for consumables it is 3 years.


What are INCOTERMS?
It stands for International Commercial Terms which are framed by the International Chamber of Commerce(ICC) based in Paris. For example, some of them are EXW(Ex works), FCA(Free Carrier) and FAS (Free alongside). For instance, if goods produced in a factory in Ghaziabad go to Mumbai and then through JNPT are exported then EXW will be Ghaziabad, FCA would be Mumbai and FAS would be JNPT. Other INCOTERMS which we are familiar with are CF,CIF,FOB etc. The basic purpose is to have a standard set of terms among all the countries for streamlining of trade.

Why does one require a Certificate of Origin to import goods? Suppose India has a FTA with a country X and the duty on a particular product A has been waived off. But there is a substantial duty on the same product coming from Y. Now exporters from Y can just send them to X and then re-route to India to avoid the duty. For checking this, the product A must have a Certificate of Origin that it was manufactured in country X so as to avail he benefit. Every country releases a list of bodies who can issue such certificates so that other countries can check the authenticity of these certificates.


What is the difference between Major and Minor Port? Give some examples.
Major Ports are under the control of the Union Government (Ministry of Shipping) and as of today we have 13 of them.

Minor ports on the other hand are looked after by the respective state governments. They are nearly two hundred in numbers.


What are the major problems that Indian Customs is facing today?
Infrastructural inadequacy, Personnel crunch, excessive litigation etc. Let's get a little specific we know we can play around such words. We only have a bunch of container scanners which is a pitty of sorts. Plus, large ships cannot dock in out tiny ports so either they have to stay in high waters or they dock at huge ports like Hambantota from where the smaller ships to and fro to get the containers. The turnaround time is also pathetic as the coordination among various stakeholders at the port is a shame. Plus, Indian Customs probably should move to the 12 or 14 digit HS classification which would  eventually see the litigation going down


As a Customs officer, what innovative changes would you bring?
Identifying the modules which can also be added to the ICT regime and computerized.
Simplifying office procedure and ensure proper documentation using the technological tools of information age.
By Ensuring proper utilization of human resources we can reduce the revenue forgone.
Building an efficient information network which is quintessential to catch connivance.
Building a heuristic system to keep track of the changing ways of violation of law especially in cases of smuggling.

How would you reduce corruption in your dept?

• By maximizing the use of Information and Communication Technology (ICT) for decision making. This would certainly curtail the undue discretion available to officers and other staff.
• For all the cases of  procurement and purchase, the forum of e-Procurement must be used.
• There must be a vigilence team or setup to constantly monitor the activities taking place in the department.
• Personnel management in a proper way such that good officers be posted at sensitive locations.
• Administrative Ethics is not a one-off thing and hence constant refresher courses in that would greatly help the department.
• At various junctures where crucial decisions are to be taken, committees can be constituted for reasons of fairness.
• Officers must make use of the grapewine channels of communication for obtaining such kind of information which rarely comes through the formal channels.
• by establishing a Grievance redressal mechanism and by sensitizing the public through a citizen charter.

CBEC IT Consolidation, what is that?

This was the project which was recently awarded on the occasion of the Civil Services Day. The main features of the IT consolidation are ...

ØCountry wide MPLS network (650 offices in 245 cities)

ØEquipment & applications hosted in one data centre

ØCentralised operations

What is C.O.I.N ?
This stands for Customs Overseas Intelligence Network. This is present in the following locations - Dubai, London, Hong Kong, Nepal, Singapore, New York, Brussels and Moscow. The mandate of COIN is...

i.To monitor the flow of trade

ii.To collect intelligence on  customs frauds

iii.To assist in investigation

iv.To liaise with local Customs Departments

v.To keep tab on all economic violations/violators

vi.To monitor and report economic and politically sensitive developments in the jurisdiction.

vii.  To monitor movements of persons with dubious records 

Viii. To gather intelligence on all activities  against internal security of the country

ix. To maintain close liaison with other diplomatic missions and share intelligence and information

x. To provide direct assistance to DRI under cover

What is CUSTOMS & CENTRAL EXCISE SETTLEMENT COMMISSION?

• The Customs & Central Excise Settlement Commission was established under Sec. 32 of the Central Excise Act 1944 vide Notification No.40/99-Cx (NT) & 41/99-Cx (NT) dated 9.6.99. The Commission has its Principal Bench at New Delhi and three Additional Benches at Chennai, Kolkata and Mumbai.
• The Settlement Commission consists of one Chairman and two Members in the Principal Bench in New Delhi and one Vice Chairman and two Members in each of the three Additional Benches.
• The basic objective of setting up of the Settlement Commission is to expedite payments of Customs & Excise duties involved in disputes by avoiding costly and time consuming litigation process and to give an opportunity to tax payers to come clean who may have evaded payments of duty. It provides a forum for the assesses to apply for settlement of their cases, on the basis of true and complete disclosure of their duty liability by them under Chapter -V of the Central Excise Act and Chapter XVIA of the Customs Act. Settlement Commission is therefore set up as an independent body, manned by experienced tax officers of “integrity and outstanding ability” (Sec 32 (3) of CE Act), capable of inspiring confidence in Trade and Industry and entrusted with the responsibility of defining and safeguarding “Revenue interest‟. The proceedings before it are declared “judicial proceedings‟ within the meaning of Sec 193 & 228 of the IPC and for the purposes of Sec 196 of the Indian Penal Code.

What is the difference between EOU and SEZ?

Lots of points actually, so Click Me!

What is Statutory Declaration Form (SDF)?

A document submitted to customs authorities by exporters verifying that shipping bills are accurate and complete. An exporter confirms on form SDF that the amount paid by the buyer is the same as the full export value stated on the shipping bill. Also called statutory declaration form.

What are the major TARC recommendations ?

• Set up an Independent Evaluation Office to monitor the performance of tax administration, promote accountability, evaluate the impact of tax policies and assess all factors that affect tax administration
• A tax council to develop a common tax policy, analysis and legislation for both direct and indirect taxes
• A separate budget allocation to ensure time-bound tax refund and a passbook scheme for Tax Deduction at Source
• Develop PAN as a common business identification number, to be used by other government departments also such as customs, central excise, service tax, DGFT and EPFO

All the best!