CBIC waives interest charges on Customs duty payable via upgraded system

The Central Board of Indirect Taxes and Customs (CBIC) on Thursday announced temporary assistance for business owners having trouble using the automated payment system that went live on April 1 to pay import duties.

As of right now, the government has permitted a brief suspension of interest fees until April 10 in the event that a technical issue causes a delay in the payment of duty. The government has also gone back to clearing certain kinds of items manually.

According to CBIC, in order to ease the burden on EXIM Trade brought on by the continuing settlement of duty payment difficulties on the customs site, interest on duty payable in respect of commodities for which payment is to be made from ECL from April 1 to April 10 has been waived.

The Customs Act states that if an importer doesn't pay the customs tax within a certain amount of time, 10-36 percent of interest will be charged on the unpaid payment. Due to unanticipated technological issues on the Common Portal, the trade has encountered the challenge of frequently being unable to complete the process whereby accounting is completed in the duty payment process they commenced.

According to the CBIC notification, interest may not have accumulated for dealers if these mistakes hadn't occurred. It noted that efforts were being made by the Directorate General of Systems to address issues with the new framework.

Importers and exporters have been concerned about difficulties brought on by the new electronics cash ledger (ECL) over the past several days, which has also contributed to the accumulation of consignments at ports.

The government has permitted manual clearance of consignments for perishable commodities, pharmaceuticals, and liquid bulk cargo, among other things, to promote an uninterrupted supply of goods. This means that such shipments can be cleared if the importer presents a certificate from a bank attesting to the payment of import duties.

Also, the CBIC has requested shipping lines to waive detention and demurrage fees until April 10 in order to accommodate importers who are unable to clear their goods at the ports.

If there is a tech issue that prevents you from paying your import duty on time, you have until April 10 to do so. The government switches back to manual clearance for commodities like liquid bulk cargo, pharmaceuticals that move in a cold chain, and perishable goods.

Prior to the cargo being cleared, the importer must present a certificate from a bank attesting to the payment of the import duty. Until April 10, CBIC has requested shipping lines to forgo detention and demurrage fees.

The change occurs against the backdrop of ECL's phased adoption, which began over the weekend. Under a system analogous to digital wallets, the government has developed an electronic account into which money may be put and taxes can be paid as and when necessary. To lessen the burden of compliance on dealers, this was done.

In accordance with the ECL's enabling provision, importers and exporters who are required to pay duty under the Customs Act must also deposit non-interest-bearing funds with the government to cover tax obligations.

The government has taken significant action to address the problem, according to Abhishek Jain, tax partner at KPMG, and has announced measures including waiving demurrage and interest on such delays. According to Jain, accepting bank confirmations for duty payment will also aid in the clearance of urgent imports and alleviate business worries about delays.

Although some exporters and importers told Business Standard that this was an urgently needed action, a representative of the industry noted that the current disruption was anticipated to have an especially negative impact on air shipments.

When an importer needs a certain commodity urgently and within a short timeframe of two to three days, air shipment is completed. That might not be the same for cargo arriving by sea because importers in these situations do plan on needing longer time, especially if the delivery location is far from the port, the official added.