CBIC waives interest charges on EXIM traders due to payment woes

The Central Board of Indirect Taxes and Customs (CBIC) on Thursday announced interim relief for traders grappling with difficulties in paying import duty through the automated payment system that went live on April 1.

The government has now allowed a temporary waiver of interest charges till April 10 in case there is a delay in paying duty due to technical glitches. Additionally, the government has also reverted to the manual clearance of certain categories of goods.

According to the Customs Act, if an importer fails to pay the Customs duty within a specified time, 10-36 per cent of interest is levied on duty not paid.

“The trade has, in a large number of cases, faced the difficulty of being unable to complete the process whereby accounting is made in the duty payment process initiated by them because of unanticipated technical difficulties on the Common Portal and with the authorised banks…as a result…the interest is arising,” the CBIC said in a notification. It added that had such glitches not arisen, interest might not have accrued for traders. The Directorate General of Systems, it said, was working towards resolving the challenges in the new framework.

Over the past few days, importers and exporters have been worried about challenges arising from the new electronics cash ledger (ECL) and this has also resulted in the piling up of consignments at ports.

To facilitate uninterrupted supply of goods, the government has allowed manual clearance of consignments for perishable items, pharmaceutical products, liquid bulk cargo, among others. This means that if an importer produces a certificate from a bank indicating payment of import duty, then such consignments can be cleared.

Besides, since importers are not able to clear their goods at the ports, the CBIC has urged shipping lines to waive detention and demurrage charges till April 10.

The development comes in the backdrop of the phased implementation of ECL that kicked off over the weekend. The government has created an electronic account in which money can be loaded and duty paid as and when required, in a system that is akin to digital wallets. This was done to ease the compliance burden for traders.

The ECL has an enabling provision, where the importer or exporter is liable to pay duty under the Customs Act, and has to make a non-interest bearing deposit with the government for payment of taxes.

Abhishek Jain, tax partner at KPMG, said that the government had proactively taken cognisance of the issue and announced redressal measures like waiver of demurrage and interest on such delays. “Also, acceptance of bank confirmations for payment of duty would help clearance of urgent imports and address commercial concerns on delays,” Jain said.

While some exporters and importers told Business Standard that this was a much needed step, one industry official pointed out that the current disruption was expected to particularly affect air shipments.

“Air shipment is done when an importer is in dire need of a particular good and in a short span of two-three days. It may not be the same in case of shipments coming via sea because importers in such cases do anticipate that more time can be needed especially if the place of delivery is far away from the port,” the official said.