THE CUSTOMS (VERIFICATION OF IDENTITY AND COMPLIANCE) REGULATIONS, 2021

[Mr. M. GOVINDARAJAN]

Verification of identity and compliance

Chapter XII B (section 99B) was inserted in Customs Act, 1962, vide Finance Act (No.2) Act, 2019 which came into force from 01.08.2019.

Section 99B provides that the proper officer, authorized in this behalf, may, for the purposes of ascertaining compliance of the provisions of this Act or any other law for the time being in force, require a person, whose verification he considers necessary for protecting the interest of revenue or for preventing smuggling, to do all or any of the following-

• undergo authentication, or furnish proof of possession of Aadhaar number, in such manner and within such time as may be prescribed;
• submit such other document or information, in such manner and within such time as may be prescribed.

Benefits

The following are the benefits available under section 99B(3)(i) of Customs Act, 1962-

• clearance of imported goods or export goods;
• sanction of refund;
• sanction of drawback;
• exemption from duty;
• licence or registration granted under this Act; or
• any benefit, monetary or otherwise, arising out of import or export.

Regulations

For the purposes of carrying out the provisions contained in Section 99B, the Central Board of Indirect Taxes and Customs made ‘The Customs (Verification of identity and compliance) Regulations, 2021 (‘Regulations’ for short) vide Notification No. 41/2021- Customs (NT), dated 05.04.2021 which came into effect from 05.04.2021.

Applicability of these regulations

Regulation 3(1) provides that these regulations shall apply to the following class of persons who are newly engaging in import or export activity after the commencement of these regulations-

• importer;
• exporter;
• customs broker.

Non applicability of regulations

Regulation 3(2) provides that these regulations shall not apply to the Central Government, State Governments and Public Sector Undertakings.

Selection of persons

The proviso to Regulation 3(1) provides that the Commissioner of Customs may select any person, who may have engaged in import or export activity or availed or claimed the benefits mentioned in sub-clause (a) to (f) of clause (i) of sub-section (3) of section 99B of the Act or engaged as a Customs Broker in such activity or in availing or claiming such benefits prior to the commencement of these regulations and these regulations shall apply to such person.  The person selected shall be informed about such selection immediately through the Common Portal, to the extent available, and in other cases, through such means as deemed appropriate by the Commissioner of Customs.

Verification of identity

Regulation 4 provides that The person selected for verification shall furnish the following documents or information on the Common Portal within fifteen days of such intimation of selection:-

• document of incorporation, in case of persons other than individuals shall be the following-

• in case of partnership firm, partnership deed or agreement;
• in case of Limited Liability Partnership, Certification of Registration issued by Registrar and LLP Agreement;
• in case of company, Certificate of Registration issued by Registrar and Memorandum of Understanding and Articles of Association;
• in case of trusts/foundations, Certificate of Registration and Memorandum of Understanding and Articles of Association;
•  in any other case, any document evidencing constitution;

• document evidencing appointment of authorized signatories, if applicable.
•  Permanent Account Number;
• GST Identification Number;
• document such as bank statement, Income Tax Return etc. evidencing financial standing of the person.

Time limit

 A person who is newly engaging in import or export activity after the commencement of these regulations shall furnish the said documents not later than thirty days of engaging in import or export activity.

Authentication and verification

Regulation 4(2) provides that on furnishing of documents or information every individual, karta, managing director, whole time director, partners, member of managing committee of association, board of trustees, authorized representative, authorized signatory, shall, within the prescribed time limit, undergo on the Common Portal-

• authentication of Aadhaar; and
• verification of Permanent Account Number.

Where the authentication of Aadhaar cannot be completed due to its non-assignment or due to technical reasons, the person to be verified shall furnish a not arised copy of valid passport or electoral photo identity card for verification on Common Portal, within an extended further period of 5 days from the date of such selection or failure of authentication or within such extended period, as may be allowed by the Commissioner of Customs.

Physical verification by proper officer

On submission of documents or information the proper officer or an officer authorized by him shall,-

• undertake a physical verification of the address provided in the principal place of business not later than forty five days from the date of submission of the documents;
• evaluate the financial standing of the person.

The verification of identity shall be considered to have succeeded, if the identity is established on the basis of the documents 

The proper officer may, for reasons to be recorded in writing and with the approval of an officer not below the rank of Joint or Additional Commissioner of Customs, in lieu of the physical verification of the place of business, carry out the verification of such documents as he may deem fit.  Where the verification of identity is completed by means other than authentication of Aadhaar, the physical verification shall not be waived.

 Failure of verification

The verification of identity shall be considered to have failed when the identity cannot be established on the basis of the documents or on the basis of the physical verification conducted.

Capture in Customs Automated System

 The outcome of the verification of identity shall be captured in the Customs Automated System and informed to the person verified.

Verification of compliance

Regulation 5 provides that the Commissioner of Customs, may, with a view to protecting the interest of revenue or preventing smuggling, cause verification of the compliance to the provisions of the Act or any other law for the time being in force, by such person and for this purpose require the person concerned to produce any document or information in the Customs Automated System.

Time period of verification of identity and compliance

The proper officer shall undertake verification and prepare a verification report on the Customs Automated Systems within 30 days of the submission of the documents and information.

The verification report may be prepared within 60 days of the submission of the documents and information, in case physical verification is required to be undertaken.

The Commissioner of Customs may, having regard to the circumstances under which the proper officer could not prepare the verification report, extend the periods specified above by a further period of fifteen days.

Determination of outcome

The Commissioner of Customs shall on the basis of the report of verification submitted by the proper officer, and other evidence as deemed necessary, determine the outcome of the verification within 15 days and cause its entry on the Customs Automated System.

The outcome of the verification shall be informed to the person concerned on the Common Portal within a period of 7 days from the date of determination.

Suspension of benefits

 Regulation 7 provides that the Commissioner of Customs may, based on reasons to be recorded on the Customs Automated System, order suspension of any or all of the benefits mentioned in clause (i) of sub-section (3) of section 99B of the Act and inform such decision to such person in case he-

• failed to comply with the requirements of the regulation 4; or
• submitted incorrect documents or information under regulation 4.

The Commissioner of Customs, shall within a period of 15 days from the date of such suspension, give an opportunity of being heard to such person whose benefits are suspended and may pass such order as he deems fit, either revoking the suspension or continuing it, within a period of 15 days from the date of hearing granted to such person.

The order of suspension shall remain in force until the person concerned complies with the requirements of section 99B or these regulations or furnishes correct document or information thereunder.

Restoration of benefits

 Regulation 8 provides that t he benefits suspended shall be restored when the person concerned complies with the requirements of regulation 4 or furnishes correct document or information sought thereunder.

Denial of benefits

In case of failure of authentication, the Commissioner of Customs may, by order, direct that such person shall not have the benefit of any of the items specified in sub-clause (a) to (f) of clause (i) of sub-section (3) of section 99B of the Act.

No such order shall be issued without providing an opportunity of being heard to such person by following the procedure prescribed under section 122A of the Act (Adjudication of procedure).

Appeal

A person, who is aggrieved by any order passed by the Commissioner of Customs under regulations 7 or 9, may prefer an appeal under section 129A of the Act to the Customs, Central Excise and Service Tax Appellate Tribunal.         

Penalty

The Commissioner of Customs may impose a penalty not exceeding ₹ 50,000/- on a person who contravenes any provision of these regulations or who fails to comply with any provision of these regulations.