Audit - CBEC's Customs Manual 2023 - Customs

Chapter 33: Audit 1. Introduction: 1.1 Central Board of Indirect Taxes and Customs (CBIC), In exercise of the powers conferred by clause (k) of section 157, read with section 99A and clause (ii) of subsection (2) of section 158, of the Customs Act, 1962 (52 of 1962) and in supersession of the On-site Post Clearance Audit at the Premises of Importers and Exporters Regulation, 2011,has notified the Customs Audit Regulations, 2018, vide Notification No. 45/2018-Customs (N.T.) dated 24th May 2018. [Notification No. 45/2018-Customs (N.T.) dt. 24th May 2018.] 1.2 A new Chapter XII A with heading AUDIT was introduced in Customs Act, 1962 after Section 99. A new Section 99A (under Chapter XII A) has been introduced to provide a statutory framework for the procedure for conducting post clearance audit. Section 99A: the proper officer may carry out the audit of assessment of imported goods or export goods or of an auditee under this Act either in his office or in the premises of the auditee in such manner as may be prescribed. Explanation of said Section 99A defines auditee as under: Explanation For the purposes of this section, auditee means a person who is subject to an audit under this section and includes an importer or exporter or custodian approved under section 45 or licensee of a warehouse and any other person concerned directly or indirectly in clearing, forwarding, stocking, carrying, selling or purchasing of imported goods or export goods or dutiable goods. It means, scope of auditee has been enlarged significantly by aforesaid definition. [Inserted by Finance Act, 2018 (Act No. 13 of 2018), dt. 29-3-2018.] 1.3 A new clause (k) has been inserted in section 157 of the Customs Act [vide Finance Act, 2018 (Act No. 13 of 2018)] to enable the Board to frame regulations in accordance with the new section 99Aof the said Act. Clause (k) of section 157 reads as: (k) the manner of conducting audit; [Inserted by Finance Act, 2018 (Act No. 13 of 2018), dt. 29-3-2018.] 1.4 Customs Audit Regulations, 2018 has been issued in terms of power conferred by Clause (k) of section 157and the same is in accordance with global best practices, which is aimed at creating an environment of increased compliance while allowing the Department the flexibility to increase the facilitation for importers and exporters. Customs Audit Regulations, 2018 mark a fundamental shift in the functioning of the Indian Customs since the legal compliance and correct assessment of Customs duties will be verified by the Customs at the premises of importers and exporters. The earlier On-site Post Clearance Audit at the Premises of Importers and Exporters Regulations 2011 (OSPCA regulation) was applicable in relation to imported / export goods that were cleared after the enactment of the Finance Bill, 2011 i.e. 08.04.2011. The said OSPCA regulation, empowered the proper officer for verification of correctness of assessment of duty on imported or export goods at the premise of importer or exporter and also prescribed the manner of conducting audit. 1.5 As per Customs Audit Regulations, 2018, audit includes examination or verification of declaration, record, entry, document, import or export licence, authorisation, scrip, certificate, permission etc., books of account, test or analysis reports, and any other document relating to imported goods or export goods or dutiable goods, and may include inspection of sample and goods, if such sample or goods are available and where necessary, drawl of samples. Further, for the purpose of the section 99A, auditee means a person who is subject to an audit under the section and includes an importer or exporter or custodian approved under section 45 or licensee of a warehouse and any other person concerned directly or indirectly in clearing, forwarding, stocking, carrying, selling or purchasing of imported goods or export goods or dutiable goods. Further, premises includes the registered office, branch office, warehouse, factory, or any other premises at which, imported goods or export goods or dutiable goods or books of account or records of transaction or other related documents, in relation to the said goods are ordinarily kept, for any purpose by an auditee.