Chapter 7

Provisional Assessment

Once goods declaration is submitted in the prescribed form (Bill of Entry or Shipping Bill ) containing all the relevant information/details and along-with all the relevant documents, the duty leviable on the imported goods or export goods, if any, is assessed by the Customs officer. Sometimes, it is not possible to assess the duty due to non-availability of some relevant information/document or any other reason. Withholding clearance of goods in such cases may cause hardship to the importers by way of payment of demurrage/detention charges, disturbance in production schedule and other financial losses. Similarly in exports, delay in clearance may cause cancellation of export order, increase in interest liability and other financial losses to the exporters. To meet such exigencies, provisions have been made in section 18 of the Customs Act, 1962 to assess the duty provisionally and allow clearance of the goods by taking a bond with appropriate security.

Conditions for allowing provisional assessment

2. The provisional assessment may be resorted to in following situations:

(a) where the proper officer of Customs is satisfied that an importer or exporter is unable to produce any document or furnish any information necessary for the assessment of duty on the imported goods or the export goods, as the case may be; or

(b) where the proper officer of Customs deems it necessary to subject any imported goods or export goods to any chemical or other test for the purpose of assessment of duty thereon; or

(c) where the importer or the exporter has produced all the necessary documents and furnished full information for the assessment of duty but the proper officer of Customs deems it necessary to make further enquiry for assessing the goods.

3. In above situations, pending the production of such documents or furnishing of such information or completion of such test or enquiry, the proper officer of Customs may order that the duty leviable on goods be assessed provisionally. The importer (or exporter), has to execute appropriate bond and furnish requisite security to the satisfaction of officer for payment of the deficiency, if any, between the duty finally assessed and duty provisionally assessed. On final assessment of duty in case of goods cleared for home consumption or exportation, the amount paid provisionally is adjusted against the duty finally assessed. If the amount so paid falls short of the duty finally assessed, the importer or exporter has to pay the deficiency; however, if amount so paid is in excess of duty finally assessed, the importer or exporter is entitled to a refund. In the case of goods being warehoused, if duty finally assessed is in excess of the duty provisionally assessed, the proper officer of Customs may require the importer to execute a bond, binding himself in a sum equal to twice the amount of the excess duty.

Terms of the Bond

4. (i) Where the provisional assessment is allowed pending the production of any document or furnishing of any information by the importer or exporter, as the case may be, the terms of bond generally are that required document/information shall be furnished within one month or within such extended period as the proper officer may allow, and that the person executing the bond shall pay the deficiency, if any, between the duty finally assessed and the duty provisionally assessed.

(ii) Where the provisional assessment is allowed pending the completion of any test or enquiry, the terms of bond generally are that the person executing the bond shall pay the deficiency, if any, between the duty finally assessed and the duty provisionally assessed.

Determination of amount of bond for provisional assessment

5. The provisions of the Customs (Provisional Duty Assessment) Regulations, 1963 lay down that the importer or exporter claiming provisional assessment is required to execute a bond for the difference between the duty that may be finally assessed and the provisional duty. The same regulations also provide that the proper officer of Customs may require that the bond to be executed under these regulations may be with such surety, or security or both as the proper officers deems fit. There may of course, be cases where calculation of exact difference between duty provisionally assessed and duty finally assessed may not be possible. But, even in such cases invariably, it would be possible to make some estimate of the same. In all the cases, the amount of surety and security for provisional assessment is normally restricted to the difference of duty provisionally assessed and duty which may be finally assessed.

Surety and Security of the bond

6. The Customs (Provisional Duty Assessment) Regulations, 1963 allows proper officer of Customs to accept bond for provisional assessment with such surety or security or both, as he deems fit. Normally requirement of surety/security is dispensed with in respect of Government Departments (or even Government Undertakings).

Finalisation of provisional assessment

7. It is to be ensured that most of the ordinary type of cases of provisional assessment are finalised expeditiously well within six months of the date of provisional assessment. In respect of machinery contract cases or registered large project import cases, where imports take place over long periods, some times extending over a number of years and where action to finalise the case can be taken only after all the imports under the contract have been made, every effort should be made to finalise the cases within six months of the date of import of the last consignment covered by the contract.

(Ref. Customs (Provisional duty Assessment) Regulations, 1963 issued vide M.F.Director (ICD).R) Notification No. 181-Cus., dated 13/7/1963 and instructions issued vide Board"s letters F.No. 512/5/72-Cus.VI dated 23/4/1973 and F.No. 511/7/77-Cus. VI dated 9/1/78).

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