F.No. D-21019/7DBK/99-CC(CBEC)

Circular No.7/1999-Cus date 3/3/1999

Subject: Indian Customs EDI Systems - measures to check frauds in disbursement of drawback

I am directed to invite your attention to a number of cases which have been detected at various Customs stations wherein drawback was claimed fraudulently by filling drawback claims for which no export had actually been made. ADO letter F.No. 009/430/98-DBK dated 30.10.1998 has already been issued to all Chief Commissioner and Commissioner of Customs listing out measures to prevent recurrence of such frauds in the manual mode of processing claims.

In so far as the processing of drawback under the ICES exports is concerned the Directorate of Systems had advised the Commissioners for audit of electronically processed shipping bills with reference to physical documents. The Standing Orders issued by the Customs Houses already provide for carrying out a check of the Shipping Bills in the system with the paper copies of Shipping bill filed with the EGM Extracts of para 6 of standing Order No. 304/98 dated 4/6/98 issued by Jawahar Customs House is enclosed for ready reference. The test audit if not already in operation, may be introduced with immediate effect. The Directorate of Systems is presently engaged in development of an Export Audit Module with the help of National Informatics Center. The proposed module would enable audit of the selected number of shipping bills on the computer system to check the veracity of the data entered in the system with the particulars as recorded on the printed copies of the shipping bill. This would also result in a confirmation whether the goods have actually been exported or not. This module is expected to be ready in the next few week.

In the meantime it has been decided as a preventive measure to subject some of the shipping bills to a test audit (say 10%) of the total shipping bills to ensure that the drawback has been sanctioned correctly as per the provisional or law. If may be verified on a selective basis whether or for shipping bills appearing on the system, goods have actually been exported by matching with the physical copies of shipping bills received with the EGM filed by the airlines.

This letter issues with the approval of the Board.

Sd/-
(P.R.V. Ramanan)
Joint Secretary (Customs).
Abstract of para 6 of Standing Order No. 304/98 dated 4/6/98 issued by Commissioner of Customs, Jawahar Customs House

6. Audit of Shipping Bills

6.1 With a view to carrying out the audit of Shipping Bills with reference to the physical documents, it is necessary that hard copies of the EGMs alongwith copies of the Shipping Bills and the annexures thereto are forwarded to the Audit Department. The designated Appraisers of respective export shed would be compiling the copies of the EGMs datewise to forward them to the Audit department the next day. The copies of the EGMs alongwith the Customs copies of the Shipping Bill will thereafter be sent to the MCD on a daily basis through the prescribed register. A continuous flow of the documents will thus be maintained and on any given day, 7 days EGMs would be available in the Audit Department. Two terminals would be allocated to the officers of the Internal Audit Department, who would be allocated to the officers of the Internal Audit Department, who would selectively verify the particulars given in the Shipping Bills as allowed 'let export' by the Appraiser (Shed) with the physical copies of the Shipping Bills. Apart from carrying out the checks prescribed for the assessing and examining officers (except those related to physical examination of goods), the Audit has to particularly ensure that the data relating to the declarations (for example, Drawback, DEEC, Quota, GR waiver etc.) appended to the Shipping Bills has been correctly sanctioned by the A.O./Supdt./Asst.Commissioner (DBK).

6.2 It is to mentioned here that the audit of the such Shipping Bills/drawback sanctions would be on a post clearance basis and the drawback sanctioned would be on a post clearance basis and drawback sanctioned would not await the audit clearance. In case of any incorrect sanction of drawback or irregular let export, the fact would be reported by the audit to the Asstt. Commr. (DBK) or the Asstt. Commissioner (Export) as the case may be for taking further action. The audit officers would be maintaining a record of all Shipping Bills audited and Shipping Bills in respect of which the objections have been raised in the prescribed register for monitoring their disposal.

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