CUSTOMS POST CLEARANCE AUDIT (PCA)
Customs Post Clearance Audit (PCA) is an initiative based on global best practices. It is aimed at creating an environment of increased compliance while allowing the Department the flexibility to enhance the facilitation for importers and exporters. The objective of Central Board of Indirect Taxes & Customs (CBIC) is to ensure collection of the correct amount of duties from importers / exporters and to secure compliance of applicable laws in a responsive, fair, transparent and cost effective manner, thereby inspiring public confidence in tax administration. PCA allows Customs to reduce border controls by shifting compliance checks from the clearance stage to the post clearance stage. PCA enables Customs to apply a risk based control approach by moving from a transaction based control environment at the border, to a stronger audit based compliance verification system. PCA is recognized as an effective tool to measure and improve compliance through a structured examination of the business environment and commercial system of the importer/exporter. PCA promotes a culture of voluntary compliance.
Legal Provisions
Section 99A of the Customs Act, 1962, provide a statutory framework for the procedure for conducting post clearance audit.
CBIC has issued “Customs Audit Regulations, 2018”. These Regulations explain in detail the rights and obligations of the auditees. They also explain the manner in which the audit shall be conducted.
Types of Post clearance audit in Indian Customs Administration:
(a) Transaction based audit (TBA): TBA acts as a reminder to business / trade that Customs are monitoring their activities. Selection of transactions for TBA is done based on certain risk parameters identified at the national and local levels. Necessary checks are conducted for such selected transactions. Additional information can be sought from the importer / exporter. TBA may subsequently involve a field audit, if deemed necessary, in order to examine an issue / entity in more detail.
(b) Premises based Audit (PBA): CBIC introduced a 3 tier Authorized Economic Operator (AEO) programme for importers and exporters vide Circular No. 33/2016-Customs dated 22.07.2016, wherein it has been provided that onsite PCA will be conducted periodically. The selection of auditee for PBA is based on risk parameters. PBA is aimed at verifying the compliance level of the auditee as a whole, by examining, if the internal control systems of the auditee are robust enough to prevent systemic risk to revenue or other compliances.
(c) Theme based audit (ThBA): Purpose of theme-based audit reporting is to conduct “focused audit” instead of a “comprehensive audit”, so that limited resources are directed to check/ verify compliance of important issues or sectors. The results obtained from ThBA assists the policy makers to check compliance level of a particular industrial or trade sectors or areas so that compliant sectors may be extended greater facilitations. The objectives of such audit are to focus on a particular audit objective across sectors or entities.
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