DGFT, TCS & Certificate of Supplies from SEZ: Height of Incompetence?

When DGFT chose TCS to revamp the website/platform, I was very happy that at least for once, this combination will make the life of the exporters better. However, my happiness was shattered just by the purposeless complications in the design of the website/platform whereas the earlier DGFT website was very plain & simple. I had the opportunity of taking up the issue with the TCS officials in a web conference concerning the problem in the issuance of CoS from SEZ & I was categorically informed that choice was made by the DGFT. Therefore, it was clear to me right at that point of time that nobody wants to take the blame (just shifting the blame is the strategy because there was no denial about the complicated design).

On 2.12.20, the first problem reported was that there was no information on the DGFT website about the issuance of CoS from SEZ. Therefore, an attempt was made to file application for amendment because that was the only possible option & details for issuing the CoS from SEZ was uploaded. However, to my utter surprise, there was amendment approved but no CoS from SEZ was issued. There was further surprise in store i.e., the DGFT burdened the exporters to rectify the mistakes of the DGFT officials & not only that but pay a fee for it. The point is simple to understand that if the DGFT officials issued the authorization then the DGFT system should contain the complete information required by the system & there is no reason to burden the exporter to carry out the amendment. The Software service provider is otherwise responsible to rectify the legacy issues but then the DGFT granted that exemption to TCS for the reasons best known to them. The DGFT was also asked to give the complete flow chart for the issue of CoS from SEZ & pinpoint where this information is given on the new platform, but then high handedness is the order of the day & replies denied hiding incompetence. The authorisation holder can obtain supplies from FTWZ unit therefore the correct nomenclature should be CoS from SEZ /FTWZ. In the application, on the platform, the SEZ supplier details records the registered address only whereas the actual supply source is different. This is a loophole ripe for exploitation. The SEZ is the Port of import but the port of import detail is nowhere recorded in the online application. This is the one of the most important factors because then the port customs authorities stand authorized to complete the imports clearance under the AA. The CoS from SEZ is akin to Telegraphic Release Advice. If you have a system, then as an authority you need to respect it. The system should show the real time AA status at the time of Amendment application in terms of Export. The system does not carry that out. I tried the repository to get the data of exports but even that is of no avail. The MEIS entitlement is claimed on the S/Bs, therefore the data should be in the repository at DGFT. The system should show the real time AA status at the time of Amendment application in terms of import. The system does not carry that out. I tried the repository to get the data of imports but even that is of no avail. Please note that it is utmost essential because otherwise the CoS from SEZ can be issued for higher quantity than permitted in the authorisation (if the physical imports are not accounted for). This is a grave error in the design of the system. To give credit, where due, at least, this has been rectified.

The issuance of CoS from SEZ was delayed to the extent that the supplier cancelled the contract. Where is the ease of business visible in all of this? However, no one seems to be bothered. With this callous attitude of the bureaucracy, I am reminded of the President of an organization, who says that if you just need to destroy any country’s economy then just send the Indian bureaucracy there. I always derided this, but experience & ground reality tells me otherwise.

At this point of time, it was brought to the attention of the DGFT that while issuing the Invalidation Letter, the system assigns pro-rata value, but this is wrong, because price fluctuations are there & therefore this is the prerogative of the exporter to assign the values. Therefore, the CoS from SEZ application is faulty to this extent. However, the error persists. Once again, the callous attitude comes to the forefront. The DGFT exists to facilitate the exporters & not to be the stumbling block but where is even the semblance of facilitation visible?

SEZ is a deemed Foreign territory as per the SEZ Act, 2005 passed by the Parliament therefore supplies from SEZ are from deemed foreign territory & therefore equivalent of direct imports. Therefore, classification cannot just change on the whims & fancy of the officials. Invalidation Letter & ARO pertain to indigenously manufactured goods & therefore cannot cover supplies from SEZ in any case. Therefore, CoS from SEZ should have been separately provided for but then who cares is the attitude! Further, please note that the legalities cannot be ignored while formatting an application on the platform. Further, the LUT is normally executed with the Customs department therefore no additional LUT/BG can be given to the DGFT. For this reason, the exporter uploads the copy of the Authorization with the endorsement of the LUT having been accepted by the Customs. The point of concern is that why the Customs does not transfer the information regarding the LUT & debit to the DGFT & why the DGFT did not make this provision on the new platform. Why are we trying to leave such loopholes for exploitation by the officials down the line? Why the DGFT is not able to have a proper glitch free software even after more than three decades (the computerization started in 1988). The issues are laid out in threadbare manner, but the replies are simply denied by way of stoic silence. In my analysis the complete lack of response is a sign of abject failure & incompetency in even understanding the basics.

There is another serious drawback faced while using the DGFT new Platform i.e., until & unless the Amendment is approved successfully by the DGFT office, you cannot proceed with any further application such as Revalidation/Extension of Export Obligation Period/ CoS from SEZ etc. Therefore, the DGFT wastes a lot of time of the exporters for no reason. TCS, the service provider does not show any competence because in every problem, they simply say that the DGFT has accepted this! In this game, only the exporters pay the price of inefficiency & the nation suffers tremendously. Why & how the DGFT permitted such a stupidity to proceed in the first place & why the DGFT is compelled to continue with it. TCS claims to be technologically advanced & Internationally acclaimed player to deliver software services but then why they failed so miserably in the case of DGFT? Who is responsible for this fiasco & why should the exporters suffer silently? Before launching the platform, everyone was speaking in the superlatives & claiming success in advance, but nobody wants to take any responsibility for the miserable failure. It is not unredeemable but then those responsible must own responsibility & work hard to bring back the system on track.

Another, serious problem encountered by the exporters is the frivolous discrepancy raised by the DGFT officials. The FTWZ supplier Proforma Invoice clearly shows that the unit is in FTWZ from where the supply is to be made. Despite this, the RLA, Mumbai raises the demand for the Approval letter of the Supplier to establish the credentials that the unit is in SEZ. Now, please note that this document may contain information of commercial value therefore why the supplier should share it with the buyer. The demand for this document was not raised in the first case of CoS from SEZ issued. The law did not change between the two issuances. The point of concern is that the officials harass the exporters for a missing comma & full stop whereas they themselves are least bothered about legal compliances on their part even after the mistakes being pointed out. How & why this lack of due diligence be acceptable? Is it just because they are the authority & no law applies to them? The DGFT was even asked in mail to reply in terms of the Citizen’s Charter but then once again Who cares?

There was another CoS from SEZ applied & once again the Mumbai RLA raised another frivolous deficiency. The Mumbai RLA makes demand for a certificate from Customs regarding the authorization utilization status in terms of Policy Circular No. 21 dtd. 11.3.19. It is pertinent to point out that this procedure was applicable when the CoS from SEZ was issued manually. Even at that point of time, it was not necessary because the authorisation debit sheet will reflect the position of the utilization of the AA.

Now, as per the DGFT, there is an exchange of information on a real time basis between the customs & the DGFT & if any imports or exports have taken place then the data should be available with the DGFT. Alternatively, the data should be there in the repository or possible to retrieve into it. Therefore, please understand that by way of common sense, the DGFT officials cannot make a mockery of the system by implementing/invoking this circular under any circumstances. It is not that the officials do not understand this but then they are mocking the DGFT on the lapses & the poor exporter made to bear the brunt of it.

There must be a strong will to do the right things & serve the best interest of the exporters but then the policy of inaction persists paving way for the unending harassment of the exporters. Till now, we have been lucky but then luck cannot last forever. This tells you the story of a very small element but the next one tells you about the major goof ups in the case of Advance Authorisations.

rajiv.pec@gmail.com