Rajiv Gupta

In this 2nd part of the article, I bring to the kind notice of the readers that how the DGFT builds in the loopholes in the system to facilitate the unscrupulous exporters. Take the example of an Advance Authorization (AA). The exporter makes an AA application to the DGFT & this application is then transmitted to the Customs department through the intervention of the ICEGATE. Therefore exports & imports under the authorization are registered in the EDI system & available at the click of mouse. The shipment data in respect of the exports is transmitted to the DGFT & based on this data, the MEIS entitlement of the exporter is issued. The said data is electronically transmitted to the RBI for the Export Data Processing and Monitoring System (EDPMS) for better control. The bankers handling the export shipment documents issue the eBRC through the system to extinguish the foreign exchange liability. Therefore this software driven approach is adopted by the CBEC, RBI & the DGFT with the participating intermediaries. All these systems are closed system & therefore secure until & unless these are hacked or the officials operating them are corrupt. The systems are operated through digital signature therefore any wrong entry & operator behind it can be easily identified. However, the DGFT does not want to use this system for the discharge of the Export Obligation. The moot question which then arises is why the DGFT despises such a system for the discharge of the Export Obligation.! What is the vested interest of the DGFT officials in discarding the secure system & call for the shabbily printed documents, which cannot be trusted (as there have been lot of scams by way of forged documents in the past). Why the DGFT wants to go out of the system & do this part of the exercise? What can be the reason on the part of the DGFT to indulge into this galaxy sized loophole. Any person with little knowledge of the electronic software for accountability of the exports & imports will tell you that the system is transparent & hassle free & foolproof as such. The exporters are using this kind of software at their end to keep their accounts as such. Therefore, once again we are hounded by the same question that why the DGFT is not willing to accept it?

Also Read- Export Promotion: DGFT & CBEC- Why bureaucracy rejoices in failure of clean administration- Part 1

Any person with common sense will understand that when the data transmission is good for issuance of MEIS entitlement then how the same data can be discarded for the discharge of the export obligation. Please note that the DGFT is the policy making authority & the CBEC is the implementing authority. The Customs department permit exports as per the AA details both in terms of the exports as well as the imports. At the time of exports, the Customs has completed appraising of the export shipment & also completed examination in terms of the AA conditions. Once this task is successfully completed by the customs officials then there is no way that the DGFT can raise any objection (once the data is successfully transmitted to the DGFT). This is very elementary therefore it cannot be possible the Udyog Bhawan mandarins are not aware of this! Once again, the moot question is that why then the DGFT wants the paper documents to harass the exporters & complete discharge of the export obligation outside the system? Whose interest the DGFT is really trying to protect? It cannot be the case of the DGFT that the three substantive parameters appearing in the S/B to discharge the export obligation viz. name of the export item ; quantity & value can be different in the physical documents then the data transmitted electronically. Therefore, why the insistence for the piece of physical copy of the S/B & conducting the discharge of EO outside the software system?

The CBEC vide Circular No. 55/2016-Customs Dtd.  November 23, 2016 pointed out the following that one of the ways to make cargo clearance easier is to reduce the use of paper and to introduce electronic messaging and paperless processing. The Board seeks to ensure that the success achieved over the years in advancing automated clearance processes, EDI messaging and digital signatures translate into a paper-free environment, besides reducing transaction costs. This was also pronounced as an ease of doing business measure.

The relevant paragraph 2 c of the circular reads as under:

Shipping Bill (Exchange Control copy and Export Promotion copy)

After the Appraiser grants LEO (Let Export Order) in the system, printout of the Shipping Bill is generated by the system in triplicate i.e. (i) Customs copy (ii) Exporter’s copy and (iii) Exchange Control Copy. The fourth copy namely the Export Promotion Copy is generated after submission of EGM. Further, with regard to Shipping Bill:

1. detailed copy of the Shipping Bill is not required by the Authorised Dealer. It is enough if a summary copy is printed.

2. CBEC provides copies of digitally signed Shipping Bills to DGFT.

3. The data of Shipping Bill is integrated with EDPMS (Export Data Processing and Monitoring System) of RBI.

In the light of the above, printing of the Exchange Control copy and Export Promotion copy of the Shipping Bill does not serve any useful purpose.

Therefore, it is crystal clear that what is the purpose of & what is implemented by the CBEC. It cannot be the case of the DGFT that the CBEC has done something drastically wrong or they do not understand the significance of the EP copy or the EC copy. Please note that EP copy is issued after filing of the Export General Manifest (EGM) & digitally signed S/B is transmitted to the DGFT therefore physical copy is not required to be generated & this is environment friendly. If the DGFT has any grouse in the matter then the same should have been taken up with the CBEC. The CBEC clearly states that the customs department is completing the legal compliance & transmitting the data to the DGFT as well as the RBI. The RBI has accepted the robust electronic system. However, as pointed out the DGFT does not accept it though it is the Export Promotion authority & mandated to be a facilitator of exports from this country. However, as apparent, the DGFT is not bothered about the exporters or what the CBEC says. Is this simply not ridiculous? The export administration is no rocket science & simply an accounting system & even that could not be put in place by the DGFT even after starting the computerization in 1995. This speaks volumes about how the DGFT has performed or treats export promotion in this country. If the DGFT has any sort of fears about electronic transmission of the data in their minds then how can e BRC be acceptable? Therefore the DGFT is obligated to put things in public domain that why only the S/B data is unacceptable & that why they need the paper copies to degrade the environment & waste the resources of this country when the secure electronic transmissions serve the same purpose more efficiently. It cannot be the case of the DGFT that the Customs department do not know their job & they are permitting illegalities. If the Customs department is doing wrong  then the DGFT should put this in the public domain transparently so that people know what is going in this country & why they are not accepting the S/B data transmitted by the Customs specific ally for the discharge of the EO & what more do they get in a physical copy to detect the crime . I Just remember the Nirav Mody case, the PNB is reportedly duped of more than 11000 Crores just because the LOUs were not on the Core Banking System (CBS). I find a lot of similarity in what DGFT is trying to do despite having a software system in place?

The readers will note that I have been telling that the Business Identification Number (BIN) should give an insight to the IEC in terms of imports  exports at any point time of time by way of the click of mouse because this is the actual record of the transactions conducted by the business entity. It tells you what is happening under a particular IEC sitting in the air conditioned chambers because this statistics cannot be manipulated. It is not that the CBEC & the DGFT do not understand this but the dark truth is that if they accept this then they lose their discretion & their powers to grant undue favours & they never want that to happen. There is no dearth of laws in this country but honest intention & transparent implementation is missing & that is the bane of the Republic of India. The authorities want to cheat the system for their vested interests & that drives the process of administration therefore a physical copy is a must to do things outside the system to avoid any detection & liability. If this is not cheating & fudging the system then what is it? Why the CAG & the CVC cannot even understand or pretend not to understand this? Whom are we trying to cheat & then how can you believe that there will be honesty in the conduct of the citizens in a corrupt & rotten system. You reap what you sow after all!

The Foreign Trade Policy effective 5.6.12 carried in paragraph 2.45 the following.

2.45 Trade Facilitation through EDI Initiatives A secure EDI Message Exchange system for various documents i.e. Authorisations, Shipping Bills, IEC, Application Fee, RCMCs has been established with trade partners i.e. Customs, Banks and Export Promotion Councils. These documents are no longer required to be physically filed with DGFT or transmitted physically to the concerned partners. Therefore, it has reduced the transaction cost for the exporters. It is the endeavour of DGFT to enlarge the scope and domain of EDI exchange continuously.

Therefore right from 5.6.12, the transmission through EDI is in process in respect of the S/Bs & the exporters are not required to file the physical copies. Even the guidelines with the application for the discharge of EO contained that the physical copy of the EP copy of the S/B is not to be submitted to the licensing authority in respect of the EDI ports. However, the DGFT has failed to implement or uphold this, despite this being brought to the notice of the DGFT. Any sane person will understand that the DGFT cannot exist for collecting penalty for the loss of Original EP copy of the S/B. There cannot be anything more idiosyncratic than this! This writer, to prove his point filed an EODC application through the DGFT website (EOM module) in respect of the S/B data successfully transmitted to the DGFT therefore it is not that the data is not available but the truth is that the DGFT is not willing to use that data despite the fact that the FTP guarantees that to an exporter. The DGFT should comprehend that the FTP is not for showcasing but for implementation. However, the DGFT seems to be least bothered about the violations of the FTP provision by the RLA, Mumbai. There is no sanctity of the written word of the law but the whims & fancy of the officials prevail. This is a punishable criminal act under IPC but if you say so then you are at the receiving end & harassed to no end. You bring this to the attention of the CVC but then the whole bureaucratic system is so rotten that nothing ever happens to the culprits though this is the worst form of corruption.

Anybody with little knowledge of imports & exports will know that EP copy has a special significance because the same was released by the Customs only after the exports stand completed. Neither the DGFT nor CBEC can therefore agree to substitute the EP copy of the S/B by any other copy. Since the EP copy is stopped by the CBEC/Customs, the exporters are not in a position to give the same to the DGFT. However, as pointed out time & again, the DGFT  has vested interest in demanding the physical copy. Therefore, the DGFT issued a Public Notice No. 52/2015-2020 dtd. 12.1.18 which specified that Wherever printouts of EP Copy of shipping bill is not provided to exporters by Customs Authorities in terms of Circular No-55/2016-Customs dated 23.11.2016, applicant will have option to submit Exporter’s Copy of shipping bill in original duly signed by the Customs authority concerned in lieu of EP copy of shipping bill.  Again, nothing can be more ridiculous than this. The exporters are simply furnished a computer printout. In the first place please note that the Exporter’s Copy of shipping bill has no value because that is not even a signed copy. If the exporter is made to run for its authentication, the DGFT is introducing a corrupt practise because there is no free lunch in this world. Why the DGFT should be interested in doing this? As the name suggests, how can the DGFT snatch away the Exporter’s Copy of shipping bill from the exporter in any case. Once again, it is legally untenable. Finally, if the DGFT can accept any piece of paper authenticated by the system then why the DGFT is reluctant to accept the S/B data transmitted by the Customs. Why the DGFT should undermine its own export promotion policy & be not bothered about it. There seems to be something very sinister about it therefore it is the responsibility of the CAG & the CVC to unearth what is going on in the name of export promotion & why the electronic transmission of data through secure source is being despised by the DGFT.

Please note that the Prime Minister is all for the digitization in this country but then the DGFT is simply not bothered even about the directives of the Prime Minister. There must be something very significant at stake to defy the Prime Minister’s directives. The PMO needs to get this examined that how the successful transmission of the S/B data be discarded by the DGFT authorities & why the DGFT is not able to implement the FTP provisions duly signed & released by him.

The simple point is that heads I win & tails you lose approach with the exporter will never facilitate & increase exports. The DGFT has long outlived the utility & it is the biggest stumbling block as on date. The treatment meted out to the DGFT in the implementation of the GST says it all. Therefore, it is really futile that the DGFT is still trying to perpetuate corruption & this is only killing the exporters & therefore needs to stop. The writer would respond if any of the GoI Officials points out anything wrong. The DGFT needs to walk the talk & facilitate & not strangulate the exporters.

(Above are personal view of Author and he can be reached at rajiv.pec@gmail.com)

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One response to “Export Promotion: DGFT & CBEC- Why bureaucracy rejoices in failure of clean administration—Part 2”

  1. Samir Kr. says:

    CBEC and DGFT Official are most currupt in the country. I do not know why business communities are paying bribe to these official.

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