The Comptroller and Auditor General (CAG) has urged the Finance Ministry to consider establishing an online system, similar to the GSTN system, for streamlining the customs refund process to enhance its efficiency. Additionally, the official auditor has raised concerns about significant delays in implementing the exchange rate update module on a daily basis. The CAG has requested that this system be made operational without delay.

Refunds can be sought under the Customs Act in various scenarios, such as when imported goods are found to be defective or not meeting agreed specifications, when export duty/cess has been paid on exported goods that are subsequently returned, or when duty has been paid upon assessing imported goods and the person seeks a refund.

The CAG suggested, “The Ministry should contemplate the adoption of an online workflow for capturing and processing refunds, modeled on the lines of the GSTN System. This approach would allow the Department to electronically monitor Bill of Entries (BEs) against which refund claims have been lodged. Such a system would significantly enhance the efficiency, effectiveness, and transparency of refund case management.”

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The CAG also noted that in February 2014, the Central Board of Indirect Taxes and Customs (CBIC) announced the completion of testing for an exchange rate update module through communication with the State Bank of India (SBI). However, the actual launch was deferred pending resolution of technical issues with SBI. Subsequently, the module underwent redesigning, and final preparations for its implementation are being undertaken by SBI.

CBIC typically establishes the conversion rate for major foreign currencies used in transactions approximately every 14 days and issues related notifications. If import/export transactions involve currencies not covered by these notifications, importers/exporters are required to provide an exchange rate certificate from SBI at the time of submitting bills of entry or shipping documents.

The CAG emphasized the importance of implementing a system that captures daily exchange rate fluctuations, which would mitigate unjustified gains or losses for importers, exporters, and the Department alike. The CAG concluded, “The system for daily exchange rate updates should be activated at the earliest opportunity.

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