Indian Customs EDI System (ICES) initiated a new era in the country.

An era of :

• Paperless Trade.

• Trade facilitation rather than control.

An era in which Indian trading community can exchange documents electronically with Customs and other Government Agencies.

This had been made possible by the joint design, development and implementation of ICES by the officers of Central Board of Excise and Customs and National Informatics Centre.

The Customs Computerization project is the outcome of a systems study conducted by National Informatics Centre and Central Board of Excise and Customs in December, 1992 at number of Customs Houses throughout the country. A more detailed requirements study at the Delhi Custom House in April, 1994 formed the basis for the software requirements of ICES.

The pilot project was launched in the year 1994-95 at Delhi Customs House which included Electronic Data Interchange (EDI) as a key element for connecting all the players involved in international trade with the Customs House electronically. After the successful implementation at Delhi Custom House, the Customs decided to extend the service to other customs houses. ICES was made operational for exports processing at Inland Container Depot, Tughlaqabad in August, 1997; Sahar Air Customs, Mumbai in November, 1997; Jawahar Lal Nehru Port Trust, New Mumbai in November, 1997; Chennai Air Customs in December, 1997; Bangalore Air Customs in February, 1998; and Container Freight Station, Patparganj in March, 1998. Right now, the system is operational at 23 sites throughout the country.

More modules like Transshipment, Warehouse, Bonds, etc., were designed and implemented in steps.

The main objectives set for Indian Customs EDI System by the Customs were:

• Respond more quickly to the needs of the trade

• Computerization of customs related functions including import/export, general manifest control, ex-bond clearance of warehoused goods, goods imported against export promotion schemes, monitoring of export promotion schemes.

• Reduce interaction of the trade with Government agencies

• Provide retrieval of information from other custom locations to have uniformity in assessment and valuation

• Provide management information system for policy making and its effective revenue and pendency monitoring and

• Provide quick and correct information on import/export statistics to Director General of Commercial Intelligence and Statistics

• The guiding principles for the officials of Customs and National Informatics Centre while designing the ICES system were:

Facilitation: While ensuring proper enforcement of Customs laws and regulations, Customs Administration should strive to improve facilitation of Customs clearance procedures.

Accountability: Customs Administration should be accountable for their actions through a transparent and easily accessible process of Administration and/or judicial review.

Consistency: Customs laws, regulations, administrative guidelines and procedures should be applied in a uniform manner.

Transparency: Customs laws, regulations, administrative guidelines and procedures should be publicly available in a prompt and easily accessible manner.

Simplification: Customs laws, regulations, administrative guidelines and procedures should be simplified to the extent possible so that Customs clearance can proceed without undue burden.

The objective was to roll out systems and processes that improve the way the business is conducted.

ICES system is not only a technology solution but it transformed the way business was done.

ICES comprises of two main sub systems namely, Indian Customs EDI System/Imports (ICES/I) and Indian Customs EDI System/Export (ICES/E).

ICES/I for processing of Bill of Entry; and ICES/E for processing of Shipping Bills. The Exporters, Importers and Custom House Agents (CHAs) transmit Bills of Entry, Shipping Bills and other related documents such as Invoice, Packing List over dial-up links to the NICNET EDI Server which, in turn, submit them to Customs computer system for clearance. The trading community is not required to travel physically to the Custom House for submitting the documents except at the last stage for physical examination of goods, and for taking delivery.

The Custom House Agents use the Remote EDI System (RES) which is a standalone software package for preparation of Bill of Entry and Shipping Bills and other related documents. It has been developed by NIC as part of Indian Customs EDI System. The documents transmitted electronically over NICNET are submitted to Customs Computer System for further processing.

Improved customs clearance and inspection procedure is generating faster, more certain and, ultimately, less costly trade transactions.

Computerization of customs procedures resulted in time and cost savings due to the reduced need to prepare, handle, store and deliver customs documentation.

Improvements in communications, access to information and the transparency of customs processes and appeals increased the level of certainty and fairness.

A good compliance track record resulted in faster clearance and less intrusive verification techniques.

Importers know the amount of duties and taxes owing as a result of the clear and consistent rules. More efficient clearance will produce time and cost savings and provide the certainty required to exploit modern business practices such as “just-in-time” inventory.

Exporters benefited from having similar customs rules and procedures apply across the international market, thus increasing market access opportunities, while reducing costs and complexity.

Customs Brokers have the opportunity to refocus their services from dealing with forms and complexity to using their expertise and knowledge to bring a new range of professional services to clients operating in an expanding and evolving trade market.

Carriers benefit from faster service, lower costs and the ability to use their equipment to its utmost capacity rather than having it delayed at Customs.

Operations

• Fully automated process with little or no intervention by either party providing a virtual on-line scenario

• Declarations can be accepted round the clock automatically, resulting in maximum productivity

• Quicker retrieval of cargo through reduction of clearance times

• Reduction in manual administrative processes resulting in fewer errors and no duplication

• Harmonised business relationships with other bodies such as Ports, DGFT, Airlines, Container Depots etc.

Time Saving

• Notification of releases are speeded up as a result of the electronic releases being generated automatically

• No capturing of the release required by the client

• Communication errors reported and communicated electronically to client

Data Accuracy

• Electronic messaging has the proven advantage of minimizing data capture which in turn ensures less errors and quicker releases

• The accuracy of data received can be incorporated into clients Track and Trace

Cost Effectiveness

• Cost on processing the documents has come down drastically.

Security and Risk Management

• Security is very vital when submitting information electronically. To compound this basic assumption, the risks of diminished value in the real world are nothing compared to the risks of loss in the virtual world.

• Customs in particular face issues such as fraud and theft in their standard business practice and they realize the need for a secure system.

• Scheduled auditing practices within the system ensured that to ensure that security is being implemented effectively customs have made sure that the security requirements. The client can be sure that their message information will not be tampered with.

Cargo Handling

Electronic clearances provide quicker cargo releases, resulting in more efficient deliveries

Indian Customs EDI system is developed for better management of Custom Activities. The existing processes were analysed in depth for re-engineering and improvement. The main achievements of the system are simplified and harmonized procedures which has not only provided efficient and reliable environment to the customs but also to the business communities and other agencies involved in the trade. The business processes of the customs and the trading partners along with their boundaries and interfaces were analyzed in depth and reengineered from the viewpoint of

• Higher efficiency

• Customer satisfaction

• Lower Cost

• Facilitation

• Lower inventory level

• Reduced turnaround time

The main objectives while re-engineering the procedures were:

• All the agencies of the government should present a single face to the user

• Data once captured should be available for all the government agencies

• The Importer/Exporter or their agent should interact with only one agency

• Gradual transition from scrutiny of paper documents

• System Appraisal for select import goods

• Minimized export appraisement

• Examination waiver - Green Channel

• Electronic credit of drawback

• Reduced documentation for export cargo

The Indian Customs EDI application is running on Sun Solaris Operating System (V.2.5/2.6) and the database is Oracle (V.7.1/7.3). Each Customs station has stand-alone servers for running the ICES application. The data at present is locally stored on these servers.

A. Document Preparation and submission

Indian Customs EDI System can accept the documents from the trading partners in the Electronic Format. The documents can be prepared and submitted using either the Electronic Data Interchange or Service Centre. The Importers/Exporters and Custom House agents can use the Graphical User Interface based package “Remote EDI System” implemented using Visual Basic/Oracle 8 from their offices to create the documents in the desired format and then transmitting them over the Internet using the secure server of NIC for submission at customs house for further processing.

The document received over the Internet at Custom house is then loaded to the ICES after the proper validation checks.

Importers/Exporters and CHA’s who do not have access to Internet can get their documents electronically prepared and submitted for further processing at the Service Centre. The Service Centre module of NIC running on powerful Sun machine under Oracle 7.0 allows entry of data, modifications and submission.

The data entered through EDI or Service Centre gets validated before their storage into ICES. If errors are found, the same are reported to the Importer/Exporter/CHA through EDI or at the Service Centre.

B. Indian Customs EDI System

Documents once entered and submitted are then reviewed by different officers of the Custom House at various stages of processing and final clearance is accorded on the computer system after all the formalities are over for physical examination of the goods at the Sheds. ICES keep track of the officers who have handled the documents at various stages of processing. The trail of the processing cycle is available to superior officers at any time. The CHA, in turn, can enquire about the status of his documents from his own system. He can view any memo or objections on his documents as they are posted in the system.

Indian Customs EDI System: Imports (ICES/I)

The Bill of Entry is to be filed through the Service Center by the Importer/CHA, who has to submit the signed declaration in a prescribed format along with copy of Invoice and Packing List if filed through Service Centre. The document can also be filed through the Remote EDI System.

After the data entry at the service center, a "Check List" is generated which is to be verified by the Importer/CHA and corrected in case any error is detected and the signed "Check List" is to be submitted in the Service Center. In case of RES, the system validates the data and if errors are found, a message is sent back to the party. If the data passes the check, system accepts the data and an acknowledgment is sent to the Importer/CHA.

The Bill of Entry then appears in the screen of the respective Group Appraiser. The Group Appraiser then assesses the Bill of Entry on the system and marks it to the Audit Appraiser. After the Audit is complete, the Bill of Entry appears in the screen of the concerned Group Assistant Commissioner. After the assessment is approved by the Asstt. Commissioner concerned, TR-6 is printed at the Service Center for payment of duty. The Examination Order is also printed along with the TR-6 Challan.

If the Appraiser does not agree with the importer regarding tariff classification / notification / declared value etc., he can raise a query in this regard. The Importer/CHA has to enquire at the Service Center whether there is any query in respect of their Bill of Entry and should reply to the same through the Service Center if there is any.

The duty is to be paid through the designated bank.

After payment of the Duty, the Bank enters the same into the system at a terminal at their end. Then the Bill of Entry appears on the screen of the Appraiser (Docks). The Importer/CHA should present a copy of the B/E alongwith duty paid challan and other documents including invoice, packing list etc. at the time of examination of the goods.

The Shed Appraiser shall examine the goods and enter the examination report in the system. After the examination of the goods is complete, the Appraiser (Docks) would give the "Out of Charge" order on the system. Thereafter, the system will print two copies of B/E for the importer and the Exchange Control Copies.

In case of any discrepancy found in the docks with respect to the goods, the same is reported to the respective Group through the system with the comments of the Dock Officers. On the basis of the examination report and the comments of the dock officers, the Group may revise the assessment or may raise a query.

Indian Customs EDI System: Exports (ICES/E)

Before filing any Export Shipping Bill, all exporters and CHAs are required to register with the Customs EDI System their IEC Code No., CHA Licence No. and Authorised Dealer Code No. of the Bank through which export proceeds are to be realised.

Those intending to file the Shipping Bill will have to present at the Service Center a declaration in the prescribed format signed by the exporter or his authorised CHA alongwith the copy of Invoice and Packing List.

After the data entry at the service center has been done, a "Check List" will be generated and handed over to the CHA/Exporter who should verify the correctness of the data entered. If any error/mistake is detected by the CHA/Exporter in the data, they should inform the Service Center operators who will make the corresponding correction in the data accordingly.

After the correct data has been entered into the system, the Shipping Bills shall be processed automatically by the System on the basis of the declaration made by the Exporters. However, the following categories of Shipping Bill are assessed by the Assistant Commissioner (Export) :

(a) Shipping Bills where the FOB value is more than Rs. 10 Lakhs.

(b) Shipping Bills relating to free trade samples whose value is more than Rs.20,000/-

(c) Drawback Shipping Bills where drawback amount is more than Rs. 1 Lakh.

The status of the Shipping Bill can be checked by the Exporter/CHA at the Service Center. They should also check whether any query has been raised in respect of their Shipping Bill. In case of any query, they should file a reply to the query through the Service Center.

During examination of the goods at the docks, the CHA/Exporter has to present the Check List alongwith all original documents such as Invoice, Packing List etc. to the Customs Officer. "Let Export" order will be given by the Appraiser if everything is found to be in order after examination of the goods and scrutiny of the documents.

After the "Let Export" order is given, the printout of the Shipping Bill is generated. The examination report printed on the Shipping Bill is to be signed by the Appraiser, Examiner as well as the CHA/Exporter. The name and Licence No. of the CHA should be clearly mentioned below his signature.

As mentioned, the main objective of introduction of EDI in International trade was to move away from customs controls to trade facilitation. Numbers of parties, most of which are government agencies, are involved in a trade transaction. NIC submitted a re-engineering proposal in 1998 to the Customs, which is subsequently implemented. The main features of the system are :

• Integration of the agencies involved in a trade transaction.

• All the agencies presenting single face to the customer

• Customer interact with only one agency as far as possible

• Data once captured made available to other agencies.

This has been achieved primarily by re-engineering the processes of these regulatory agencies involved. The internal functions of these agencies are automated and are made EDI capable. The inter-agency data files are automatically transferred and received by the system and act upon the messages received and the response messages are generated.

The main agencies other than Custom House and CHA/ Importer/ Exporter integrated into the Customs EDI Community System are:

• Directorate General of Foreign Trade

• Airport Authority of India

• Apparel Export Promotion Council

• Export Promotion Council(EPC)/Commodity Board

• Airlines

• Port Authorities

• Shipping Lines and Shipping Agents

• Inland Container Depots

• Container Freight Stations

• Banks

Based on www.cbec.gov.in