Invoice manipulation to undervalue imported goods causing heavy loss of customs revenue is an area of serious concern. The Indian Customs Valuation Database Project, more commonly referred to as National Import Database (NIDB) Project was initiated in this context to develop a real time electronic data base in respect of goods imported at all customs stations in India. The idea is to provide instant access to the combined data, duly analyzed and flagged by the Directorate of Valuation (DOV), to all assessing officers for their use as an effective tool to check under-valuation and valuation fraud so as to safeguard customs revenue.

Main Purposes

The main purposes for introducing the valuation database are as under:

  • Need for up-to-date product information with customs to check under-valuation of imported goods;
  • Eliminating the scope for importers shifting from one port to another for undervaluing imported goods;
  • Increased transparency in customs valuation and enhanced trade compliance;
  • Facilitating Risk analysis;
  • Better monitoring of related party transactions and transfer pricing;
  • Checking misclassification of imported goods;
  • Minimizing undue price advantage of undervalued imported goods and providing domestic producers a level playing field.

Data Capture

The import data is captured on a daily basis in a specially devised format by the individual customs stations immediately after assessment. In cases where electronic data processing is in vogue (EDI), the inputs required are already available in the computer system. The required data is retrieved by special software and transmitted to a central server in the Valuation Directorate through a dedicated Intranet called ICENET. In case of non-EDI assessment, the required input data is entered manually at the customs stations and transmitted to the Valuation Directorate on a daily basis. For remote customs stations not on ICENET, the required data is sent to the Valuation Directorate via email. This data is analyzed on a weekly basis in DOV with the help of intelligent software. This software calculates unit values, the weekly weighted averages for sensitive commodities and percentage deviations of each import from weighted average. An interface with international price information is also being provided progressively along with analyzed data.

Data Transmission

The analyzed data is transmitted to all customs stations every week by electronic means, i.e. via ICENET to major customs stations and via email to other stations. Weekly transmissions are consolidated at Custom stations and stored in MS access format with easy search and retrieval facilities. This data is made available to assessing officers at custom stations on LAN. When the declared value is found to be below 10% the weighted average, the consignment is flagged as an outlier. The customs stations examine the outliers pertaining to them, to determine whether the declared values in such cases are genuine or not in consultation with the importer and causing inquiries as appropriate. From 31st December 2002, the NIDB data has been made available on the DOV website for access on a restricted basis (Password protected). Now any customs officer in the country, duly authorized with username and password, can access the national imports database (NIDB) from anywhere, anytime.

Benefits from the Project

NIDB is a powerful assessment tool for Customs officers and a Decision Support System. For those who are engaged in day to day assessment of imported goods at the numerous Custom stations in India, the NIDB provides instant information to compare declared values with contemporaneous import prices as well as current international prices of identical and similar goods. This enables them to take well-informed decisions on valuation and classification of imported goods and to prevent loss of revenue on account of under valuation or mis-declaration.

The database also helps Customs officers and investigative agencies, like Directorate of Revenue Intelligence (DRI), to conduct risk analysis and item profiling to target goods or consignments, which are sensitive to valuation fraud. NIDB is also a valuable source of information in post audit work to review classification, valuation and other particulars of goods, which have been imported and cleared from customs. NIDB also provides vital information for product research and analysis in tax planning.

Information available in the database is made use of in the risk analysis. Risk indicators generally used are sensitivity of the goods from valuation angle, source of supply, profile of the importer, exporter, supplier, relationship etc, original of goods, carrier, the nature of transaction and payment channels.

Main Contributers

Several agencies under the Govt. of India have pooled their resources and expertise to develop the National Import Database (NIDB) on a priority basis.

These are:

(i) Directorate of Valuation (DOV), which was assigned the responsibility of development of NIDB and its maintenance;

(ii) Directorate of Systems (DOS), which is the Central agency for Customs Computerization. They were entrusted with the job of ensuring smooth data transmission;

(iii) National Informatics Centre (NIC), which was assigned the job of Software development for extraction of import data from Customs stations;

(iv) National Centre for Software Technology (NCST), which is another expert agency entrusted with the development of software for data analysis and the Decision Support System;

(v) Customs stations all over India are actively participating in the NIDB Project by ensuring generation of good quality import data. The Customs stations also have a pivotal role in the project by making use of the NIDB data as an effective assessment tool.

Data Process and Use

While the input data is in flat file format, the weekly output data is in Excel format. The aggregated data is stored by Customs Stations in MS Access format using another software to make it available on the desktop of assessing officers in a LAN. Data is arranged in the order of HS based eight digits Tariff Heading (CTH). Within the CTH, data is arranged in the order of the Customs station and then by Country of origin. However the data can be sorted out in any order desired by the user. Sorted data can be filtered and printed. It also allows wide search and retrieval facilities.

Stage of Implementation

The NIDB Project has been implemented in four phases. In the first phase, EDI data from 21 major Customs stations linked by ICENET were included in the project that started in November 2001. The second phase incorporated non-EDI data from 21 ICENET locations and it was implemented in May 2002. The third phase that covers data from all other Customs stations in India started in stages and was implemented in September 2002. Most of the Customs stations have since been covered and the NIDB now incorporates about 97% of the imports all over the country. "Data Entry Module" has been circulated to all field formations for getting 100% import data of the country in the database. The final phase included making available the entire data on the DOV server for Internet access by remote customs stations and it was implemented in December 2002. All Customs stations have been provided with NIDB software (NIDB-C for EDI locations and NIDB-Q for Non-EDI locations) for managing and querying the database offline. All weekly analyzed files (DVF /DVS Files) are also available for downloads from the DOV website. These files keep the databases updated at all customs locations in the country.