The Comptroller and Auditor General of India (CAG) has recommended the Commerce Ministry to ensure that the entire system of administration of foreign trade promotion schemes is automated by rolling out a foolproof system. It has also suggested that the Directorate General of Foreign Trade, under the Ministry, should review the procedure of granting MEIS/SEIS scrips, and lay down an appropriate checklist for grant of scrips both electronically and in manual environment.
Currently, duty benefits are provided under two key trade promotion schemes — Merchandise Export from India Scheme (MEIS) for goods, and Services Export from India Scheme (SEIS). The benefits under these schemes are provided in the form of scrips or certificates.
"Given the government's endeavour to shift to e-governance and the vast experience gained by DGFT in automation, it must be ensured that entire system of administration of foreign trade promotion schemes is automated by rolling out foolproof system, duly mapped to scheme provisions…," the CAG said. The recommendations are part of the performance audit report of the CAG on MEIS and SEIS for the year ended March 31, 2019, which was presented in the Parliament on Wednesday.
It said substantial delays in issue of MEIS and SEIS scrips indicated failure of automated system in achieving the objective of simplification of procedures and ease of doing business. On SEIS, it said self-declarations and CA certificates were insufficient to provide assurance about eligibility of services and remittances for grant of rewards under the scheme.
"However, the department (of commerce) relied heavily on these self-declarations and CA certificates for granting rewards. RAs (regional authorities) failed to distinguish between eligible and ineligible services and to segregate and deny rewards to ineligible services," it said. It added that there was a lack of clarity in SEIS provisions for port services as to how the actual service providers would get the benefit when they were not directly providing service to foreign consumers.
"No guidelines were issued by DGFT to RAs regarding checks to be exercised as part of due scrutiny before sanctioning SEIS and there was no uniformity in procedure being followed for processing SEIS claims across RAs…," it added. CAG recommended that to avoid ambiguity and bring in more clarity on eligible services, DGFT may consider insisting for CA certificate on exact classification of service with central product classification code and the mode under which it falls, rather than simply stating the serial number of the list of eligible service.
It added that the directorate should provide clarity in the policy and procedures on segregation of four types of services. "DGFT may issue clear instructions to RAs about basic checks required before issuing SEIS scrip. Invoking penal provisions may be made mandatory on shortcomings found in applicant's declarations and CA certificates," it said.
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