Customs Circular No- 23/2007 dated
28.06.2007
Risk Management System (RMS)- Charter of functions for Risk Management Division
and constitution of national/local risk management committee- regarding-
The undersigned is directed to invite attention to Board’s Circular
No.43/05-Customs dated 24.11.2005 introducing Risk Management System as a
significant step in the ongoing Business Process Re-engineering initiative of
the department. In continuation of this initiative, a Risk Management Division (RMD)
has been created in the Directorate of Systems and Data Management, CBEC with
its headquarters in Mumbai.
2. The objective of the Risk Management System (RMS) is to achieve an optimal
balance between providing appropriate levels of facilitation to the
international trading community and ensuring compliance with regulatory
provisions. With a view to streamlining the operations of the RMS, the Risk
Management Division with the following charter of functions has been created.
3. Charter of functions for the RMD.
3.1 The RMD will have the overall responsibility for the management of the RMS
which has been designed to address risks facing Customs, i.e., the potential for
non-compliance with Customs and allied laws and security regulations, including
risks associated with the potential failure to facilitate international trade.
3.2 The RMD will be the nodal agency with the overall responsibility for
designing and implementation of Risk Management System using various risk
parameters and risk management tools. RMD will suggest assessment and
examination in respect of consignments perceived to be risky and facilitate the
remaining ones.
3.3 The RMD will also be responsible for collecting and collating information
and developing an intelligence database with a view to effectively implement the
RMS and also carry out effective risk assessment, risk evaluation and risk
mitigation techniques. It will update and maintain risk parameters in relation
to the trade, commodities and all stakeholders associated or involved with the
supply chain logistics.
3.4 The RMD will be the nodal agency for Accredited Client’s Programme (ACP). It
will maintain a list of accredited clients in the RMS and closely monitor the
compliance standards of these accredited clients.
3.5 The RMD will closely interact with all Custom Houses, Directorate of Revenue
Intelligence (DRI) and Directorate of Valuation (DOV) to enable it to
effectively address national risks. The local risks will be largely addressed by
RMD in co-operation with the Custom Houses where import/export clearances are
actually effected. Further, the RMD will also closely interact with Directorate
of Valuation (DOV) on all matters pertaining to the Valuation Risk Assessment
Module (VRAM) of RMS. DOV will guide and advise RMD on all matters pertaining to
valuation in RMS. DOV will also supply the list of Most Sensitive Commodities
with value bands, the list of valid valuation alerts and the list of Unusual
Quantity Code(UQC) at agreed intervals.
3.6 The RMD will also review the performance of the RMS in terms of reviewing
the various targets/interventions inserted by the Local Risk Management (LRM)
Committee, make an objective assessment of the effectiveness of such insertions,
and ensure that the performance is consistent with the objective laid down. For
this purpose, the RMD shall provide necessary advice and guidance to Custom
Houses as and when required, which shall be followed. The RMD will also review
the extent of facilitation being provided to the trade and offer necessary
guidance to the officers in the Custom Houses with a view to providing
appropriate facilitation and also ensuring compliance.
3.7 The RMD will also coordinate and liaise with other Government Departments (OGDs),
in order to deal with risks relating to the compliance requirements under allied
Acts which the Customs department is required to administer, under the overall
direction of the D.G. (Systems).
3.8 The RMD will work in close coordination with NACEN in developing training
manuals and other documentation necessary for the implementation of RMS. In
addition to this, it will also work out regular training schedules for training
of officers responsible for implementing the RMS in major customs locations.
3.9 The RMD shall work in close coordination with Directorate General of Audit
(DG Audit), which has the responsibility for formulating audit policies and
procedures, developing criteria and parameters for selection of cases or
documents for audit.
3.10 DG(Systems) will submit periodic reports on the functioning of the RMS to
the Board.
National Risk Management (NRM) Committee
4.1 There shall be established a National Risk Management (NRM) Committee with
the DG(Systems) as the head. The RMD will be the nodal agency responsible for
convening the National Risk Management (NRM) Committee to review the functioning
of the RMS, supervise the implementation of RMS and provide feedback for
improving the effectiveness of RMS. The NRM Committee will be a standing
committee and shall include representatives of Directorate General of Revenue
Intelligence (DGRI), Directorate General of Valuation (DGOV), Directorate
General of Audit (DG Audit), Directorate General of Trade Facilitation (DGSTF)
and Tax Research Unit (TRU).
4.2 The NRM Committee shall be convened at least once every quarter and will
have the following functions:
i) Review of the performance of the RMS including progress on implementation of
the ACP and reviewing the implementation of PCA (Post Clearance Audit)
functions;
ii) Review of Risk parameters and behaviour of important risk indicators;
iii) Review of economic trends, changes in policies, duty rates, exemptions,
market data etc., that adversely impact on customs functions and processes and
suggesting remedial action thereof;
iv) Any other matter of import / export which the RMD considers important enough
to engage the NRM Committee’s attention.
Local Risk Management (LRM) Committee
5.1 A Local Risk Management (LRM) committee shall be constituted in each Custom
House / Air Cargo Complex / ICD and shall be headed by an officer not below the
rank of Commissioner of Customs.
5.2 The LRM Committee will comprise the Additional / Joint Commissioner in
charge of Special Investigation and Intelligence Branch (SIIB), who will be
designated as the Local Risk Manager, and will also function as the Secretary of
the Committee. The LRM Committee shall also include the Additional / Joint
Commissioner in charge of Audit and a nominee, not below the rank of a Deputy
Director from the regional / zonal unit of the DRI, and a nominee, not below the
rank of Deputy Director from the Directorate of Valuation, if any.
5.3. The LRM Committee will meet once every month and will have the following
functions:
i) Review of trends in imports of major commodities and valuation with a view to
identifying risk indicators
ii) Decide on the interventions to be put in place at the local level, both for
assessment and examination of goods prior to clearance and for post clearance
audit.
iii) Review the results of interventions already in place and decide on their
continuation/modification or discontinuance etc.
iv) Review the performance of the RMS and evaluate the results of the action
taken on the basis of the RMS output.
v) Any other matter which the LRM Committee considers important to be brought
before the NRM Committee
5.4. Periodic reports, as may be prescribed by the RMD, will be sent to the RMD
with the approval of the Commissioner of Customs.
6. All field formations are requested to take note of the charter of functions
of RMD and the creation of NRM / LRM Committees for effective implementation of
the Risk Management System. The above instructions may be brought to the notice
of all concerned.
F.No.450/20/2007-Cus.IV
Yours faithfully,
(Anupam Prakash)
Under Secretary to the Government of India
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