Premises Based Audit

Overview: 

Premises Based Audit is conducted under Section 99A of the Customs Act, 1962 read with the Customs Audit Regulations, 2018. 

The audit is typically conducted at the registered business premises and usually covers a period of 3 to 5 financial years. 

The scope of audit generally includes: 

• Classification under the Customs Tariff. 

• Valuation under Section 14 and Valuation Rules. 

• Correctness of duty assessment under Section 17. 

• Eligibility of exemption notifications issued under Section 25. 

• Compliance under export promotion schemes such as EPCG Scheme, Advance Authorization Scheme and DFIA Scheme. 

• Compliance under IGCR Rules. 

Audit teams may also review: 

• GST returns. 

• Financial statements. 

• Foreign remittance details. 

• Related party transactions (including SVB cases). 

• Refunds, drawbacks and RoDTEP claims. 

If discrepancies are identified, proceedings for recovery of duty, interest and penalties may follow. 

Benefits: 

• Specialized Customs Audit Expertise: 
  Focused handling of PBA matters with detailed knowledge of customs law, valuation rules and exemption frameworks. 

• Pre-Audit Risk Diagnostics: 
  Identification of potential exposure areas before escalating into formal demands. 

• Structured Reconciliation Model: 
  Alignment of Customs data with GST filings, financial records and license documentation. 

• Strategic Litigation Shielding: 
  Carefully structured submissions to minimize the risk of Show Cause Notices and penalties. 

• Export Scheme Protection: 
  Safeguarding benefits under EPCG, Advance Authorization, DFIA and IGCR. 

•  Authority-Level Representation: 
  Structured interaction and legally supported submissions before Customs Audit Commissionerate. 

• Faster and Controlled Closure: 
  Process-driven handling to reduce operational disruption and ensure timely audit completion. 

Documents Required: 

The exact documentation depends on the audit scope. Typically required documents include: 

• Audit intimation / notice issued by Customs. 

• Import and export data (Bill of Entry / Shipping Bills). 

• Classification and valuation of working sheets. 

• Exemption notification documents. 

• EPCG / Advance Authorization / DFIA licenses (if applicable). 

• IGCR declarations and compliance records. 

• GST returns (GSTR-1, GSTR-3B). 

• Financial statements (Balance Sheet, Profit & Loss). 

• Foreign remittance records. 

• Related party agreements (if applicable). 

• Reconciliation statements (Customs vs GST vs financial records). 

Incomplete documentation often leads to adverse observations. 

Process to Apply: 

Stage 1: Notice Review & Risk Mapping 
Detailed analysis of audit notice and identification of potential exposure areas. 

Stage 2: Internal Compliance Audit 
Review of classification, valuation, exemption claims and scheme compliance. 

Stage 3: Data Reconciliation 
Alignment of Customs, GST and financial records to eliminate inconsistencies. 

Stage 4: Legal Positioning 
Preparation of statute-backed explanations and documentary support. 

Stage 5: Audit Representation 
Structured interaction and submissions before Customs Audit authorities. 

Stage 6: Post-Audit Strategy 
Handling audit observations and preparing defense in case of further proceedings.