Customs Audit Asks for Deadlines

Blitz Bureau

NEW DELHI: A scheme designed forty years ago to let a factory import a whole plant on one simplified bill has run into a difficulty that has nothing to do with duty rates. Nobody ever wrote down when it has to end.

The Comptroller and Auditor General’s Performance Audit Report No. 27 of 2026, on the Project Imports Scheme, Union Government, Department of Revenue (Indirect Taxes — Customs), for the year ended 31 March 2024, was presented to Parliament on 12 August 2026. The auditor issued its press brief on the report the following day.

The report carries 36 audit observations and 11 recommendations. Its stated revenue implication is ₹128.58 crore, and it records procedural irregularities involving ₹2,979.33 crore — on Blitz’s own computation, 23.17 times the revenue figure. Responses received from the Central Board of Indirect Taxes and Customs and from field formations have been considered and included in the report itself.

What the scheme was built to do

Project Imports is one of the oldest pieces of trade facilitation on the Indian statute book. Under the Project Import Regulations, 1986, an importer setting up an industrial project may register the whole contract with Customs and bring in the entire consignment — machinery, instruments, components, spares — under a single tariff classification at a single rate, instead of classifying and assessing every item separately. For a plant with ten thousand line items, that is the difference between a project and a paperwork exercise.

The bargain is that the concession is tied to the project. The goods must go into that plant, and the contract must eventually be finalised against proof that they did: an Installation Certificate, a Plant Site Verification, a reconciliation statement, the bills of entry, the invoices, the final payment certificate.

Blitz Data Card · CAG Report No. 27 of 2026:The audit, in the auditor’s own figures

Source: Office of the Comptroller and Auditor General of India, press brief on Report No. 27 of 2026, New Delhi, 13 August 2026. The share of 57 in 383 — 14.88 per cent — and the ratio of the two rupee figures have been recomputed by Blitz. Photograph note under Circular BIMG/CIR/2026/02: an audit report tabled in Parliament has no photograph of its own, and the circular bars a file picture or a building exterior standing in for an event. The desk carries this data card at the exact point where a picture would run.

A concession with no closing date is not a concession. It is an open file.

A figure the desk did not print

• A widely circulated secondary summary of this report carried the revenue implication as ₹2,128.58 crore and the procedural irregularities as ₹22,979.33 crore.
• The auditor’s own press brief of 13 August 2026 states ₹128.58 crore and ₹2,979.33 crore.
• Blitz has printed the auditor’s figures. Where a summary and the primary document differ, the document governs.

The gap the auditor found

The first and most consequential finding is an absence rather than a lapse. The Project Import Regulations, 1986 prescribe no timeline — not for registering a project, and not for completing imports under a registered contract. Audit records that the absence of defined timeframes affects project implementation schedules, reflects procedural inefficiency and weakens control over import compliance, and may lead to duty evasion, non-accounting of goods and loss of revenue to the government (paragraphs 2.1 and 2.2).

From that single hole in the drafting, most of the rest follows. Audit found project import benefits extended to projects not notified and to ineligible machinery and goods, which it traces to deficiencies in verifying eligibility at the assessment stage (paragraphs 2.4 and 2.7). Of 383 finalised cases examined, 57 — 14.88 per cent, on Blitz’s computation — across eight Commissionerates were closed without the mandatory Installation Certificate, without the prescribed Plant Site Verification, and without other required documents (paragraphs 2.11 and 2.12).

Then the delays. Audit observed clearance of goods under the scheme taking anywhere from 3 to 1,149 days — the opposite of what a simplification scheme exists to achieve, and a drag on the targets of the National Trade Facilitation Action Plan (paragraph 3.1). It found bills of entry finalised late and inconsistently even after project contracts had been completed, and instances of premature finalisation of bills of entry before the contract itself was closed, which it attributes to weak linkage between project registration and import documentation (paragraph 3.3). It found bonds and bank guarantees not renewed while finalisation remained pending (paragraph 4.1), and pendency in the recovery of confirmed demands, which risks becoming irrecoverable as limitation periods expire (paragraph 4.3).

What the auditor recommends

The eleven recommendations are worth reading together, because they are not eleven ideas. They are one idea applied eleven times: put the check inside the system, not beside it.

The Board is asked to prescribe a time frame for completing registration once a complete application is received, and to amend the 1986 Regulations to set a time limit for completing imports and closing projects. It is asked to embed automated document validation in the ICES registration module so that a registration cannot be made without the mandatory documents; to build system-based validation so that a case cannot be finalised unless the Installation Certificate and the Plant Site Verification report have been uploaded and verified; to flag ineligible contract registrations automatically by registration date and classification; to monitor dwell time for every project-import bill of entry in ICES and analyse delays across field formations; to link finalisation of a contract to automatic validation of the associated bills of entry so that no bill is closed in isolation; to alert on bonds and bank guarantees nearing expiry; to flag related-party transactions automatically for reference to the Special Valuation Branch; and to maintain a centralised digital tracker of confirmed demands and the recovery action taken on each.

The eleventh recommendation is the plainest of them. Field formations are to adhere strictly to the reporting and monitoring framework already prescribed in Circular No. 22/2011-Customs of 4 May 2011; the Project Import Registers are to be maintained digitally and monitored periodically; and the Directorate General of Performance Management may develop an automated dashboard linked to ICES to consolidate pendency across Commissionerates in real time. The framework, in other words, has existed for fifteen years. What has been missing is the register in machine-readable form and a screen on which somebody can see it.

The constructive reading

It should be said clearly that this is not a report about wrongdoing, and the auditor does not present it as one. It is a report about a facilitation scheme that has outlived the paper it was designed on. Every recommendation is addressed to a system, not to a person; the Board’s responses were taken on board before the report was finalised; and the remedy in almost every case is a validation rule in software that already exists.

Two things would carry this further, and both are already within the Board’s reach. The first is the amendment to the 1986 Regulations that the auditor asks for — a stated time limit for completing imports and closing a project. Forty years is a long time for a concession to have no closing date, and the amendment is a short one to draft. The second is publication: once the ICES dashboard the auditor recommends is built, a periodic public statement of project-import contracts registered, finalised and pending, Commissionerate by Commissionerate, would let importers see their own queue. An importer who can see the queue chases his own file. That is the cheapest enforcement there is.