Strengthening Integrity in Self-Declarations: Due Diligence Requirements for Authorisation Holders under Advance Authorisation/EPCG Schemes at JNCH

Strengthening Integrity in Self-Declarations: Due Diligence Requirements for Authorisation Holders under Advance Authorisation/EPCG Schemes at JNCH

The Office of the Commissioner of Customs, NS-II, Jawaharlal Nehru Custom House (JNCH), Nhava Sheva, has issued Public Notice No. 68/2026 dated 04-06-2026 emphasizing strict compliance and enhanced due diligence in the submission of self-declarations by Authorisation Holders (AHs) and Customs Brokers (CBs). The notice pertains to the declaration requirements for availing exemption from Bank Guarantee (BG) or cash security in relation to Advance Authorisation and Export Promotion Capital Goods (EPCG) schemes.

This measure reinforces the principle of trust-based facilitative governance while ensuring accountability and transparency in customs procedures.

Regulatory Background and Policy Framework

The Public Notice derives its authority from CBIC Circular No. 58/2004 dated 21.10.2004 (as amended), which governs the conditions under which exemption from Bank Guarantee is granted to Advance Authorisation and EPCG license holders.

As per Para 3.2(c) of the Circular, eligibility for BG exemption is subject to, among other conditions, the requirement that the license holder must not have been penalized under:

• The Customs Act, 1962
• The Central Excise Act, 1944
• The Foreign Exchange Management Act (FEMA), 1999
• The Foreign Trade (Development and Regulation) Act, 1992

during the preceding three financial years.

Accordingly, applicants are required to submit declarations or affidavits confirming compliance with these conditions.

Issue of Misrepresentation in Self-Declarations

The Customs administration has observed multiple instances where Authorisation Holders or Customs Brokers have failed to disclose prior penalties imposed under the Customs Act, 1962 while submitting declarations for BG exemption.

In several cases, such omissions were detected during scrutiny, after which revised declarations were submitted incorporating the missing information. This pattern indicates gaps in due diligence and raises concerns regarding the accuracy of self-certified declarations.

Such instances, even if not intentionally fraudulent, are treated as misrepresentation before Customs authorities, since the declarations form the basis for granting significant financial and procedural exemptions.

Importance of Trust-Based Governance

The Public Notice highlights that India's customs administration operates within a trust-based facilitative governance framework, where compliance is largely based on self-declaration and voluntary disclosure by stakeholders.

However, this trust-based system relies fundamentally on:

• Accuracy of information submitted by trade
• Full disclosure of material facts
• Accountability in self-certification processes

The integrity of facilitation measures such as BG exemption depends on the correctness of declarations made by Authorisation Holders and Customs Brokers.

Mandatory Due Diligence Requirements

In view of the observed discrepancies, JNCH has directed all Authorisation Holders and Customs Brokers to exercise enhanced due diligence while submitting affidavits or declarations.

They are required to ensure that all declarations are:

• Complete
• True
• Correct in all respects

Specifically, any penalties imposed within the last three financial years under applicable laws must be fully disclosed, including those under:

• Customs Act, 1962
• Central Excise Act, 1944
• FEMA, 1999
• Foreign Trade (Development and Regulation) Act, 1992

Standardized Disclosure Format

To ensure uniformity and transparency, the Public Notice prescribes a structured format for disclosure of penalties. The format includes details such as:

• Serial number
• Order number and date
• Issuing authority
• Section under which penalty was imposed
• Penalty amount
• Status of order (appeal filed or not)
• Appeal details, if applicable

This structured approach ensures that Customs authorities can objectively assess eligibility for BG exemption without ambiguity.

Legal Consequences of False Declarations

The Public Notice clearly warns that submission of incorrect, false, or misleading declarations may attract penal action under relevant provisions of the Customs Act, 1962, including Section 117, which deals with general penalties for contravention where no specific penalty is provided elsewhere.

This reinforces the seriousness of compliance obligations and serves as a deterrent against incomplete or inaccurate disclosures. Even in cases where misstatements are not intentional, liability may still arise due to the principle of strict responsibility in customs declarations.

Impact on Trade and Compliance Ecosystem

The Public Notice has significant implications for stakeholders involved in Advance Authorisation and EPCG schemes:

1. Strengthened Compliance Discipline - Stakeholders are now required to maintain accurate internal records of past penalties and enforcement actions.

2. Enhanced Transparency in Exemption Claims - Customs authorities will have more reliable data to assess eligibility for BG exemption.

3. Reduced Risk of Post-Approval Rejections - Proper disclosure at the initial stage reduces the risk of later cancellation or recovery proceedings.

4. Greater Accountability of Customs Brokers - CBs are explicitly expected to ensure due diligence before filing declarations on behalf of clients.

Administrative and Governance Perspective

The directive reflects a broader administrative shift towards balancing facilitation with compliance enforcement. While Customs continues to support ease of doing business through exemptions and simplified procedures, it simultaneously emphasizes:

• Integrity of self-assessment systems
• Responsibility of trade intermediaries
• Legal consequences for misrepresentation

By institutionalizing structured disclosure norms, the department seeks to minimize information asymmetry between trade and administration.

Conclusion

Public Notice No. 68/2026 issued by the Office of the Commissioner of Customs, NS-II, JNCH, Nhava Sheva reinforces the critical importance of accuracy and due diligence in self-declarations submitted by Authorisation Holders and Customs Brokers under Advance Authorisation and EPCG schemes.

While continuing to support a trust-based facilitative governance model, the Customs administration has made it clear that such facilitation is contingent upon truthful and complete disclosure of material facts, particularly regarding past penalties under relevant statutes.

The notice strengthens the compliance framework by introducing structured disclosure requirements and warning of penal consequences for misrepresentation. In doing so, it strikes a balance between trade facilitation and regulatory integrity, ensuring that exemptions such as Bank Guarantee waivers are granted only to genuinely eligible and compliant entities.

Ultimately, this measure enhances transparency, accountability, and trust in India's export promotion ecosystem while safeguarding revenue and regulatory objectives.

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