The Comptroller and Auditor General (CAG) of India has found deficiencies in the module of Merchandise Exports from India Scheme (MEIS) in calculating values and "late cut".

The Performance Audit Report of the Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) in the report on Department of Revenue-Indirect Taxes-Customs, tabled in the Parliament on Wednesday, noted that these deficiencies were attributed to programming bugs by the Directorate General of Foreign Trade.



It further said that the delays in updating the system resulted in incorrect adoption of foreign exchange rates.



"The MEIS module also did not restrict grant of benefits on ineligible export proceeds realised in INR. Further, the system did not enforce conditions and checks prescribed in the scheme regarding utilisation of Shipping Bills (SBs) in more than one Licence and Jurisdictional Provisions," the report said.



The government auditor also found that the substantial delays in issue of MEIS and SEIS scrips indicated failure of the automated system in achieving the objective of simplification of procedures and ease of doing business.

The extension of MEIS benefits to E-commerce exports amounting to Rs 5.52 crore was delayed by almost four years due to delay in amending the regulations and operationalisation of e-commerce module, it said.



The CAG said that to mitigate the risk in the automated system, the Risk Management System (RMS) was designed so that sample files would be checked post rewards in order to ensure that only eligible exporters claimed the rewards.

"However, deficiencies like non-restriction of inadmissible components viz, Commission, Insurance and Freight (CIF) charges and failure to restrict excess grant on account of mis-classification, exports under Minimum Export Price (MEP) were observed due to non-implementation of RMS designed to flag such ineligible/restricted items," the report said.

The non-implementation of the RMS for MEIS and SEIS for the period from April 2015 to December 2017 was in contravention of policy provisions and left a key risk control measure unattended for more than two years, it said.

The CAG recommended that the RMS be strengthened by plugging the loopholes and leakages in the automated system on issuing of scrips. Appropriate policy framework and system alerts need to be put in place making it mandatory for exporters to declare CIF and for DGFT to check the correctness of self-declaration of exporter/applicant in select cases earmarked by the system, it added.