Decision support system in customs assessment to detect valuation frauds

In the era of globalization and liberalization, the countries are progressively eliminating all non-tariff barriers. The markets are now opening up even in the developing countries for importation of the goods, to take the advantage of quality and prices. The customs duty is usually charged as the percentage of the assessable value of the imported item. Many unscrupulous importers, however, undervalue the actual value of the goods to evade the customs duty. Determination of the correct value of the imported good is the most challenging task of the customs officials. Customs officers engaged in assessment of duty and prevention of revenue fraud over a period of time develop expert knowledge and skill for predicting the sensitivity of valuation fraud merely by careful scrutiny of few critical data of the import document. In this paper we have used the expertise of officers to develop a decision support system based on the expert rules to determine the sensitivity of the import. The DSS was tested against the actual data obtained from a customs port in India. The results show that it is possible to defect all cases of fraud by scrutinizing less than 10% of the import document.