ISSN: 2225-8329
Open access
The major benefits of transforming the Customs manual system into automation is making data processing faster, reduce time delay and increase transparency for the international logistics management. A robust digital system of automation by default is assumed to be able to barricades any mistake made by parties involved in the process of declaration, assessing, and releasing goods from the Customs control. In this paper, we focused on the Integrity issues concerning the result of using the Customs Information System (CIS) in Malaysia as it is the only automation software used by The Royal Malaysian Customs for processing and releasing goods under its control. As a semi-digital system, CIS has its advantages and disadvantages that may affect integrity issues among Customs officials who administrated it. In this article, we used 795 samples of analytic data for imported prefabricated used vehicles (Toyota Wish) mined from CIS databank to examine whether this output data is administrated consistent, or otherwise, deteriorate with the requirements stipulated under the Customs importation rules and circulars in force? Our focus of analyses will be on the examination of how far the items in K1 electronic forms, namely tariff code declaration, vehicles first registration date, CIF value, imposed tax rates, physical check of vehicles and approval permit is consistent with the Customs Taxation law and Circulars. The finding shows that many output data are inconsistent with the current tax laws and circulars in force. These include 28.05% inaccurate samples for tariff code declaration, 80.63% that are not declared the vehicles first registration date in the origin country, and 98.62% are declared false or wrong CIF values. We found that CIS also failed to include the detailed records of vehicles year’s made, VIN, seating capacity and the engine type as required by K-1 form. The output data also shows that there are 3% of samples charged with an inaccurate excise duty rate for different types of vehicles models or variants. In the physical inspection records, data showed that 100% of prefabricated vehicles brought in were not marked as inspected via CIS module. Meanwhile, for AP records, 73.21% of samples do not have valid approved permits and were classified as Record Not Found (RNF), while 7.05% have expired AP. This evidence shows that CIS is a weak automation software and can be manipulated by the parties involved in the transaction process, either Customs officials or company agents. The main disadvantage is the design of the software that permit users to input value that may be incorrect, inaccurate, or incomplete into the digital K-1 forms. As a semi-digital automation system, CIS does not integrate itself with multiple other government agencies (OGA), PIAs (permit Issuing Agencies) and other related bodies which also contribute to the failure to record, review, and validate transaction information quickly and correctly, such as information regarding approval permit and tax setting. It is suggested that CIS must be updated. The software must be able to prevent or block any incorrect, incomplete, or blank data entry into the system and must be able to warn users in the transaction process. The CIS must also be constructed to rejecting any data submission into the next levels of processing if the information is found inaccurate, incomplete, or blank. Apart from this, an education to CIS’s customers especially to the importers and company agents must also be carried out properly.
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In-Text Citation: (Omar et al., 2021)
To Cite this Article: Omar, N. H., Selamat, M. N., Aziz, S. F. A., Mohd, R. H., & Ismail, R. (2021). Integrity Risk in The Customs Automation System. International Journal of Academic Research in Business and Social Sciences, 11(3), 206–222.
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