KARACHI: Following the order passed by the Federal Tax Ombudsman, Model Customs Collectorate of Appraisement-West has issued 1,600 notices to car importers due to a short levy of duty and taxes demanding recovery of Rs 320 million.
The irregularity was detected after scrutiny was conducted on the order FTO regarding interpretation of clearing the age limit of old/used cars. The collectorate issued hearing dates for next week before enforcing the recovery action.
FTO issued the order in a review petition in March 2014 filed by Customs authorities in Peshawar against an earlier order of the FTO on an application jointly filed in August 2013 by six overseas Pakistanis alleging that the Customs authorities in Karachi were releasing cars that were breaching the age limit prescribed by Commerce Ministry through notifications issued December 12, 2012 and February 25, 2013.
However, overseas Pakistanis said that Customs had refused to provide similar treatment to imported cars at the Peshawar Dry port. The complainants also alleged that discrimination against their cases is in violation of the Constitution of Pakistan and constituted maladministration.
The case was investigated by the office of the Federal Tax Ombudsman on the basis of documentary evidence provided by the complainants. FTO ordered the Federal Board of Revenue in June 2013 to release the vehicles imported by the six overseas Pakistanis, as per law, by extending the same treatment in terms of depreciation, age limit, pitch of fine or surcharge and amount of duty and taxes as done by MCC Appraisement-West.
However, MCC Appraisement-West denied any clearance of imported cars beyond the law and urged that MCC Peshawar explore all options available in the case to file review petition before FTO or a presentation before the President of Pakistan.
In the review petition, FTO observed that Customs staff at Karachi misused the interpretation of the provisions of Import Policy Order and Commerce Ministry instructions for clearance of cars imported by overseas Pakistanis.
It was also observed by the FTO that the cars were initially held up by Customs at the Karachi port as these were hit by reduction of age from five years to three years in December 2012. Customs authorities at Karachi sought Commerce Ministry’s clarification and soon after a strange solution was found to manipulate the dates of bill of ladings and to show that the reduction of age limit did not apply to these cars, it was observed. “Thus, hundreds of held up cars were fraudulently released with benefit of age and surcharge apparently by a tripartite collusion of Customs authorities at Karachi, the clearing agents and the shipping agents,” the order stated. The FTO also found that the Commerce Ministry issued confusing SROs in this regard.
The order said that Customs authorities admitted to releasing 1,458 held up vehicles on the basis of date of bill of lading, which is a blatant violation of the Commerce Ministry clarification.
In its findings, the FTO observed that the entire data of vehicles released by the Customs on or after December 12, 2012 be scrutinised by a carefully selected team of competent and honest professionals to identify all cases in which the appraisement staff indulged in the malpractices and irregularities.
On the basis of facts, the FTO rejected the review petition and directed the FBR to ascertain the short levy of duty and taxes, surcharge involved and recovery. It is also directed to fix responsibility of clearing agents and shipping agents for manipulating the dates of bill of ladings after providing them with an opportunity to explain their conduct.