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PAkISTAN’S FIRST INDEPTh NEwSPAPER ON CUSTOMS
vol 2 Issue No. 13
weekly
PAK-CHINA
karachi, Tue April 15 - Mon April 21, 2014
Regd. No, MC-1381
REVIVING THE SILK ROAD
FACILITATINgFOREIgNINvESTOR
FTO directsFBR totakedisciplinary actionagainsttheofficialswho deliberatelytroubledaforeign investorforfilinggenuinerefund. | SEE PAgE 03 | IMPORTINg bANNED OIL
ECONOMIC CORRIDOR TO TRANSFORM WHOLE REGION: PM Pakistan’s long coastline makes the ports of Karachi and Gwadar as a strategic transit on the maritime Silk Road
BOAO
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P DirectorateGeneralofIntelligence andInvestigation-Customs proposesFederalBoardofRevenue toeffectivelycontrolbanned cookingoilimportintothecountry. | SEE PAgE 05 | ISSUINgvALUATIONgUIDELINES
Teams of all three collectorates after a comprehensive study and market survey issued the guidelines of 133-items, says Collector Muhammad Saleem. | SEE PAgE 02 | CARTOONS SPECIAL
rime Minister Nawaz Sharif said the revival of the Silk Road can prove an important instrument for the economic growth and prosperity of the region. In his remarks at the session titled ‘Reviving the Silk Road – A dialogue with Asian Leaders’ at the Boao Forum for Asia 2014, the PM said Pakistan, as a country located at the southern edge of the New Silk Road, recognizes that political and economic dividends of this vision were unparalleled, both in scale and potential. Sharif remarked that a revival of the Silk Road in today’s
EXPANDING ECONOMIC AND TRADE COOPERATION WILL NOT ONLY BENEFIT
CHINA AND PAKISTAN BUT ALSO TRANSFORM THE REGION, SAYS CHINESE PREMIER | SEE PAgE 11 |
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world of passports, visas and intricate tariff manuals, required ingenuity both in policy formulation and policy application. He mentioned that the policy could be based upon four elements including coordination to ensure mutually benePicial endeavours in peaceful and secure settings; introduction of cohesive laws and regulations regarding movement of humans and merchandize, taxation policies and tariff/non-tariff barriers; regional infrastructure for better connectivity by building better transport networks and convertibility of currencies and uniformity in Pinancial and banking sectors. “Our geography links China and the New Silk Road to the warm waters of the Arabian Sea and the Persian Gulf. This is the linear dimension of our relevance with the Silk Road,” he said. The PM said Pakistan is at the conPluence of China, the Eurasian land-bridge and the Middle East which enables it to be the route to a threepronged economic corridor between China, Central Asia and the Middle East. He mentioned that Pakistan’s long coastline also makes the ports of Karachi and Gwadar as a strategic transit on the maritime Silk Road. The premier said the two countries had achieved a broad consensus on planning various infrastructure and energy projects under the project of the Economic Corridor. He said Pakistan believed that the Shanghai Cooperation Organisation (SCO) was playing an important role in settling disputes and managing conPlicts which would help revive the Silk Road. Meanwhile, Prime Minister Nawaz Sharif urged Chinese Premier Li Keqiang to encourage Chinese companies to invest in Pakistan. The two leaders agreed that expanding economic and trade cooperation would not only benePit China and Pakistan but also transform the whole region. Li Keqiang hoped that the Corridor would soon start to take practical shape and yield tangible benePits, within the time-frame agreed upon between the two countries.
02
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KARACHI
APRIl 15 - APRIl 21, 2014
Customs I&I seizes 2,100 yard bootleg cloth
ISLAMABAD: Customs Intelligence and Investigation has seized 2,100 yard Chinese women cloth being smuggled from Peshawar to Lahore via GT Road. Acting on a tip-off, the Customs I&I squad intercepted a truck at Rawalpindi station and upon search recovered 2,100 metres cloth. Customs officials also arrested two traffickers identified as residents of Peshawar. The smuggled cloth was estimated to be worth one million rupees. An FIR has been registered against the smugglers.
MCC Appraisement-East, west, Port Qasim generate Rs144b in 3rd quarter CUSTOMS TODAY REPORT www.customstoday.com
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he three main collectorates of Pakistan Customs, i.e. Model Customs Collectorate of Appraisement-East, Model Customs Collectorate of AppraisementWest and Model Customs Collectorate of Port Muhammad Bin Qasim have collected a total of Rs 144,558.99 million all together during the third quarter of the current Piscal year i.e. the period from January to March, 2014. MCC-Port Qasim stayed on top among all three collectorates in revenue collection during the period. MCC-Port Qasim collected total revenue of Rs 53,027.643 million in the 3rd quarter of the Piscal year 201314. MCC Appraisement-East collected Rs 46,027 million and MCC Appraisement-West collected revenue of Rs 45,504.36 million during the period from January to March, 2014. In the month of March, MCC Port Muhammad Bin Qasim collected Rs 16,272.36 million. The collectorate generated revenue of Rs 4,147.08 million in share of customs duty against its target of Rs 4,597.46 million; Rs 9,858.39 million in share of sales tax against target of Rs 12,580.13 million; Rs 176.44 million in share of FED surpassing its target of Rs 168.30 million; and collected Rs 2,090.45 million in share of income tax against its set target of Rs 3,309.27 million. In the month of February 2014, MCC Port Qasim collected revenue of Rs 16,240.96 million in share of customs duty, sales tax, FED and income tax. The collectorate generated rev-
Exports to touch $50b: SM Muneer rade Development Authority of Pakistan Chief Executive SM Muneer has showed his commitment to take Pakistan’s exports up to $ 50 billion within next 2 to 3 years. While chairing a meeting of top management ofTDAP and Federation of Pakistan Chambers of Commerce and Industry (FPCCI), SM Muneer, on behalf of TDAP, welcomed the delegation headed by FPCCI President Zakaria Usman and acknowledgedTDAP’s toiling efforts in boosting the exports. He further mentioned that support of FPCCI, associations and trade bodies was required to experience strengthening of exports as far as the vision of the Prime Minister and of Commerce Minister was concerned. —CT Report
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enue of Rs 4,329.448 million in share of customs duty against target of 5,587.520 million; Rs 9,697.570 in share of ST against target of Rs 12,154.090 million; Rs 165.793 million in share of FED against target Rs 308.630 million; and collected a sum of Rs 2,048.149 million in share of income tax against target of Rs 2,500.780 million set by FBR in the month of February. In the month of January 2014, MCC Port Qasim collected revenue of Rs 20,514.323 million in share of customs duty, ST, income tax and FED against the set target of Rs 23,646.05 million. The collectorate generated a sum of Rs 4,579.015 million in share of customs duty against the set target of Rs 5,484.830
million; Rs 12,921.386 million in share of ST against the target of Rs 15,008.190 million; Rs 226.848 million in share of FED against the set target of Rs
269.140 million; while it has collected a sum of Rs 2,787.074 million in share of income tax in the month of January against the set target of Rs 2,883.890 million. In the month of March 2014, MCC Appraisement-East collected revenue of Rs 15,694.45 million. The collectorate generated revenue of Rs 4,341.67 million in share of customs duty against its target of Rs 4,335.46 million; Rs 8,954.29 million in share of ST surpassing its target of Rs
5,569.74 million; Rs 2,209.49 million in share of WHT against the set target of Rs 2,454.73 million; and collected revenue of Rs 189 million in share of FED surpassing its set target of Rs 68.80 million. In the month of February 2014, MCC of Appraisement-East collected revenue of Rs 13,944.91 million all together in the share of customs duty, ST, WHT and FED during the month of February 2014 against the target of Rs 11,730.38 million. The collectorate generated an amount of Rs 3,933.62 million in share of customs duty against target of Rs 4,111.65 million; a sum of Rs 7,801.47 million in share of ST by collecting 2,201.93 million more against the set target which stood at Rs 5,599.54 million; surpassed its target by Rs 131.08 million in share of WHT and collected revenue of Rs 2,114.17 against the set target of Rs 1,983.09 million; while the collectorate surpassed target by Rs 59.55 million in share of the collection of FED by collecting revenue of Rs 95.65 million in its share against target of Rs 36.10 million. In the month of January 2014, MCC Appraisement-East collected revenue of Rs 16,387.64 million in share of customs duty, ST, income tax and FED. The collectorate generated a sum of Rs 4,663.91 million in share of customs duty against the set target of Rs 5,057.76 million; revenue of Rs
8,859.04 million in share of ST, which was Rs 3,124.92 million ahead of its set target of Rs 5,734.12 million; Rs 519.29 million more in share of income tax against its set target of Rs 2,193.48 million, as it has collected revenue of Rs 2,712.77 million in terms of income tax. The Collectorate of Appraisement-East has also overlapped in order to collect revenue in share of FED generating Rs 151.92 million in share of FED, which was 69.49 million more against the set target of Rs 82.43 million. It is pertinent to mention here that the MCC Appraisement-East, throughout the Piscal year 2013-14 had almost achieved the revenue targets every month set by the FBR and marginally fell short in share of customs duty collection so far. During the last month of the 3rd quarter of the current Piscal year, MCC-Appraisement-West collected revenue of Rs 17,908.02 million in share of customs duty, sales tax (ST), additional sales tax, federal excise duty (FED) and income tax. The collectorate generated revenue of Rs 9,003.82 million in share of customs duty; Rs 6,041 million in share of ST; Rs 456 million in share of additional sales tax; Rs 85.35 million in share of FED; and collected revenue of Rs 2,321.85 million in share of income tax. In the month of February, MCC of Appraisement-West generated revenue of Rs 12,698.52 million in share of customs duty, income tax, ST and FED. In the month of January, 2014; the collectorate has generated revenue of Rs 14,897.82 million in different shares including customs duty, ST, WHT and FED. The collectorate has generated a sum of Rs 5,532.42 million in share of customs duty; Rs 6,456.38 million in share of ST; Rs 2,796.26 million in share of WHT; and Rs 112.76 million in share of FED.
Guidelinesissuedwithcompleteconsensus:CollectorSaleem KARACHI
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ollector of Model Customs Collectorate of Appraisement-West, Muhammad Saleem said that trade activities would be augmented by mid-April, 2014. While apprising the recent situation of trade, Collector MCC Appraisement-West said that the decrease in US dollar’s rate against the local currency has temporarily put a slowdown effect on imports and trade activities, as the businessmen, importers and trade bodies are reading the market and Pluctuation of US dollar’s rate against local currency. “There would be a major boost in the import activities by the mid of April, if the US dollar’s rate would remain stable against local currency,” he expected. The Collector acknowledged
— Exclusive Customs Today photo
KARACHI
that the 133-items guideline is being followed at Karachi ports only. However, he conPirmed that the same guideline would also be implemented at all dry ports soon. To a query, Muhammad Saleem said that the teams of all three collectorates i.e. MCC AppraisementEast, MCC of Appraisement-West and MCC Port Muhammad Bin Qasim comprised of Deputy Collectors, Additional Collectors and Collectors after a comprehensive study and market survey issued the guidelines of 133-items, same as they did in case of issuance of guidelines of 96-items, few months ago. He further said that a complete consensus among all three collectorates has been made before issuance of the guidelines, adding that those guidelines have been issued while keeping in view the desire to facilitate the trade at maximum level.
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ISlAMABAD 03
APRIl 15 - APRIl 21, 2014
12,000 metres foreign cloth impounded
LAHORE: Anti-smuggling scout of Pakistan Customs has seized 208 rolls of foreign made cloth worth millions of rupees at Ferozpur Road. Sources said that the cloth was being smuggled to the local market when the anti-smuggling scout intercepted the smugglers. The 12,000 metres cloth valued at Rs 700,000. The anti-smuggling wing, registering a case, has started investigation into the matter.
he Federal Board of Revenue (FBR) has amended SRO 565(I)/2006 through an SRO 221(I)/2014 to withdraw concessionary rate of customs duty on the import of BOPET film. The FBR has enhanced import duty on BOPET film with a view to protect the interest of local manufacturers. As per details, local manufacturers had taken up the issued with the FBR that BOPET film, classified under HS Codes 3920.6200 and 3920.6900, was being produced by them locally as an import substitute which was mainly consumed in packaging industry. On the recommendation of the Engineering Development Board (EDB), the BOPET film (all types, i.e, transparent, chemical coated, metalised, etc) having thickness of various microns, falling under the PCT headings 3920.6200 and 3920.6900, had already been included in the list of locally manufactured goods. The local manufacturers pleaded that the concession in duty had been allowed at a time when there was no BOPET film production locally. As the product is manufactured locally now, its concessionary import is hurting interests of local manufacturing industry. They have, therefore, requested to withdraw the duty concession on the import of BOPET film (polyester film) under SRO 565(I)/2006, they added. Following strong recommendations and keeping in view the interest of local manufacturers, the FBR issued notification in this regard. The notification read that in exercise of powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), the Federal government is pleased to direct that further amendments shall be made in its Notification No SRO.565 (I)/2006 dated 5.6.2006. —CT Report
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hassling foreign contractor: FTO wants stern action against officials ISlAMABAD
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he Federal Tax Ombudsman (FTO) OfPice played a key role in facilitating a foreign investor who was punished for Piling genuine refund claims with the tax department. The FTO directed the FBR to take disciplinary action against the ofPicials who deliberately changed investor jurisdiction Pive to six times to avoid payment of refunds pertaining to past years. As per details, in a case of M/s Ghazi Barotha Contractors, RTO Peshawar had been collecting substantial deduction of tax from contract receipts. After completion of the project, the foreign contractors declared huge losses in their returns of income and consequently claimed refund of Rs784 million for assessment years (199697 to 2002-03). However, the tax ofPicers, instead of processing their refund claim, created huge demand to cover up refund claim by treating the taxpayers as Association of Persons (AOP). This assessment was annulled by the Income Tax Appellate Tribunal on the ground that assessment was unlawful and arbitrary. The High Court also endorsed the decision of the Tribunal dismissing the department's reference. Consequently, the taxpayers again applied for refund. However, the Peshawar RTO transferred the case to RTO Abbottabad to avoid liability of refund payment. RTO Abbottabad transferred the case to LTU Islamabad for the same reason, where the Chief Commissioner refused to issue refund despite taxpayers' repeated visits to his ofPice and his meeting with Chairman and Member FBR. Instead, unlawful sales tax demand was created by LTU Islamabad which exceeded the refund claim. This demand was also remitted by the Appellate Tribunal. At which the contractors Piled a com-
— Exclusive Customs Today photo
FBR withdraws duty concession on BOPET film import
plaint against this maladministration in terms of the FTO Ordinance, 2000. After investigation and hearing of the parties, the FTO directed the tax department to issue lawful refund to the complainant. Opposing the decision, the FBR Piled a representation to the President of Pakistan in terms of Section 32 of the aforesaid Ordinance. The representation was rejected. Instead of issuing refund, the LTU Islamabad again raised income tax demand against the complainant as high as Rs3.7 billion on the pretext that the taxpayers did not deduct tax on the interest of foreign banks. This was done by the departmental ofPicers after almost 13 years just to cover up the refund amount and to harass the foreign investors. Once again, the third cycle of appeals started and the Appellate Tribunal annulled the orders of the Dept being unlawful and tax demand was quashed. The Dept Piled reference in the High
Court just to delay the claim of refund. In the meantime, LTU Islamabad transferred the case to RTO Rawalpindi, which transferred it further to RTO Peshawar and RTO Peshawar once again transferred it back to LTU Islamabad which was the Pifth transfer of the case. On Review Petition No 49/2013 Piled by the complainants, the FTO took serious notice of the highhandedness involved in this case of maladministration of a very serious nature, and directed the FBR to take disciplinary action against ofPicers concerned and issue refund with compensation without delay. In this case, the foreign investors were not only entangled in three cycles of arbitrary and unnecessary litigation up to the high court, but their case was also arbitrarily and unlawfully transferred Pive times to different jurisdictions to block genuine refund claim, right under the nose of the FBR.
Peshawar RTO transferred the case to avoid liability of refund payment
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04 NATIONAl
APRIl 15 - APRIl 21, 2014
ban on gold import to be lifted in two weeks
LAHORE: Federal Commerce Minister Khurram Dastgir has said that ban on import of gold would be lifted in two weeks with an ultimate goal to facilitate the value added exports of the commodity. The government has devised a comprehensive plan to allow import of gold and the ban will be lifted in two weeks, the minister said. He said that the decision to lift the ban is being taken in light of stability of Pakistani rupee against US dollar.
ederal Board of Revenue is facing loss of millions of rupees in terms of tax evasion on mis-declaration on the importation of galvanized steel sheets in the garb of alloy steel sheets in the coil of secondary quality, it is learnt here. Sources on the condition of anonymity informed Customs Today that the consignments of galvanized steel are being cleared on mis-declaration and in the garb of alloy steel sheets, which is damaging the national exchequer. They further told this scribe that the commercial importers were releasing their consignments of galvanized steel sheets on declaring those consignments of alloy steel sheets in coil of secondary quality. “The consignments of alloy steel sheets are being cleared against the payment of government taxes of Rs 22,269 per metric tonne and on 5 per cent customs duty, whereas the consignments of galvanized steel were being cleared on the duties/taxes of Rs 35,111 and on 20 per cent customs duty,” they added. —CT Report
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FbR bags cooperation from hM Revenue and Customs HM Revenue and Customs can provide mentoring and assistance to FBR are mainly risk based selection and processing of cases for tax audit, extension of value added tax to retail stage, proper valuation at import stage and checks to ensure proper declarations lONDON
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ederal Board of Revenue has been assured of assistance in certain Pields of revenue generation in Pakistan by Her Majesty’s Revenue and Customs. In this regard FBR Chairman Tariq Bajwa has visited United Kingdom recently with delegation of FBR high ofPicials including Member Customs Nisar Muhammad, Member Inland Revenue Shahid Hussain Asad, Member IT Raana Ahmed and Chief Tax Policy Dr. Muhammad Iqbal. The FBR delegation met with Justine Greening, UK’s Secretary of State for International Development (DFID) in the ofPice of the Finance Minister of UK.
— Exclusive Customs Today photo
Govt losing millions on import of galvanized steel sheets
It was taken into consideration by Secretary of State that HM Revenue and Customs can offer mentoring and technical assistance to FBR in augmenting its efforts for revenue generation. The Pinance minister has directed FBR to formulate a way forward in this regard. The areas which were considered where HM Revenue and Customs can provide mentoring and assistance to FBR are mainly risk based selection and processing of cases for tax audit, extension of value added tax to retail stage, proper valuation at import stage and checks to ensure proper declarations and to prevent revenue leakages to explore the nature and extension of cooperation with HM Revenue and Customs. HM Revenue and Customs has agreed to provide input and guidance on all the issues mentioned by the ofPicials.
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NATIONAl 05
APRIl 15 - APRIl 21, 2014
Remittances increase by 11.9pc
KARACHI: Overseas Pakistanis have remitted an amount of $ 11.582 billion in the period from July 2013 to March 2014, against $ 10.353 billion received during the corresponding period of previous fiscal year. The inflow of remittances mainly poured in from Saudi Arabia, UAE, USA, UK, Gulf countries (including Bahrain, Kuwait, Qatar and Oman) and EU countries. Remittances have also been received from Norway, Switzerland, Australia, Canada, Japan and other countries.
n bid to fulfill a commitment made with the IMF under $6.6 billion EFF facility, the government has decided to implement a simple import tariff structure with four slabs between zero and 25 percent rates in a phase-wise manner in the next three years. According to details, the government has decided to phase out maximum statutory rate of customs duty under tariff reforms. The maximum rate of duty was reduced from 150 percent in 1987-88 to 25 percent in 2003-04 and raised to 35 percent in 2007-08 onwards. Moreover, standard tariff slabs were also reduced from 14 in 1996-97 to currently six, i.e, 0 percent, 5 percent, 10 percent, 15 percent, 20 percent, 25 percent and 35 percent. Under the tariff rationalisation plan, only four tariff slabs – 0 to 25 percent would remain under the Pakistan Customs Tariff (PCT). In this regard, the government will reduce a number of general customs tariff slabs to four, minimising higher slabs of customs duty on annual basis. The phase in of the revised tariff rates and phase-out of SROs is likely to start by end of June 2014 and is expected to be completed by end June 2017. Another change within the customs duty framework has been drifting down of commodities from high tariff slabs to lower slabs. This change was essential for proper cascading between primary, semimanufactured and manufactured products. Till 2000-01, no commodity was subjected to 5 percent rate of duty. However, it was introduced in 200102 and covered 1/5th of total tariff lines and this share had gone up to more than 1/3rd of total tariff lines since 2006-07 to 2010-11. This change has been at the expense of commodities previously subject to 10 percent and 20 percent rates of duty. The slab at 25 percent as maximum tariff has been from 2003-04 to 2007-08. —CT Report
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DgI&I suggests FbR to control banned oil import ISlAMABAD
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hile endorsing the viewpoint of ghee/cooking oil industry on the illegal import of banned and used cooking oil, Directorate General of Intelligence and Investigation-Customs has proposed to the Federal Board of Revenue to effectively check its import into the country. The banned oil is subsequently marketed, after processing like bleaching, etc, to be used in low quality junk foods. This oil is imported in the garb of soap stocks. To ensure proper examination and laboratory test for conPirmation of actual description of under-reference goods, DGI&I Lutfullah Virk has requested FBR to consider issuance of certain instructions for clearance through Customs Collectorates. This includes the clearance of mixture/residue of fatty acids (PCT codes 1522.0090 and 3823.1990) imported by commercial importers should be allowed through Red Channel. Each such consignment should be subjected to physical examination and its samples sent for Customs laboratory test. The laboratory should be requested to categorically conPirm the actual description and correct Pakistan Customs Tariff code of the given samples in light of relevant Explanatory Notes to HS and that the goods do not contain used cooking oils and fats of pigs, boars, hogs, swine and other such animals. In case of any dispute with regard
— Exclusive Customs Today photo
Govt to simplify customs tariff structure
to laboratory test reports, samples should be referred to reputed laboratories like PCSIR or HEJ, for categorical conPirmation of actual description of goods. The directorate also agreed to the proposal of Pakistan Vanaspati Manufactures Association (PVMA) to the effect that import of the commodity should not be allowed in drums to minimise chances of mis-declarations and that bulk import of residue of fatty acids/soap stocks, etc. (PCT codes 1522.0090 and 3823.1990) should be restricted to industrial
DgI&I Lutfullah virk requests FbR to consider issuance of certain instructions for clearance through Customs Collectorates
concerns only i.e. recognised manufacturers of soap and oleo chemicals. FBR is requested to approach the Ministry of Commerce for imposition of proposed restrictions in the IPO. The directorate has asked FBR to implement the proposal of the documented industry that import of the commodity should not be allowed in drums to minimise chances of misdeclaration and that bulk import of residue of fatty acids/soap stocks, etc. should be restricted to industrial concerns only, i.e. recognised manufacturers of soap and oleo chemicals. FBR is requested to approach Ministry of Commerce for imposition of proposed restrictions in the IPO, the suggestions of the directorate added. According to the report of the Directorate General of Intelligence and Investigation-Customs to FBR, PVMA has proposed that to minimise chances of import of used oil in the garb of residue of fatty acid, mixture of fatty acid, etc, import of the same in drums may be banned. Moreover, only industrial consumers (of soap and oleo chemicals, etc) may be allowed to import it in bulk, besides taking other measures to check clearance of the item through misdeclarations. The directorate suggested that the scrutiny of import data of items 'Residue of Fatty Acids' and Mixture of Fatty Acid" cleared under PCT codes 1522.0090 and 3823.1990 respectively from ports for the period July to December 2013 shows that during the period, huge quantity of the commodity valuing at Rs 806.317 million was imported from various countries including Indonesia, Saudi Arabia, Malaysia, Thailand, Sri Lanka, UAE, Australia, Philippine and Kuwait.
MCC lahore seizes vehicles, goods worth Rs220m in 9 months lAHORE
M hAYAT
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nti-smuggling wing of Model Customs Collectorate Lahore has conPiscated vehicles, goods and articles worth Rs 220 million in 274 cases in nine months period i.e., from July 2013 to March 2014. The anti-smuggling scout registered cases against 83 non-duty paid vehicles worth Rs 35 million while seized goods and articles worth Rs 185 million in 191 cases. During the month of July 2013, the wing registered 33 cases against seven vehicles and 26 smuggled goods worth Rs 44 million. In the month of August 2013, it has registered nine cases against non-duty paid vehicles and seized smuggled goods worth Rs 41 million in 28 cases. The customs authorities impounded four vehicles and conPiscated smuggled goods worth Rs 27.5 million in 29 raids in September 2013. The wing held nine vehicles and smuggled goods worth Rs 19.7 million in
27 raids in October 2013. The customs authorities seized two vehicles and smuggled goods worth Rs 13.4 million in 20 cases. The customs ofPicials impounded vehicles and goods worth Rs 21.7 million in 40 raids in the month of December 2013. The anti-smuggling scout seized vehicles and goods worth Rs 19 million in 25 cases in the month of January 2014. During the month of February 2014, the customs ofPicials conducted 39 raids conPiscating vehicles, goods and articles worth Rs 16 million. The anti-smuggling wing of MCC Lahore undertook 33 raids and seized non-duty paid vehicles and goods worth Rs 17.19 million in the month of March 2014. Source said that the customs authorities conPiscated the vehicles, goods and articles from various places in and around the city including Gari Shahu, Faizpur interchange, Shera Kot, Shahdara, Shah Alam Road and others. Customs ofPicials seized the vehicle and goods as a result of particularly strong measures taken by the department to overcome the menace of smuggling.
06
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SPECIAlREPORT
APRIl 15 - APRIl 21, 2014
KARACHI
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akistan has enormous potential for becoming the hub of regional transit trade and Prime Minister’s initiative to build 2,000 kilometre Gwadar-Kashgar trade corridor will go a long way in developing local infrastructure, creating jobs and revolutionising intra-regional connectivity. Transit Trade Director Muhammad Javed Ghani expressed the views during an exclusive interview with Customs Today at his ofPice. Javed Ghani pointed out that apart from Pakistan-Afghanistan Transit Trade Agreement (APTTA), Pakistan was also a signatory to the ECO Transit Agreement and Quadrilateral Trade Agreement between Pakistan, China, Kyrgyz Republic and Kazakhstan, adding that taking into account this scenario, the Transit Trade Directorate General was striving hard to exploit the opportunity to bring in benePits for the nation. Responding to a query, the Transit Trade Director informed that the TT Directorate General during the year 2012-13, transited commercial goods worth almost Rs100 billion to Afghanistan through Pakistani territory, adding that similar transit facility was also provided to Afghanistan for being a landlocked country. “Besides Pakistan, Iran and some Central Asian states are also providing transit facility to Afghanistan,” he informed, adding that no import duty and other taxes were charged on the transit goods as per the international law. To another query, Javed Ghani said that keeping in view the signiPicance of the transit trade cargos, the Federal Board of Revenue had established an exclusive Directorate General to deal with the affairs of transit trade across the country. Shedding light of the functioning of TT Directorate General, Javed Ghani informed that core responsibility of the Directorate was to deal with the weightage, scanning of containerised transit cargo, processing of transit documents, securing Pinancial securities and examination of the goods both at the port of entry and at exit for cargo movement to and from Afghanistan and the cargo destined for India from Torkham and Chaman border posts. “Allowing loading, sealing
and de-sealing, mounting of tracking devices and gate-out at Karachi Port and Port Bin Qasim besides en-route tracking and monitoring of the transit trade cargo in collaboration with MCCPreventive are also among the major responsibilities of the Directorate,” he elaborated. Replying to a query, the TT Director informed that the Directorate also monitored transit trade cargo movement at en-route check-posts under the administrative control of Customs Collectorates. “Similarly, apparent clearance of the carriers is handled by both the Model Customs Collectorates Appraisement and Preventive, adding that the function of licensing the bonded carriers as well as transport operators responsible for the safe transportation of the transit trade goods and registration of their vehicles was regulated by the
that with the introduction of new Customs Rules in 2011 under the APTTA further improvements had been made in the procedure for clearance of transit trade cargo. Speaking about the improvements introduced in the APTTA, Javed Ghani said that the legal framework to regulate the transit trade operations had been speciPically provided in the shape of notiPication SRO601(1)/2011 on June 13, 2011 and CGO 10.2012 on July 31, 2012, “Penalty in case of violation of transit trade rules has been enhanced under the Customs Act, 1969, the scheme of bonded carriers with enhanced security amounting Rs20 million has been introduced for safe transportation of the goods, an elaborating system of documentation has been devised for ensuring reconciliation of the documents relating to transit trade,” he claimed, adding that timelines had
crossed the border as currently it is done both manually as well as electronically”, he asserted. “You see the TT Directorate General has introduced various measures including procedure for cross-stufPing at the port of exit, procedure for the movement of US/ISAF reverse cargo and procedure for the US/ISAF re-export of frustrated cargo,” he pointed out, adding that a centralized one-window processing section for transit trade arriving at Port Qasim and Karachi Port had been established at Custom House and separate station codes for Port Qasim and Karachi Port had been obtained exclusively for the transit trade. The TT Director enumerated that a separate customs security cell had been established, fully automated customs computerised modules (WeBOC) for clearance of forward US/ISAF cargo
Model Customs Collectorate Appraisements”, he explained. The TT Director revealed that the FBR planned strengthening the Directorate General on war footings through increased logistics and human resources to streamline the procedures further and make the Directorate solely responsible for the regulation of transit trade. To a query, Javed Ghani informed that the TT Directorate General currently was handling commercial transit trade cargo, non-commercial transit and US military/ISAF consignments to and from Afghanistan through the routes of Khairabad Customs checkpost (between Attock and Peshawar), Kohat Customs check-post and Baleli Customs check-post (between Quetta and Qila Abdullah). About improvement made in the transit trade system, Javed Ghani said
been provided for reconciliation of the transit trade data. He said that 100 percent scanning was carried out at the port of entry at Karachi and Port Qasim and copy of scanned image was dispatched to the exit directorates. The TT Directorate also obtain insurance guarantees as customs security in relation to the commercial transit trade cargo to obviate any chances of enroute pilferage and tracking and monitoring of the containerized cargo was carried out through tracking and monitoring system. “According to the Rule 14 of the Customs General Order 10/2012 dated 13.07.2012 and Rule 650 of the Customs notiPication SRO601 (1)/2011 dated June 6, 2011 require reconciliation of the dispatched consignments to ensure that goods, which are transported through the registered bonded carriers, has safely and securely
had been launched and fully automated customs computerized module (WeBOC) for the clearance of commercial transit trade cargo had been launched as a pilot project from Jan 1, 2014. Similarly, automated customs computerized module (WeBOC) for the clearance of reverse US/ISAF cargo has been launched as pilot project from Jan 15, 2014, he added Responding to query, Javed Ghani informed the Customs Today that Pakistan Customs through the FBR had requested the Afghan Government to impart training its staff to handle computerized system (WeBOC) in Afghanistan. He further said that the installation of scanners for reverse cargo en-route from Afghanistan to Pakistan was in the ofPing and the FBR would take a Pinal decision in this regard to streamline the transit trade operations.
the TT Dir including ectorate Gener for the m procedure for al has introduc US/ISAF r ovement of US/ cross-stuffing ed various meas IS e-export u of frustrAF reverse cargaot the port of exi res t, ated car and proc go edure foprocedure r the — Exclusive Customs Today photos
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APRIl 15 - APRIl 21, 2014
SPECIAlREPORT 07
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08 EDITORIAl
APRIl 15 - APRIl 21, 2014
Founder & Chairman Zulfiqar Ali Editor Rahil Yasin editor@customstoday.com.pk For advertising & subscription marketing@customstoday.com.pk +92-322-3370002 www.customstoday.com Phones: 042-35781643-4, Fax: 042-35781645 Address: 627, Siddiq Trade Centre, Gulberg, lahore
EDITORIAL
The issue of valuation guidelines
F
BR has placed valuation guidelines for selected 136 imported items for all over the country with the objective to discourage misdeclaration throughout the country. But the business community has been continuously expressing its concerns that these valuation guidelines would promote smuggling and increasing trade in the guise of Afghan TransitTrade and smuggling back of goods into Pakistan. The tax machinery has been facing a dilemma that it remained unable to apprehend smuggling and mis-declarations in a big way. Now by using technology, efforts are underway to come up with same valuation of goods at entry and exit points in order to avoid misdeclarations but the FBR placed this mechanism without taking the stakeholders into confidence. Now the system is in place and FBR should initiate consultation process and bring changes where it really creates impediments for genuine importers. The trade and industry has rejected these guidelines by terming it as unjust and unfair which will cause increased malpractices of Customs officials with a view to harass the importers. The business tycoons have requested Finance Minister Ishaq Dar to take notice and abandon this practice with immediate effect. On other side, FBR is of the view that there is different valuation going on at different imports clearance points so the Board taken conscious decision to fix benchmark valuation for 136 items which are imported rampantly into Pakistan. “We expect that the FBR will be able to increase its revenue in shape of customs duty to the tune of Rs 2 to 3 billion in last quarter (April-June) of fiscal year 2014,” Member Customs Nisar Muhammad says. Now the FBR and business community will have to sit together to come up with viable solution acceptable to both sides. The business community has been requesting to Finance Minister to spare time after his return from USA and listen to the viewpoint of industry before taking any final decision. If implemented, these valuation guidelines will leave no other option for the importers but to seek other ways, including the controversial AfghanTransitTrade and the situation is likely to promote mis-declaration and smuggling. They said that importers are kept uninformed about the changes in the valuation guidelines and due to fears of escalating demurrage/detention charges, the importers find no other option but to immediately clear the imported goods according to the value mentioned in the valuation guidelines. Ishaq Dar should immediately intervene into this issue and resolve this issue without wasting anytime.
A historic return to int’l bond market ISlAMABAD
SM hAIDER
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A
fter pause of seven years, Pakistan has again appeared on the radar screen of global investors by launching $2 billion bonds for next Pive and ten year period. Initially, the government intended to Ploat a Euro bond worth $500 million but keeping in view highest subscription up to $6 billion, the country’s economic managers took a decision in consultation with Prime Minister Nawaz Sharif to increase the accepted amount by three times from $500 million to $2 billion. This will help the central bank in increasing foreign currency reserves to the level of $9.5 billion by end June 2014 which are currently standing below $5 billion. The government requires more than $4.5 billion during last three months period (April-June) which will enable the State Bank of Pakistan to increase its net foreign currency reserves up to $9.5 billion.
After a period of seven years Pakistan made a historic return to the international bond market with a US dollar denominated dual tranche offering aggregate US$ 2.0 billion, raising US$ 1.0 billion each in 5 and 10 years tenors respectively. The Finance Ministry claims that against the initial expectations of raising US $500 million, the investor response was overwhelmingly strong and the order-books were oversubscribed across the two tranches, consisting of over 400 orders from high quality investors. The Pive year bonds were distributed across all major geographic regions: 59% in the US, 19% in UK, 10% in Europe, 10% in Asia and 2% in others. Fund managers took 84% of the Pive year issue, banks 8%, hedge funds 7% and insurance company/pension funds 1%. The ten year bonds were distributed 61% in the US, 21% in UK, 12% in Europe, 5% in Asia and Middle East and 1% in others. Fund managers took 86% of the ten year issue, hedge funds 9%, banks 4% and insurance company/pension funds 1%. However, the critics say that the
keeping in view low interest rates, Pakistan has offered over 7pc rate on five year bond and over 8pc on 10 year bond
spread of bonds was over 556 basis points and it was high benchmark agreed and placed by the government to generate the required $2 billion inPlows for building up the country’s reserves position. Keeping in view low interest rates, Pakistan has offered over 7 per cent rate on Pive year bond and over 8 per cent on 10 year bond. It will result into increasing debt servicing as the government will have to provide around $170 million in shape of interest payments over the next Pive and ten year periods. Now the government has stabilized its external account position by jacking up its reserves position and time has come to focus upon removing bottlenecks to jump-start the sluggish exports which can really put the country on the path of prosperity on long and sustained basis. This requires overcoming energy outages, improving security situation and transferring benePits of improved macroeconomic indicators to masses as well as business sectors by reducing the cost of doing business in Pakistan which will promote investment and create job opportunities for people of Pakistan.
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NATIONAl
APRIl 15 - APRIl 21, 2014
09
Trade deficit reduces by $809m
ISLAMABAD: In the period from July 2013 to March 2014, Pakistan’s trade deficit stands at $13.93 billion, reduced by $809 million which is 5.5 per cent less than the deficit recorded in the corresponding period of previous fiscal year. During the period, import payments amounted to $33.1 billion. Exports in the nine-month period stood at $19.1 billion compared to $18.1 billion in the previous fiscal year. In March, imports stood at $3.6 billion while the exports grew to $2.26 billion.
People to hear good news on SROs soon: Dastgir
Show-cause notice against PTCl, contractor, clearing agent issued KARACHI
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astgir said that the Ministry of Commerce was in constant consultation with Federal Board of Revenue to seek an agreeable solution of the issuance of SROs and the nation would be hearing good news in next budget. Federal Commerce Minister Khurram Dastgir said this while addressing a function at Rawalpindi Chamber of Commerce and Industry (RCCI).The minister said that the government was taking sincere steps to offer maximum facilitation for the enhancement of industrial sector with the special emphasis to create more job opportunities besides offering respectable employment opportunities to the youth. On FreeTrade agreement (FTA), the federal minister said that there was no proposal under consideration to offer status of Most Favourite Nation to India but the discriminatory regime would be overcome for the accomplishment of FTA clauses which is binding on Pakistan as a signatory to WorldTrade Organization. Giving emphasis on the promotion of regional trade, he said that the government through experience of the past had been considering improvement in relations with the bordering countries for an ultimate good of the peoples of the regional countries. —CT Report
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wRITE TO US YOUR gRIEvANCES: Through CUSTOMS TODAY platform hELP DESk, now you have chance to DIRECTLY write your problems to top govt. functionaries. If you have any grievances, queries, questions or suggestions, you can write in this section as it provides easiest access to you to approach Customs and Revenue authorities. whO can write in this section? Importers & Exporters, Customs Agents, Chambers of Commerce, Trade Associations and Customs Officers TO whOM you can write? Honourable PM, Minister/Secretary for Finance & Revenue, Minister/Secretary for Ports and Shipping, FBR Chairman, Member Customs and Chairperson Senate/National Assembly Standing Committee on Finance & Revenue. Send your letters at: letters@customstoday.com.pk
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ustoms Collectorate of Adjudication-I has issued showcause notice against M/s Pakistan Telecommunication Limited (PTCL), its local contractor M/s Huawei Technologies Pakistan (Private) Ltd, and its clearing agent M/s Eastern Freighter Services (CHAL No.2442) on mis-declaration of import value through concealment of actual CFR value in Goods Declaration and invoice aimed at evasion of customs duty and other taxes amounting to Rs 116,228,110 on imported telecommunication equipments. Directorate General of Intelligence and Investigation-Customs on credible information seized consignments of PTCL, its contractor and clearing agent and found that they were involved in massive evasion of customs duty and other taxes on import of telecommunication equipments and spare parts etc. under contract No.PRO 34/4/290413/0796 on 22 May, 2013. Subsequently, the directorate was found that the equipments under aforesaid contract were being imported and cleared on meager declared values which were about 1.62 per cent of the actual CFR price of the items mentioned in the price lists and Bill of Quantities (BOQs) indicated in the aforesaid contract. Sources informed Customs Today that the consignments were being cleared on heavily discounted prices up to 98 per cent of the actual CFR prices evading thereby huge amount of leviable duties and taxes, adding that majority of the consignments were cleared through “Green Channel” of the automated clearance system.
Sources further revealed that the contract No. PROC 3-4/4/290413/0796 in the perusal procured by M/s PTCL found that same has been executed among M/s PTCL, its off-shore suppliers M/s Huawei International Pvt Ltd, Singapore and its local contractor M/s Huawei Technologies Pakistan (Pvt) Ltd for supply, installation, up-gradation, testing and commissioning of 100 LTE BTSs (Huawei) Phase-I on turnkey basis. “It was further laid down vide para 42.1 of the contract that the payment for the foreign portion (CFR) will be made in US dollars and for the local portion and services (DDP), payment will be in Pakistani rupees through the nominated banks, adding that the contract vide its para 27.2 further envisages that valued invoices and packing lists of equipments should be provided in the manner as laid down in para 27.3 and 27.4 of the contract,” they added. Sources further informed that during the scrutiny of relevant records in July 2013, on the identical information, the Directorate General of Intelligence and Investigation also found that the equipments imported by M/s PTCL under the same contract whereby the equipments were cleared on self-assessment basis at about 98 per cent discounted price of such equipments evading thereby huge amount of customs duty and income tax to the tune of Rs 261.815 millions. The consignments which were cleared against goods declaration no. KAPW-HC-998 on July 8, 2013 was seized by the directorate and seizure report forwarded to Collector of Adjudication-I for adjudication. “In the referred case, the concealed amount of suppressed value of seized equipments worked out to $ 23.847 million. However, on intervention by the High Court by way of constitutional petition Piled by M/s PTCL, the seized consignments were released on submission of bank guarantees
PTCl managed to clear telecom equipments on suppressed value of Rs 10,151,947 against actual CFR value of Rs 1,088,792,621
covering the differential amount of taxes and anticipated penalties. The case was adjudicated vide Order-in Original (ONO) No. 208/2013-14 on 14 October, 2013,” they added. They further informed that since the charges of actual import value established beyond any doubt, the adjudication authority upheld the seizure case and ordered for recovery of leviable duty amounting to Rs 261.815 million besides in position of penalty of Rs 1 million on M/s PTCL. Furthermore, on investigation it was revealed that further two consignments of telecommunication equipments imported and cleared by M/s PTCL through “Green Channel” vide GD no.s KCSI-HC-1973-05-072013 and KCSI-HC-1449-03-07-2013 adopting the same modus operandi. In the aforesaid cases, import value of goods indicated in the invoices was $ 8,654 and $ 92,800 respectively, whereas, the actual CFR value of under-reference equipments as per prices speciPied in the price lists and BOQs provided in the contract worked out to $ 2,000,340 and $ 8,947,020. Thus, the concealed dutiable CFR values of equipments cleared vide aforementioned GDs come to $ 10,845,904 equivalent to Rs 1,078,640,674, involving evasion of Rs 116,228,110. Thus it was apparent that the M/s PTCL in collusion with its local contractor and authorized clearing agent managed to import and clear under-reference consignments of telecommunication equipments on grossly suppressed value of Rs 10,151,947 against the actual CFR value of Rs 1,088,792,621 by concealing the same through submission of vague invoices and declarations in GDs, evading customs duty and taxes of Rs 116,228,110 have committed offence of misdeclaration in term of Sections 32(1)&(2) read with the Section 79 and 80 of the Customs Act, 1969.
Industrial zones facing security problems To, Honourable Commissioner, Karachi Respected Sir, We, the members of Landhi Association of Trade and Industry (LATI) and Bin Qasim Association of Trade and Industry (BQATI) would like to draw your attention towards some issues of serious nature being faced by both the associations of trade and industries. Through this letter, we would like to inform you that there have been no uplift and development projects being pursued in the industrial zones of Landhi and Bin Qasim for the last many years. Added to it are the illegal encroachments which are creating huge impediments in the daily affairs of the industrial zones. We would also like to inform you
that the industrial areas of Landhi and Bin Qasim are vulnerable in terms of security since absence of proper security arrangements prevails in these areas. Despite the fact that both the industrial zones i.e. Landhi and Bin Qasim have great importance in gen-
erating valuable revenue for the country, they have been ignored by the authorities concerned in terms of facilitating the industrial zones. Crimes of serious nature including kidnapping for ransom, snatching of cell phones and other valuables are on
the rise in the vicinity of both the aforesaid industrial zones. Hundreds of employees who come to work over there have been deprived of their cell phones and other valuables as a matter of routine. Illegal encroachments are also on the rise on way from Malir Mandir to Steel Town, Dawood Chowrangi to Younus Textile, Mehran Highway roundabout to Gul Ahmed roundabout and other adjacent areas. In addition to these, there is no proper network of roads and sewerage system present in the industrial zones. Now that the facts have been brought into your notice, we hope that you will take the appropriate and effective steps in order to resolve the prevailing issues of the trade bodies for the sake of providing us our basic rights. Thanking you in anticipation, Members of LATI & BQATI
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10 PICTORIAl
APRIl 15 - APRIl 21, 2014
7,000 kg marijuana seized
KARACHI: The police recovered over 7,000 kilograms of marijuana million from Rashid Minhas Road worth around Rs600. The police on routine checking intercepted a truck near Moti Mehal stop and recovered tonnes of marijuana while arresting six persons. Three were arrested on the spot while remaining three persons were arrested on the information of the accused men. Police said the gang sought to smuggle the stuff abroad where it was worth millions of dollars.
LAhORE: Federal Commerce Minister Khurram Dastgir and lCCI President Sohail lashari talking to media after a ceremony held at lCCI.
LAhORE: Federal Board of Revenue Employees Alliance Pakistan President Mian Abdul Qayoom celebrated the 4th anniversary by cutting a cake along with the office bearers. RAwALPINDI: Member FATE Riffat Shaheen and Chief Commissioner RTO Rawalpindi Aftab Ahmed talking to Withholding Agents of different organizations in a Taxpayer Facilitation Workshop held at Regional Tax Office.
Prize distribution ceremony at Customs Public School
— Exclusive Customs Today photos
kARAChI: Chief Collector Appraisement (South) Nasir Masroor giving away a shield to DG ATT Farid Maneka.
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CARTOONSSPCEIAl 11
APRIl 15 - APRIl 21, 2014
Amnesty scheme: LhC directs FbR to register vehicles
LAHORE: Lahore High Court, while deciding several identical petitions, has directed FBR to register vehicles under amnesty scheme introduced through an SRO by the previous government. The petitioners submitted that the Islamabad High Court division bench had already issued directions for the registration of such vehicles. However, the authorities concerned were denying registration of their vehicles. On the other hand, the counsel for FBR submitted that there was no harm in registration of vehicles having proper documentation.
FbRdevisesnewtaxstrategytoget$350mIMFloan ISlAMABAD
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ederal Board of Revenue has devised four pronged strategy in order to obtain $350 million loan from the World Bank under second phase of Tax Administration Reform Project (TARP-II). According to World Bank documents, FBR has prepared a tax reform strategy aimed at increasing tax collection from 9.7 per cent to 14 per cent of GDP by 2017. “This is consistent with government’s commitment to achieve a sustainable Piscal dePicit of around 4 per cent of GDP by FY 2017,” said the World Bank. FBR tax strategy has four areas to be focused. First one of them is rationalization of concessionary regime. It’s the main focus to achieve a sizeable revenue gain by eliminating all Statutory Regulatory Orders (SROs) which provide ad hoc tax exemptions or concessions over a period of three years. The critical SROs are to be made part of tax law through an action of the parliament, while the remaining would
be phased out. FBR plans to start eliminating the Pirst batch of SROs identiPied in the FY 2015 budget, which, along with other budgetary measures, will yield up to 0.75 per cent of GDP in revenue. In addition, the existing tax laws will be amended to prohibit a resort to such ad-hoc policy measures in the future. Another area is reduction in the tax gap. FBR intends to take a number of actions to strengthen its tax enforcement capabilities. The key initiatives include initiating sector studies to estimate the tax potential of each sector; facilitating access to information on bank accounts of potential tax evaders and tax avoiders; enhancing FBR capacity for undertaking and expanding the coverage of tax audits; and institutionalizing a risk-based system of sales tax registration, which would not only expand the tax base but also be capable of detecting and forestalling the abuse of the tax refund process. These measures will be supplemented by a computerized risk-based evaluation of sales tax returns and an automated system of sales tax refunds establishing an electronic monitoring
system to assess accurate volumes of industrial production and developing an anti-smuggling strategy. Broadening of the tax base is another area of focus. To bring more of the large percentage of unregistered taxpayers, both individuals and businesses, into the tax net, FBR has started using third-party information on Pinancial activities, such as the acquisition of real estate, purchase of motor vehicles, foreign travel expenses, etc. On the basis of this information, FBR has started issuing tax notices to these potential taxpayers to register and begin paying their tax dues. Over the next two years, the central revenue body intends to issue at least 100,000 notices to such individuals and businesses. In addition, FBR has made it a mandatory requirement for all exporters and importers to register with the Board; government departments
have been instructed to purchase goods and services only from registered taxpayers; registered taxpayers are discouraged to make any sale to unregistered taxpayers by levy of an additional 1 per cent tax on those sales. Similarly, any purchase of goods and services from unregistered individuals and Pirms is subjected to 1 per cent withholding tax, and supplies of electricity and gas to unregistered businesses are subject to a 5 per cent surcharge. Fourth area of focus is improvement in management and behavioral change. To strengthen its internal controls to combat corruption within the system, FBR has devised a plan for integrity management and performance appraisal. For this purpose, an Integrity Management Unit will be established which will provide input on integrity-related matters, process corruption-related comp l a i n t s , prepare proPiles of ofPicers and coordinate with other anticorruption agencies.
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APRIl 15 - APRIl 21, 2014
Published by M. F. Riaz, Off. 91, 3rd Flr, Gul Plaza, M.A. Rd., Karachi, for Customs Today and Printed at Dhoom Printing Press Masheer Mahal Building, Off: I. I. Chundrigar Road, Karachi