daily on www.customstoday.com
Find us on
pAKISTAN’S FIRST INdepTH NewSpApeR ON CUSTOmS
vol 2 Issue No. 24
weekly
Karachi, Tue July 01 - mon July 07, 2014
Regd. No, mC-1381
ISSUINg SROS
In the presence of Parliament, issuance of SROs by FBR is illogical and the government should return the powers to its Constitutional guardian, says Senator Usman | See pAge 06 |
The directorate has forwarded the FIRs to Customs courts
ACHIevINg ReveNUe TARgeT
KARACHI
SOHAIL RAB KHAN www.customstoday.com
D
irectorate of Intelligence and Investigation-Customs, Karachi headed by Director Asif Marghoob Siddiqui has registered seven FIRs against the different importers of woven textile fabric who were involved in importing blended viscose rayon in the garb of blended cotton. Model Customs Collectorate of AppraisementWest has not yet taken any legal action against these importers. Last month, MCC AppraisementWest put on hold around 200 consignments of woven textile fabric and sent
FBR will have to race against time to achieve Rs159b target in the last week of FY2013-14 | See pAge 02 | UNCOveRINg TAx FRAUd
ly f near o t r o p s Lab re nsignment 100 co es massive l revea laration in ec mis-d ted fabric impor nments consig
On the DG I&I instructions, Lahore customs detected income tax and sale tax evasion and recovered Rs60m from two fraudulent companies | See pAge 03 |
R&D Section of MCC Appraisement-East under supervision of Collector Najeeb-urRehman made contravention report against ZA Pharma and recovered evaded tax of Rs 14.9m. | See pAge 04 |
— Exclusive Customs Today photo
ReCOveRINg TAx
those for laboratory tests in order to determine the actual description of the imported fabric. Later, the lab report of nearly 100 consignments revealed massive mis-declaration in the imported consignments and stated that the blended viscose rayon of higher value had been imported in the garb of blended cotton which involved massive tax evasion of at least Rs 225,165,356. Subsequently, Directorate of Intelligence and Investigation-Customs, Karachi after joint examination with MCC Appraisement-West lodged FIRs against seven importers. In the FIRs, the directorate stated that the importers were allegedly involved in clearance of fabric imported from China by mis-declaration in description HS Code and value thereof and claiming undue benePit of SRO 1125(I)/2011 and through Pak-China FTA under SRO 659(I)/2007 aiming to evade levyable duties and taxes. It was further stated that the importers were involved in violation of Section 19, 32(1) & (2), 32(A), 79(1) of the Customs Act, 1969 punishable Section 156(1), (10A) (14) and 14A of the Customs Act, 1969, read with Sections 3, 6, 33, 34 of the Sales Tax Act, 1990 and Section 148(1) of the Income Tax Ordinance, 2001. The importers who were allegedly involved and booked in FIRs included M/s Samad Enterprises involved in tax evasion of Rs 5,270,676; M/s M A Enterprises involved in tax evasion of Rs 23,352,680; M/s A K Fashion Apparel involved in tax evasion of Rs 6,997,284; M/s Country Care Trader involved in tax evasion of Rs 136,408,253; M/s Klassic Industries involved in tax evasion of Rs 2,468,023; See page 05
Price Rs. 50.00
www.customstoday.com
02 NATIONAL
JULY 01 - JULY 07, 2014
pak, eU agree to strengthen bilateral trade ties
ISLAMABAD: Pakistan and European Union agreed on a comprehensive economic partnership, with a focus on increasing the volume of bilateral trade. This understanding was reached in the fifth meeting of the EU-Pakistan Joint Commission, which was held here in Islamabad. The next meeting will be held in Brussels in 2015. EU delegation raised concerns over levy of export duty on certain products as Brussels wants removal of these duties on the plea that the raw materials were in great demand for EU industries.
Crucial last week
Customs I&I registers FIR against 2 appraisers KARACHI
CUSTOmS TOdAY RepORT www.customstoday.com
he Directorate General of Customs Intelligence and Investigation-FBR, Regional Office, Karachi has lodged an FIR against two Customs officials, allegedly involved in patronizing the importers in under-invoicing/misdeclaration for clearing the consignments containing miscellaneous goods. The FBR sources informed Customs Today that the two appraisers of Customs including Jam Akram are allegedly involved in clearing the consignments of miscellaneous goods including cosmetics items, assorted sprays, sports items and others at low duty/taxes from Karachi International Container Terminal (KICT). They further revealed that the Directorate General of Customs Intelligence and Investigation-FBR has submitted the FIRs in Customs Courts after legal proceedings, while further investigation was underway in the said case.
T
Customs thwarts attempt to smuggle heroin to Canada SIALKOT
ZAFAR mALIK
www.customstoday.com ustoms Intelligence has foiled a major attempt of smuggling heroin to Canada from Sialkot, during a special checking at General Post Office (GPO) Sialkot. A Fatehgarh-Defence Road Sialkot based accused Rashid booked a parcel at Sialkot GPO carrying the dental surgical instruments for Canada.When on a tip off, Customs Intelligence officials started special checking of the consignment, they detected as many as half kg fine quality heroin worth millions of rupees in the parcel.The heroin was secretly packed in the dental surgical instruments. Meanwhile, Model Customs Collectorate Sialkot Collector has formed a special committee led by Deputy Collector Customs Sadak Afzaal to ensure early arrest of the accused Rashid.
C
FBR recovers Rs18.52m from Eden Housing ederal Board of Revenue (FBR) recovered Rs 18.52 million from Eden Housing Limited for tax year 2011 by seizing their bank account. Sources said that total due tax is Rs 73 million.They said that FBR Lahore office recovered Rs 18.52m by seizing their account at Habib Bank Limited, Mall Road branch, Lahore. —CT Report
F
FBR assigns special tasks to field formations to meet revenue targets Board to race against time to achieve Rs159b target ISLAMABAD
CUSTOmS TOdAY RepORT www.customstoday.com
F
ederal Board of Revenue has collected net taxes of Rs 2,217 billion until June 23. Rs 101 billion refunds and rebates are included in the sum. This takes the net revenue Pigures reach a total of Rs 2,116 billion. FBR has yet to collect Rs 159 billion in remaining one week of the current Piscal year ending on June 30, 2014. Details received by Customs Today reveal that FBR has collected gross taxes of Rs 165 billion in the month of June so far. Despite better recovery of taxes against previous Piscal year and 15.5 per cent increase over previous year’s revenue collection altogether, it is seemingly an impossible task for the revenue body to get to its target. On the other hand if the sum owed by FBR in the form of refunds and rebates are not excluded from the revenue collection Pigures FBR is quite certainly going to collect the remaining amount of Rs 58 billion or even surpass its twice revised and reduced revenue collection target of Rs 2,275 billion. FBR Chairman Tariq Bajwa has visited Peshawar, Multan and Karachi this week. During the visits the chairman has stressed the ofPicers concerned to collect the revenue in full or otherwise get ready for transfers and discontinuation of special allowances and various facilities in the aftermath of shortfall.
FBR Chairman Tariq Bajwa
Customs duty collection has declined by about 1.9pc as Rs 231b have been collected so far against Rs 235b collected during the corresponding period of the previous fiscal year The contribution of customs duty to the national exchequer has declined by about 1.9 per cent as Rs 231 billion have been collected so far against Rs 235 billion collected during the corresponding period of the previous Piscal year. There has been a decline of over Rs 4 billion in customs duty collection.
In share of Domestic Taxes which include direct taxes (income tax), sales tax (on imports and domestic) and federal excise duty (on imports and domestic), FBR has collected gross taxes of Rs 1,985 billion against gross collection of domestic taxes of Rs 1682 billion in the corresponding period of previous Piscal year.
ASOconfiscatessmuggledgoodsworthRs71m KARACHI
CUSTOmS TOdAY RepORT www.customstoday.com
A
nti-Smuggling Organization (ASO) of the Regional Directorate of Customs Intelligence and Investigation, Karachi has seized smuggled goods in 12 cases worth Rs 71,084,643 in 20 days of June in which duty/taxes involved of Rs 27,012,056. The Anti-Smuggling Organization, Karachi conPiscated 16 Birla brand tyres and tubes of size 11.00-20 PR20 on June 1, imported from India. The consignment was worth Rs 310,400 while Rs 161,160 duties/taxes were involved in it. ASO has also seized 46 cartons of Indian gutka worth Rs 1,840,000 on June 2. It has also seized 316 tyres of size 155/70 R12 73S manufactured by Yokohama, Dunlop and Bridgestone and being imported from Japan
and Indonesia on June 5. The worth of seized smuggled goods was Rs 577,388 while Rs 336,300 duties/taxes were involved in it. ASO with its continuing efforts seized smuggled goods on June 7 including 404 new tyres HTV F/O worth Rs 12,120,000 in which Rs 3,991,116 duties/taxes were involved; 579 used LTV F/O tyres worth Rs 2,895,000 in which Rs 1,503,084 duties/taxes were involved and 700 solar lamps worth Rs 500,000 in which Rs 322,900 duties/taxes were involved. The ASO has also lodged an FIR against the culprits after the seizure report. It has seized 25 bags of smuggled black pepper worth Rs 317,125 on June 9 in which Rs 104,429 duties/taxes involved. ASO has also seized cloth of foreign origin (1900 kilograms) worth Rs 836,000 on the same date in which Rs 381,132 duties/taxes were involved.
Similarly, on June 9, ASO seized two different smuggled consignments including 516 bags of Kenyan black tea worth Rs 17,065,800 where Rs 381,132 duties/taxes were involved. It has also seized 16,000 litres of HSD worth Rs 1,304,000 in which Rs 491,760 duties/taxes were involved. An Isuzu oil tanker (registration number TTA-883, Chassis No.3542603 and Engine No.430523) costing Rs 1,200,000 has also been seized. FIR has been lodged in both the cases. On June 12, ASO made two seizures in which 1250 invertors of 1200VA and 2400VA, Mercury brand imported from China worth Rs 5,124,480 have been conPiscated. The duties/taxes of Rs 2,011,871 were involved. ASO also seized smuggled cosmetics items including 1,410 pieces of perfumes, 34 pieces of eye-shadow and 24 packets of nail polishes worth Rs 1,275,000. The duties/taxes of Rs 823,395 were involved.
Interestingly, in share of domestic taxes’ collection, FBR has showed around 18 per cent growth over the previous Piscal year’s collection. FBR has so far collected gross income tax around Rs 866 billion against Rs 732 billion in previous Piscal year; gross sales tax Rs 988 billion against Rs 834 billion; and gross federal excise duty Rs 131 billion against Rs 115 billion in the previous Piscal year. Meanwhile, Federal Board of Revenue has assigned special tasks to all the ofPicers working in the Pield formations to achieve their respective revenue targets of the current Piscal year with a warning that if they fail to do so, they will be transferred. FBR has issued the directives while taking into consideration the current trend in revenue collections for Piscal year 2013-14 which is going to end in ten days. Sources said that in light of such instructions, FBR ofPicials have started working day and night with unusual determination in fulPilling their responsibilities. Numerous Piles of all categories of taxpayers have been opened up in the Large Taxpayer’s Units (LTUs). A renewed scrutiny of these Piles is underway. It has also been decided that the returns of the big companies, whose Piles have been attached with audit reports, will also be rechecked. Apart from this, recovery of taxes along with Pines from non-taxpayers is also hastened up. Authorities of LTUs, Customs and Dry port located within the federal capital have informed Customs Today that they are conPident about achieving their respective targets.
Stock of pine cigarettes confiscated MULTAN
ImRAN ALI KHAN
www.customstoday.com ultan Customs special team confiscated smuggled Pine Cigarettes worth 500,000 rupees in a raid in Sadiqabad region. Government imposed ban on Pine Cigarettes, the Korean cigarettes brand last year and its sale was declared illegal. Its selling was declared violation of law due to non payment of taxes and customs duty along with the reason that the instructions of health mandatory and underage warning were missing. Special team headed by Inspector Maqsood ullah took action against the existence of banned cigarettes and seized the stock.The Korean cigarettes are being smuggled through Afghanistan and Iran. Cases will be registered against the persons from whom it is recovered and they will be punished according to law.
M
www.customstoday.com
LAHORE 03
JULY 01 - JULY 07, 2014
excise duty increase to shoot up cement prices
LAHORE: The cement industry, expressing concern over the decision of enhancing excise duty by another Rs50 per ton on cement manufacturing, has said that government did not incorporate industry’s proposals regarding reduction in levy in line with its commitment made with the representatives of the industry. As per calculations of cement industry experts, the additional excise duty on cement will add rupees 2.5 per bag to the cost and the duty on coal will further increase the prices substantially as fuel is the major cost of production.
and grabbers have grabbed at least 2,200 acres of land belonging to Federal Board of Revenue out of 4,000 acres in Karachi at the Hawks Bay while the grabbers are planning to grasp remaining 1,800 acres in due course.The land was allocated to the then Central Board of Revenue at the time of division in 1947. This was disclosed by Federal Revenue Alliance Employees Union CBA FBR Central President Mian Abdul Qayoom on the other day.The president of FBR employees union urged the government to distribute the remaining 1,800 acres among the employees of the board lest the grabbers should not clinch the valuable land. He said that the employees of the board have been struggling to collect the important revenue to meet the expenditures of the whole country. However, it’s the employees who have been deprived of the basic human needs including housing, transport facility, medical complexes, and education for their children.He said that FBR is a total profitmaking organization as compared to other governmental institutions but these institutions have their own medical complexes, housing schemes and educational institutes despite they have been suffering from heavy losses. In an answer a question, the union president said that investigations into land matters will surely reveal the criminal negligence and involvement of those FBR officers who became billionaires during their tenures.“It is impossible for the grabbers to seal FBR’s 2,200 acre land without the due involvement of the FBR high-ups,” he disclosed, adding that investigation can bring to light many hidden names. The FBR Union president also informed that the Board also possesses land in other parts of the country including Lahore, Sheikhupura and Quetta. —CT Report
L
Customs intelligence unearths Rs60m tax evasion Lahore Customs Intelligence seizes goods worth Rs264m LAHORE
m HAYAT
www.customstoday.com
T
he Directorate of Customs Intelligence and Investigation claimed to have detected income tax and sale tax evasion and recovered Rs60 million from fraudulent companies. According to ofPicials reports, it was brought to the notice of DG Customs Intelligence Lutfullah Virk that two companies named Apex International and Liberty International got fraudulently registered under sale tax as manufacturing units and availed two per cent income tax and two per cent additional sale tax exemption on import of cloth from India. On the DG intelligence instructions, Director Customs Intelligence Mukarram Jah deputed Additional Director Asad Raza Rizvi and Deputy Director Rizwan Salabat to examine the case thoroughly in the light of SRO-1125. On suspicion, Intelligence OfPicer Mian Muhammad Yasin conducted physical inspection of the units and detected tax evasion for not being manufacturing units and subsequently defaulting companies were served notices for immediate payment of tax evasion of Rs60 million. The directorate has moved two separate applications to the Lahore Customs Collector (Adjudication) for imposing heavy penalty on both fraudulent companies for concealing facts. Meanwhile, anti-smuggling wing of Model Customs Collectorate
— Exclusive Customs Today photos
Landgrabbersseize 2,200acresofFBRland
dg I&I Lutfullah virk
director I&I Lahore mukarram Jah
of Lahore seized smuggled vehicles and goods worth Rs 264 million in 314 cases, attaining a growth of 12 per cent during the period from July 2013 to May 2014 against Rs 236 million in 263 cases during the similar period last Piscal year. During the aforesaid period of the current Piscal year, Anti-smuggling wing seized vehicles worth Rs 38.4 million in 101 cases. While it impounded contrabands worth Rs 226 million in 213 cases. In July 2013, the Customs Antismuggling department seized goods and articles worth Rs 45 million in 33 raids, while, in August 2013, the antismuggling wing in 28 cases conPiscated goods and vehicles valued Rs 41 million.
In September 2013, 29 raids were undertaken by the Anti-smuggling scouts recovering vehicles and smuggled goods worth Rs 27 million, while, in October same year, the anti-smuggling unit conducted 27 raids, impounding vehicles and non-duty paid items worth Rs 19.69 million. Likewise, during November 2013, the wing conducted 20 raids and seized vehicles and non-duty paid items worth Rs 13 million while in December 2013, the Anti-smuggling wing conducted 40 raids and conPiscated vehicles and goods worth Rs 21 million. The Anti-smuggling wing conPiscated vehicles and contrabands worth Rs 19 million in 25 cases including four non duty paid vehicles during the month of January 2014. The anti-smuggling unit conducted 39 raids seizing vehicles and goods worth Rs 16 million during the month of February this year. Customs ofPicials seized 18 vehicles worth Rs 5 million and goods worth Rs 11 million in 21 raids. Similarly, during March 2014, the wing seized vehicles and goods worth Rs 17.19 million in 33 cases of which the wing conPiscated vehicles in 13 cases and goods in 20 cases. During April 2014, the anti-smuggling scout conPiscated vehicles and goods worth Rs 9.83 million in 13 cases. The wing seized one vehicle and impounded non duty paid articles in 12 raids. The Anti smuggling wing seized vehicles and goods worth Rs 34.15 million in 27 cases during the month of May 2014. It seized 17 vehicles worth Rs 2.24 million while held goods and articles worth Rs 31 million in 10 cases.
www.customstoday.com
04 NATIONAL
JULY 01 - JULY 07, 2014
Lack of co-op: Three ST rates in vogue
ISLAMABAD: Due to lack of coordination among the Centre and provinces on budget preparation, three general sales tax rates will be implemented in the country simultaneously. The federal government has fixed sales tax rate at 17% while it is 16% in Punjab. Sindh, on the other hand, has further reduced it to 15%. According to analysts, three different sales tax rates in the country will not only create confusion among taxpayers’ minds but also result in complexities in input tax adjustment among the centre and provinces.
Large scale irregularities in seizure register aking strict notice of the large scale anomalies and irregularities in the seizure register, Deputy Director Admin of Customs Intelligence, (Headquarters) Islamabad, Dr Muhammad Nasir has impeded any kind of amendment in the seizure register after the first entry without permission of the officers concerned. In a detailed official order issued by the office of Deputy Director Admin Dr Muhammad Nasir, it is mentioned that irregularities of serious nature have been found in the seizure register which are identifiably intentional and are established corrupt actions. The seizure register contains the record of confiscations of smuggled items and goods that are confiscated due to non-payment of customs duty and other taxes.The official order explained that it has been found to be tampered through cutting the record, overwriting, erased with whiteners, rewritten, etc. Through the use of various methods, either the record has been changed or attempts to change it are being made. Dr Muhammad Nasir has said that the record will not be altered again after the first entry. If necessity arrives high officials will be made known of the need. If the official concerned will deem it essential, the change will be made accordingly. According to the order, anyone found short of following the order will be held accountable on charges of corruption and bad intentions. Responsible staff will have to face disciplinary official action. Copies of the aforementioned official order have been forwarded to all other offices concerned. —CT Report
T
FBRtolaunch industrial monitoringsystem BR is going to launch an industrial monitoring system very soon. Initially the industrial monitoring will be launched in specific industries. In due course, various sectors may be added as it will assist to evaluate the tax returns of businessmen. The government initiative will empower FBR officers to monitor production and sales of goods, purchase of raw material for goods and data of stocks available in the factories. The approval of Finance Bill 20142015 has provided FBR officers power to inspect any industry without obtaining warrants from the Magistrate. Tax collection will be increased through this major step and corruption in tax returns will be eliminated through electronic monitoring system. Moreover it is also projected that taxes will be collected through utility bills of the consumers. —CT Report
F
Rs25.6m tax evasion
FBRservesfinalnotice tobeveragecompany, defaulterofRs100m
ContraventionReport againstZApharmaprepared F KARACHI
CUSTOmS TOdAY RepORT www.customstoday.com
T
he Research and Development (R&D) Section of Model Customs Collectorate of Appraisement-East has made contravention report (CR) against the importer M/s Z A Pharma after establishing tax evasion in terms of customs duty, sales tax, additional sales tax and income tax through claiming of inadmissible benePit of SRO 567 (I)/2006 and SRO 551 (I)/2008 and reduced rate of income tax by claiming the status of Industrial under taking. M/s Z A Pharma was involved in tax evasion of Rs 40,548,666 including customs duty worth Rs 3,779,922; sales tax worth Rs 23,576,635; additional sales tax worth Rs 4,262,163 and income tax worth Rs 8,929,946. Sources informed Customs Today that the R&D Section of MCC Appraisement-East under the dynamic leadership of Collector Najeeb-urRehman Abbasi has recovered evaded tax of Rs 14,943,058 including Rs 3,184,515 in share of customs duty; Rs 4,267,112 in share of sales tax; Rs 180,064 in share of additional sales tax; and Rs 7,311,367 in share of income tax. However, R&D Section is yet to recover an amount of Rs 25,605,608 including Rs 595,407 in share of customs duty; Rs 19,309,523 in share of sales tax; Rs 4,082,099 in share of additional sales tax; and Rs 1,618,579 in share of income tax. Sources further told this scribe
that a team of R&D Section of MCC Appraisement-East led by Collector Najeebur-Rehman Abbasi and comprising Additional Collector Wajid Ali, Deputy Collector Rizwan Mehmood, Principal Appraiser ShaPiullah Khan Niazi, Appraiser Dost Muhammad,
Piled Goods Declaration bearing number KAPE-HC72694 on 15-02-2014 for clearance under Pakistan Customs Tariff heading 2835.3900 declaring unit value of goods at $ 0.57 per kg. Besides claiming exemption of duty in excess of 5 per cent under FTA SRO 659(1)/2007, Z
— Exclusive Customs Today photo
Collector mCC Appraisement east Najeeb-ur-Rehman Abbasi Preventive OfPicer Muhammad Hashim, Examining OfPicer Azhar Abbas and UDC Adil Rasheed with their all out efforts and team work had detected and processed the case. According to the sources, the M/s Z A Pharma has committed offences under Section 16, 20, 32(1), 32(2), 32(3)A, 32A, 79 & 80 ibid of the Customs Act, 1969 punishable under Clauses 9, 10A, 12, 14, 14A and 43 of Section 156(1) of the Customs Act, 1969 read with the Section 36 of the Sales Tax Act, 1990 punishable under Section 33 of the Sales Tax 1990 and read with Section 148 of Income Tax Ordinance 2000, thereby evading customs duty, sales tax and income tax to the tune of Rs 25605608. Sources revealed that the M/s Z A Pharma, Khushab imported a consignment of 50,000 kilogram Disodium Di-hydrogen Phosphate and
A Pharma claimed exemption of whole of the sales tax in terms of SRO 551(1)/2008 under the “pharmaceutical raw material.” Furthermore, the goods were assessed at $ 0.80 per kg and the consignment was allowed release by the assessing group against the payment of duty/taxes on the basis of the aforesaid assessment by extending the benePit of SRO 551(1)/2008 and reduce rate of income tax being an industrial unit. Later, the preliminary inquiry and scrutiny of the relevant record has revealed that the impugned goods i.e. Di-sodium Di-hydrogen Phosphate imported vide reference consignment which is placed on hold do not fall within the category of ‘pharmaceutical raw material’ and hence, are not entitled for the claimed and availed benePit of sales tax exemption in terms of SRO 551(I)/2008.
BR has issued final warning notice to a major defaulter beverage company giving a deadline for clearing its outstanding arrears until June 30, 2014. FBR is continuing its special recovery campaign to ensure the recovery from all the minor and major defaulters in the Gujranwala region by issuing them the final notices and warning them to clear their dues or face the freezing of their bank accounts by FBR. According to senior FBR officials, the beverage company was a defaulter of Rs 100 million, as it had not paid the sales tax to the FBR during the fiscal year 2013-14 despite the repeated recovery notices issued by the revenue body. The beverage company was bound to ensure the timely deposit this big amount to FBR at the earliest. Now, FBR has warned the beverage company to clear its prolonged pending Rs 100 million arrears until the last date of June, 2014. Otherwise, FBR will freeze the accounts of the company and would deduct the chunk from beverage company’s bank accounts after the deadline, the senior FBR officials added. Meanwhile, the FBR has also issued the final notices to all the minor and major steel smelters in Gujranwala region to ensure the early payment of their outstanding arrears worth millions of rupees before the last date of the current fiscal year. The government had levied 17 per cent sales tax on all the steel smelters and 4 per cent sales tax surcharge on every steel smelting unit. But, the units had not yet paid their outstanding dues worth millions of rupees. FBR senior officials have also warned these units to clear their arrears. FBR will freeze the bank accounts to recover their outstanding arrears. —CT Report
FBRdirectsregionalofficestotakesternsafetymeasures ISLAMABAD
CUSTOmS TOdAY RepORT www.customstoday.com
— Exclusiv e Customs
O
wing to the current security concerns, Federal Board of Revenue, on the directives of Chairman Tariq Bajwa, has directed all its ofPices including Regional Tax OfPices, Large Taxpayers Units, Customs Houses and Dry ports to take strict measures for ensuring safety of the ofPices. Entry of visitors into FBR Headquarters in Islamabad has been restricted to a particular limit. Rules and regulations are strictly followed. In a letter written to all the ofPices of FBR, Secretary Security & Management has stated that taking into consideration the current state of security, all the ofPices should reinforce the security measures. It has been advised through the letter that the security checks for
visitors and strangers/unconcerned persons should be made stricter. Through the new security measures, visitors for ofPicers of Grade-
Today phot o
20 and above have been directed to receive schedule for the meeting in advance. Those wanting to meet randomly will only be able to do so
if the ofPicer concerned allows it. The letter has advised the ofPices that instructions should be acted upon rigorously.
www.customstoday.com
KARACHI
JULY 01 - JULY 07, 2014
05
CRpC stresses decrease in telecom taxes
KARACHI: The Consumer Rights Protection Council of Pakistan (CRPC) has urged the Finance Ministry to provide some relief to consumers by reducing the rate of taxation on telecom services as the masses are already overburdened with heavy taxation in all sectors. CRPC President Shakeel Baig said, “The taxation rates, as proposed in the federal budget 2014-2015, are unjustifiable.” “The finance ministry should immediately reduce withholding tax to 5 percent and bring the federal excise duty to a single digit,” Baig told the media.
Karachi Customs Collectorates speed up revenue recovery CIU seizes consignment of M/s Samana Sons comprising empty tubes with caps printed with Indian brands for packing of face wash and hair gel KARACHI
SOHAIL RAB KHAN www.customstoday.com
CustomsIntelligence registers7FIRsagainst fabricimporters From page 01 M/s First Lock Enterprises involved in tax evasion of Rs 94,05,808; and M/s NK Enterprises involved in tax evasion of Rs 41,262,632.The total tax evasion and loss to national exchequer reached Rs 225,165,356 from those seven importers alone. Sources informed this scribe that the directorate has forwarded the FIRs to Customs courts and further action is to be taken in this regard. When contacted, one of the senior officers in MCC Appraisement-West said that lodging FIRs against the importers involved in mis-declaration is a policy matter and Chief Collector of Appraisement-South Nasir Masroor has the authority to decide whether the FIRs against those importers would be lodged or not. Meanwhile, Director of Intelligence and Investigation-Customs, Karachi Asif Marghoob Siddiqui has held a meeting with the Additional Directors of the directorate in order to expedite the process of anti-smuggling operations in the city. Sources informed CustomsToday that the Director instructed the Additional Directors Nadeem Ahsan, Feroz Alam Junejo and KhalilYousfani to evolve more effective strategies in order to curb smuggling activities. Sources told this scribe that Director Asif Marghoob Siddiqui also asked the officers concerned to formulate an effectual strategy in order to eliminate smuggling of oil and diesel from Iran in particular. “The performance of Anti-Smuggling Organization (ASO) was also being reviewed in the meeting,” sources added. They further informed that the Director also urged that the additional directors to adhere to zero-tolerance policy of Director General Intelligence and InvestigationCustoms LuftullahVirk towards smuggling of contraband items.
— Exclusive Customs Today photos
M
CC Appraisement-East, MCC Appraisement-West and MCC Port Muhammad Bin Qasim of Pakistan Customs while following the directives of Chief Collector Appraisement-South Nasir Masroor Ahmed have further hastened their revenue recovery in order to attain maximum revenue by the end of last month of Piscal year 2013-14. OfPicial sources informed Customs Today that all the three Collectorates have sped up for collecting maximum revenue by the end of the current Piscal year. Sources added that the authorities concerned of Pakistan Customs were avoiding unnecessary examinations in order to save time and facilitate the importers and traders. Sources further told this scribe that the Collectorates have taken all options into consideration including bank guarantees, encashment and expedited the auction process for the revenue recovery. “Special assignments have been given to the ofPicers of Pakistan Customs in order to recover more revenue by the end of current Piscal year,” they added. Meanwhile, Customs Intelligence Unit of Port Qasim has seized a consignment of M/s Samana Sons comprising empty tubes with caps printed with Indian brands for packing of face wash and hair gel etc. which were to be used for distributing counterfeited products in the country. MCC Port Qasim has submitted the seizure report for initiation of adjudication proceedings. Credible informa-
Chief Collector Appraisement Nasir masroor tion was received by Collector Dr. Jawwad Uwais Agha of MCC Port Qasim, Karachi that some unscrupulous persons were trying to import counterfeited products from China and will try to clear the same in the garb of freely importable goods. In order to verify the veracity of the information, the subject consignment was intercepted. The goods were declared to contain assorted type and colour packing material for the value $ 2200 i.e. Customs Value of Rs 214,791 with duties and taxes of Rs 102,622. However, upon physical examination, the consignment had been found consisting of ‘packing material –
Chief Collector enforcement Nazim Saleem
Authorities concerned of pakistan Customs are avoiding unnecessary examinations in order to save time and facilitate importers and traders
empty plastic tubes with caps for packing of face wash, hair gel etc. of assorted types and colours, brand Himalya, Set Wet etc. bearing the name and addresses of these brands’ manufacturing units in India. The importer M/s Samana Sons imported counterfeited products, misdeclared classiPication and valuation and avoided duties/taxes to the tune of Rs 469,234. Collector of MCC Port Qasim appreciated the efforts of Additional Collector Ihsan Ali Shah, Assistant Collector Falik Shair, Principal Appraiser CIU Port Qasim Sultan Aurungzaib and Appraiser MCC Port Qasim Khurram RaPiq.
DI&IregistersFIRagainstRegentEnterprises,examiners KARACHI
CUSTOmS TOdAY RepORT www.customstoday.com
D
irectorate of Customs Intelligence and Investigation-Customs, Karachi has registered an FIR against importer M/s Regent Enterprises, examining/assessment staff of MCC Appraisement-West in their alleged involvement in tax fraud by manipulating the Web-Based One Customs (WeBOC) computerised clearance system. The importer M/s Regent Enterprises deliberately got involved in mis-declaring of quantity, origin, value, weight and Unit of Measurement (UoM) aimed to evade
duty/taxes levy able thereon. As per details, the directorate vide letter C.No.Appg-574/Div-II/2014 blocked in system a 1x40 feet container no.WHLU-5726023, imported vide IGM No.814/14 by M/s Regent Enterprises, containing miscellaneous goods including Nido Fortified Full Cream Milk Powder, Silky Cool Shampoo, Cannula, Deep Heat Rub Cream, Chew-gum, Soft drinks, Perfume spray, flavour for shisha and Cheddar Cheese lying at Al-Hamd International Container Terminal (AICT). The total assessed value of all items by assessment staff was Rs 6,071,405 while the declared value by the importer was Rs 1,419,193. The difference stood at Rs 4,652,211.
Duties/taxes on declared items were Rs 923,318, whereas, the duties/taxes on assessed value were levy able up to Rs 3,404,872. The duty/tax evasion of Rs 2,481,554 was detected. After a joint examination, it was found that the mis-declaration of quantity, origin, value, weight and unit of measurement was in violation of Section 32(1)&(2), 32A and 79(1)(b), of the Customs Act, 1969 read with the Section 3, 6, 33, 34 and 36 of the Sales Tax Act, 1990, read with the Section 148 of Income Tax Act, 2001 punishable under clause 14 and 14A, 43 and 82 of the Section 156(I) of the Customs Act, 1969 read with the Section 33,34 and 36 of the Sales Tax Act, 1990.
m/s Regent enterprises deliberately got involved in mis-declaring of quantity, origin, value, weight and Uom to evade duty/taxes
06
www.customstoday.com
SPECIALREPORT
JULY 01 - JULY 07, 2014
S
ISLAMABAD
mUHAmmAd FAIZAN www.customstoday.com
enate Standing Committee on Finance Member Senator Usman Saifullah regretted that in the presence of the Parliament, the issuance of SROs by the Federal Board of Revenue was illogical and illegal and the government should return the powers to its Constitutional guardian. “It is the sole prerogative of the National Assembly to draft and promulgate new laws in the light of Constitution”. Senate Standing Committee on Finance Member Senator Usman Saifullah expressed the views during an exclusive interview with Customs Today here. Senator Usman Saifullah declared that increase in the rate of taxes in budget for 2014-15 would badly impact the common man, adding that it was yet to be gauged the trickledown effect of the hike in tax rate. “The government must improve governance in the FBR to enable it come up to the challenges,” he suggested, adding that though the FBR chairman was a ca-
Capi Tax s tal Gains incre hould be tradi ased on ng in mark stock et
pable person, it seemed he did not have the liberty to make decision on part of the government. He feared that 27 percent taxation would ultimately slowdown the economy, adding that the government should introduce electronic invoicing and cash registers which should be linked to the FBR. The Senate Standing Committee member stressed the need for making easy the Tax language and documentation to facilitate the taxpayers, adding that Capital Gains Tax should be increased on trading in stock markets. “The current budget is fall short to bring about any positive change in the country’s financial condition,” he claimed, adding that it was right time for the government to take tough decisions. He also questioned where was the list of millionaires the government had claimed to have provided to the International Monetary Fund for broadening tax net? Senator Usman Saifullah declared that increase in the rate of taxes and electricity tariff would give rise to its theft. The government which has not been able to improve three prime public sector institutions i.e. PIA, Railways and Pakistan steel mill cannot be expected to solve the multifarious problems,” he commented, adding that why was the withholding tax withdrawn from steel scrap only? “There is no sign of any improve-
ment; Look I am the only Senator from Islamabad but nobody bother to take me on board on Metro bus project,” Senator Usman Saifullah lamented, adding that the track for Metro Bus in Blue Area should have been laid at Green Area on Fazl Haq Road instead of Jinnah Avenue. He pointed out that under the circumstance, the privatization of public sector institutions at throwaway prices would be of no use, adding that the government should instead improve their management. He cited a World Bank’s report, saying that a corporation had to pay 27 kinds of taxes in Pakistan as compare to China where 15 kinds of taxes were levied. He suggested that the federal government should initiate dialogue with the provinces on implementation of agricultural tax, adding that currently the burden of 27 per cent taxes had been laid on those who were already paying taxes. “Steps have to be taken to speed up economic development,” the PPP Senator emphasized, adding that new companies were not being registered in the stock markets. “Look, 18 per cent of total stock market capital belongs to two families alone and If the Capital Gains Tax might have been increased, it may have merged with stock prices,” he said. He maintained that the government had not only failed to achieve its set targets for fiscal year 2013-14, but it had
www.customstoday.com
JULY 01 - JULY 07, 2014
SPECIAL REPORT 07
also been unable to act upon its own manifesto. “A list of 3.5 million potential taxpayers was provided to the IMF for obtaining loans but currently the FBR is even denying the existence of any such list,” he pointed out. He regretted that if only half of the listed potential taxpayers were brought to the tax net, the revenue would be increased Rs160 billion. Senator Usman Saifullah termed the Senate a symbol of the federation, saying that issues pertaining to the federation could be debated in the Senate in a better way. The Senate Standing Committee member termed the subsidy for power sector much less, saying that increase in gas tariff in Khyber Pakhtunkhwa would leave the industry uncompetitive in the province. Senator Usman Saifullah suggested that the government should support the sectors where lesser electricity was consumed and more labour was employed like textile. “Conversely, it should prioritise the sectors where more electricity is consumed and lesser labour is employed,” he pointed.
— Exclusive Customs Today photos
www.customstoday.com
08 EDITORIAL
JULY 01 - JULY 07, 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
Increasing foreign reserves
p
akistan’s foreign currency reserves are all set to touch $15 billion mark very soon on account of expected approval of next IMF tranche worth $550 million, transaction of PPL shares and reimbursement of Coalition Support Fund (CSF) from the USA. The positive development has been happening on the economic horizon of the country when the political temperature is boiling up so there is dire need to avoid derailment of political process in order to reap the benefits of improved economic situation. Crossing a psychological barrier of $15 billion at this critical juncture of the country’s history is quite crucial, which can set the stage to achieve growth and prosperity on long and sustained basis. Now the country’s external sector difficulties have largely overcome and time is ripe to boost exports by focusing energies on value addition sector by diversifying products and markets to achieve quantum leap in exports of country’s products. Although, the Planning Commission has envisioned $150 billion exports under its ambitious Vision 2025 but it requires a lot of homework for achieving the desired goal because five to six times increase in exports would be a distant dream if implementable strategy is not devised and executed vigorously. After approval of this upcoming tranche under $6.67 billion Extended Fund Facility (EFF) by the IMF’s executive board, Pakistan’s foreign currency reserves will go close to $15 billion. The foreign currency reserves were standing at $13.5 billion on June 6, 2014 and WB’s loans as well as upcoming IMF tranche will push up the reserves close to $15 billion mark. The IMF staff, the sources said, has been asking the government to resolve lingering controversy over NEPRA’s decision to reduce the line losses for DISCOs (power distribution companies) from 16.5 percent to 12.82 percent as well as take steps to avoid delays in privatization proceeds. On the privatization front, the government successfully offloaded shares of United Bank Limited to fetch $387 million and now the process is underway to sell the shares of PPL. On the hiring of Financial Advisor for state owned PIA, the process is expected to be completed soon. Pakistan had met all targets under the IMF’s performance benchmark criteria for end March 2014 with the exception of the target on Net Domestic Assets of the central bank, which was missed by a small margin. The indicative target on social transfers to the poor under the Benazir Income Support Program (BISP) was also met. The mission welcomes the government’s efforts to deepen its support to the poor through the BISP program, and the commitment to ensure timely payments to 4.7 million eligible families. Two of three structural benchmarks for this review were met, including the structural benchmark on tax administration and the benchmark on the audit of the National Electric Power Regulatory Authority (NEPRA). However, the benchmark on hiring privatization advisers was only partially met. In the energy sector, the Fund mission urged the authorities to continue implementation of the National Energy Policy to increase energy supply while improving the financial health of the system.
Implementing tax measures ISLAMABAD
Sm HAIdeR
www.customstoday.com
A
fter getting assent of President of Pakistan on Finance Bill 2014-15, the FBR has started taking steps to implement the tax measures from July 1, 2014. The Parliament has already approved the Finance Bill 2014-15 and after assent of the President it has now become law of the land. Now the FBR is in the process of issuing notiPications to implement these approved tax measures starting from July 1, 2014. As the FBR enhanced tax burden for non Pilers so the tax machinery shared data of active taxpayers with all commercial banks, companies and excise and taxation departments to collect increased rate of withholding tax at source on cash withdrawal from banks, deduction of tax on dividends and registration of vehicles in the Piscal
year 2014-15. As the provincial registration authorities for transferring plots are not equipped with online system so the FBR is also devising a mechanism to charge 2 percent tax from non-Pilers and 1 percent from tax Pilers on property transaction valuing over Rs 3 million. However, the FBR’s next year target of Rs 2810 billion depends upon effective enforcement on measures taken by the government in the budget. But the Pirst test lies on front of achieving the revised tax collection target of Rs 2275 billion for outgoing Piscal year 201314, ending on June 30 because if this target was missed then the basis of envisaging next Piscal year’s target would be shattered. The FBR has so far collected Rs 2160 billion till June 26 and it will have to collect Rs 115 billion in last four days. The FBR high-ups hope that they will go close to the revised
target and even making efforts to touch it. “We need Pive to six big strokes in order to display the desired target of Rs 2275 billion on our board by June 30,” said the ofPicial. In order to facilitate the taxpayers in depositing their duties and taxes during the last few days of the current Pinancial year, the State Bank of Pakistan, on request of FBR has decided to keep authorized branches of State Bank of Pakistan, National Bank of Pakistan, Commercial Banks and National Institute of Facilitation Technologies (NIFT) open for extended hours. According to details, State Bank of Pakistan branches would remain open on 30th of June 2014 till 10:00pm. National Bank of Pakistan branches would remain open till 8:00pm on 28th and 29th June for collection of FBR taxes/duties and till 10:00 for cheque collection and 12:00 mid-
night for cash counters on 30th June 2014 (Monday) for government receipts and payments. Similarly, designated branches of Commercial Banks would remain open on 28th June 2014 (normal working hours) and 30th June 2014 until 10:00pm. NIFT will also remain available to collect and sort the clearing instruments deposited on 28th & 29th June 2014 from NBP. Two special clearings on Monday 30th June 2014 at 3:00pm and 10:00pm respectively have also been arranged besides normal clearings. Besides the opening for extended hours of banks, arrangements have also been made to facilitate taxpayers in payment of Taxes/ Duties and fulPil their national obligation. In this regard FBR has directed all its Pield formations to remain open on 28th and 29th June 2014 until 8:00pm and on 30th June 2014 until 12:00 midnight.
www.customstoday.com
ISLAMABAD 09
JULY 01 - JULY 07, 2014
edB rolls out directory of engineering goods exporters
ISLAMABAD: The Engineering Development Board (EDB) has compiled a Directory having profile of almost 150 leading engineering goods exporters from sub-sectors to strengthen and promote the industry. The Directory - first of its kind is being widely circulated to all foreign diplomatic missions, Pakistan’s missions aboard, local and foreign chambers of commerce & industries, associations and all relevant organizations engaged in promoting and enhancing exports.
Stalled promotions: FBR lower cadre officials in deep distress roblems like delay in promotions, service structure and time scale have made FBR officials suffer mentally as well as financially. FBR’s CBA employees union and Federal Revenue Employees’ Alliance has demanded of FBR Chairman Tariq Bajwa to announce new promotion policy and time scale immediately. Union’s Central Vice Chairman Chaudhry Muhammad Akram has written a letter to FBR Chairman in which he has complained that despite vacant seats of admin officers, DPC has not been held. Due to this reason, promotions of lower level staff have been stalled which is injustice. FBR lower cadre officials spend 20 to 25 years of their service in a single cadre. Due to lack of timely promotions their working capabilities are affected negatively. For the last three and a half years posts of office superintendents have been vacant but no DPC has been held for the promotions. As a result, the promotion system in the whole institution has been blocked for the lower cadre all the way to the top. Akram regarded it as financial persecution of lower cadre officials. He said that Member Legal of FBR has already said that there is no rule or regulation in way of promotions. In June 2009, on the directions of FBR Headquarters and under the supervision of DG DOT, an institutional examination was held in Islamabad, Lahore and Rawalpindi regions for promotion to the post of inspectors. Those who passed the exams have been waiting for their due promotions for five years. The waiting list was prepared on the orders from FBR Headquarters, the vice chairman of the union stated. He said that due to not being promoted even after having passed the examinations, the lower cadre officials are in deep distress. —CT Report
P
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
Customs wins legal battle over 10kg gold seizure from Iranian ISLAMABAD
mUHAmmAd FAIZAN www.customstoday.com
A
fter struggle of twenty Pive years, Pakistan Customs has won the legal battle over conPiscation of ten kilograms of smuggled gold worth tens of millions of rupees. Supreme Court of Pakistan has given its verdict over the conPiscation of the gold from Iranian citizen Ghulam Hussain Ramzan Ali in favour of Pakistan Customs while rejecting his appeal. The Iranian citizen’s stance regarding the conPiscation was that he was a transit passenger and Pakistan Customs had no authority to conduct any search on him or his luggage. A three member bench of Supreme Court comprising Justice Mian Saqib Nisar, Justice Sarmad Jalal Usmani and Justice Muhammad Athar Saeed heard the case. Model Customs Collectorate of Preventive was party to the case. The judgement of SCP’s three member bench stated that Pakistan Customs jurisdiction applies to all the passengers including transit passengers who stay temporarily on any Pakistani port or airport, during their journey. The verdict established that Section 158 of Customs Act 1969 enables any customs ofPicer who has reasonable doubt to conduct search on any person along with his pos-
DGI&I confiscates smuggled items worth Rs2.099b in 11 months irectorate General of Intelligence and Investigation-Customs has confiscated tonnes of drugs along with smuggled items worth over Rs 2.099 billion during the period from July 2013 to May 2014. As per details the Directorate General of Customs I&I seized 258 vehicles U/S 157 worth over Rs 382 million; 241 vehicles U/S 167 (NDP) worth over 285 million; around 1.1 million yards of foreign cloth worth around Rs 152 million; over 119 tonnes of tea worth over Rs 36 million; 6,417 tyres and tubes worth over Rs 50 million; numerous auto/spare parts worth over Rs 26 million; 31,428 bottles and tins worth over Rs 6 million; 663,820 litres of diesel worth over Rs 54 million; 51,527 litres of engine oil worth over Rs 6 million; 8,877 buckets of grease worth over Rs 6 million; 39,516 stacks of fake/foreign cigarettes worth over Rs 26 million; numerous electronic goods worth over Rs 101 million; 339 carpets worth over Rs 4 million; 7,794 blankets worth over Rs 11
D
sessions, who is entering or leaving Pakistan’s borders and doubted of travelling without legal document(s) of such possessions like gold. In such a case, i.e. failure to
million; numerous medicines worth over Rs 49 million; gutka worth over Rs 7 million; and miscellaneous items including pirated CDs/DVDs, toys, crockery, toiletries, etc., worth over Rs 888 million. Foreign currency worth Rs 3.3 million is also included in this large amount. However, the directorate has not come across any case of fake currency and illegal weapons both of which are rife in the country. Directorate General of I&I-Customs also seized illicit drugs including 656.5 kg charas, 40.5 kg opium, 9.775 kg heroin, 10,261 kg poppy straw, 70,030 kg poppy seeds and 2,250 kg cannabis seeds in 866 cases while arresting 88 persons. According to report received by Customs Today, Directorate General of Customs I&I has kept up with its tradition as it has played a proactive role in its anti smuggling operation. But all of it comes at a cost. During the performance of his duties a young customs intelligence officer Aqeel lost his precious life.
produce legal documents of possession of dutiable goods the customs ofPicer can seize the goods. The verdict further justiPied customs’ seizure by stating that there
was advance information of smuggling in Ghulam Hussain’s case. Therefore, searching a transit passenger was a justiPiable act on part of customs’ authorities. Details of the case revealed that in 1987 an Iranian passenger Ghulam Hussain was travelling to Singapore via Karachi. Customs authorities received a tip-off that the person will try to smuggle gold during his transitory stay in Karachi. Ghulam Hussain tried to skip customs examination hall without checking while taking his luggage on way to a hotel. He did not inform customs authorities about the possession of gold. On examination it was found out that he had 50 gold bars which were seized due to the reason that he did not have any permission letter issued by the federal government. He was issued show-cause notice according to Customs Act 1969 and Foreign Regulation Act 1947. Ghulam Hussain took the stance that he was a transit passenger and it was out of jurisdiction of Pakistan Customs to seize it. He was accused of smuggling the gold by customs authorities while the gold was conPiscated since he brought the gold to Pakistan without any permission. Meanwhile, he was Pined up to Rs 500,000. Later in 1992, Ghulam Hussain’s appeal against the customs authorities’ conPiscation was rejected by Member Judicial of Federal Board of Revenue who kept the Order in Original intact.
Appeal to stop tax officials from harassing businessmen To,
critical times due to unavailability of required electricity and gas and is in dire need of patronage by the government to run the businesses. Private sector is ready to supplement all government efforts aimed at revival of economic activities in the country if they are provided the breathing space needed. But in the presence of such anti business tactics, it would be very difficult for the private sector to continue with their businesses. As chairman of the revenue body, you ought to take notice of the whole situation and stop the FBR officials from misdeeds.
Tariq Bajwa, Chairman FBR, Islamabad, Dear Chairman, I would like to bring it to the consideration of high officials of FBR that tax officials are creating an atmosphere of harassment by using negative tactics to meet revenue targets. FBR is creating problems for the industrial sector without giving any kind of notices whatsoever, and has held clearance of the goods at Karachi Port. Unfortunately, despite clear direction of the Federal Finance Minister Ishaq Dar and Chief Minister Punjab Mian Shahbaz Sharif, the bureaucracy is creating troubles
for the businessmen who are the backbone of the economy.
The manufacturing sector is already passing through extremely
Yours Sincerely, Waqar Ahmad Mian, President Anjuman-e-Tajran Auto parts, Lahore
www.customstoday.com
10 PICTORIAL
JULY 01 - JULY 07, 2014
wealth Tax revival underlined to generate revenue
HAFIZABAD: Different segments of the society including local politicians, social and labour workers have demanded the revival of Wealth Tax to improve economic condition and withdrawal of different direct and indirect taxes on essential commodities to provide relief to the common man, groaning under the yoke of unbearable dearness. Labour leaders and small traders regretted that the PML-N government had disappointed the nation by imposing taxes of more than Rs300 billion on all essentials due to which prices of daily used items have been increased.
JeddAH: Federal Finance Minister, Senator Muhammad Ishaq Dar addresses the 39th meeting of Islamic Development Bank Board of Governors.
BAHAwALpUR: Federal Minister for Commerce, Engr. Khurram Dastgir Khan expressing his views regarding Vision 2040 at the Bahwalpur Economic Development Forum organized by Bahawalpur Chambers of Commerce and Industry.
RAwALpINdI: DG ANF Khalid Hanif addressing a press conference at ANF Office.
LAHORe: Lahore Tax Bar President Aysha Qazi presenting a shield to FBR Spokesperson Shahid Hussain Asad.
Runaway clearing agent among two arrested by DI&I over mis-declaration ISLAMABAD
CUSTOmS TOdAY RepORT www.customstoday.com
D
irectorate of Intelligence and Investigation-Customs, Rawalpindi has arrested two persons including the importer and the clearing agent for mis-declaration and tax evasion in share of customs duty on import of cloth at a large scale.
The customs clearing agent was at first able to escape from the office of the directorate. He was later arrested and handed over to the police. Enquiry is being underway to sort out how he escaped in the presence of the officials. In case of negligence or assistance of officials concerned, they will be dealt accordingly. As per details, mis-decla-
Customs intelligence oďŹƒcers held the representative of the customs clearing agency and registered an FIR
ration was made on consignments in container no. MAGU 5112121 to evade millions or rupees. When the customs intelligence officers received the information from the officials concerned, they initiated examinations. On thorough checking valuable cloth was found in large quantity. On this the customs intelligence officers held the representative of the
customs clearing agency and registered an FIR. During this period the clearing agent escaped. Customs authorities have forwarded the case to the court. The court has accepted bail before arrest for one of the persons arrested. After the incident security of the office of the Directorate of Intelligence and Investigation-Customs, Rawalpindi has been beefed up.
www.customstoday.com
CARTOONS SPECIAL 11
JULY 01 - JULY 07, 2014
Slash in ST to boost tractors’ sales
KARACHI: With the reduction in General Sales Tax (GST) back to 10% in budget 2015, tractor industry sales are expected to rebound over the next year. AKD Securities, a brokerage house, predicted that the sales of Millat tractors in fiscal year 2015 might touch 32,000 units while the Al-Ghazi tractors sales may reach 25,000 in 2015. The government had reduced GST on tractors from 16% to 10% in the federal budget.
Customs confiscates generators worth Rs80m from twin cities ISLAMABAD
CUSTOmS TOdAY RepORT www.customstoday.com
irectorate of Intelligence and InvestigationCustoms, Rawalpindi has confiscated smuggled heavy duty power generators for industrial use in two raids. The raids were carried out under the leadership of Deputy Director Dr Muhammad Nasir Khan at two warehouses near Tarnol and Sector I-10 in Islamabad. The power generators were estimated to be worth Rs 80 million. Enquiry has been launched against the persons responsible. The duties/taxes on the same power generators in case of legal import were supposed to be levied at over Rs 15 million. Directorate of Intelligence and Investigation-Customs, Rawalpindi received secret information from its sources that heavy duty power generators for industrial use were being brought into two warehouses near Tarnol on which there had not been
D
paid any duties/taxes. On the directives of Additional Director of the Directorate of Intelligence and Investigation-Customs, Rawalpindi, Deputy Director Dr M Nasir launched investigation into the matter. After confirmation of the information, he obtained the search warrants of the warehouses by the local magistrate and with the help of police department raided the warehouses along with his team. In the
said raid, eight power generators worth Rs 35-40 million were impounded. The power generators ranged from 250 to 365 megawatts. On approach of the customs intelligence team, the staff at the warehouses fled. Therefore, no arrest could be made. In the second incident, the customs intelligence team raided industrial area in Sector I-10 of the federal capital and seized generators worth Rs 40 million.
DGI&I issues warning letters to 2 customs intelligence officers irectorate General of Intelligence and Investigation-Customs has issued departmental warnings to two customs intelligence officers while expressing serious concerns regarding the performance of their official duties and declaring them guilty of negligence. According to sources, Deputy Director Headquarters Muhammad Asif has issued written warnings to customs intelligence officers Abdul Majeed and Zulfiqar Ali. The warning letters state that they have been found disobeying departmental discipline and rules and regulations. They have demonstrated negligence and incompetence in carrying out their duties, the letter adds. The officers had been asked to provide reasoning in written to convince the high ups in regards to their behaviour earlier which was pronounced non-satisfactory. Furthermore it was stated that they were provided with 100 per cent allowance equal to their salaries so that they would show better performance. Despite the efforts, the said officers failed to come up to the expectations of the department, it added. The warning letters state that their allowances have been discontinued; however, they are being given chance. If the two officers fail to show responsibility in carrying out their official duties and better performance in the future, their special allowances will be discontinued. They may face disciplinary action by the department, the letter states.
D
www.customstoday.com
12
JULY 01 - JULY 07, 2014
Regional economic prosperity to bring about peace: dar
ISLAMABAD: Finance Minister Ishaq Dar has said that Pakistan wants to promote regional peace and security by enhancing economic relations with its neighbours. Talking to Afghan Finance Minister Dr Omar Zakhilwal on the sidelines of 39th Annual Board of Governors Meeting of Islamic Development Bank in Jeddah, Dar discussed progress on various issues of common interest between the two countries. Adviser to Afghan Ministry of Finance Attaur Rehman Durrani and Aid Coordination Specialist Frough Kaifer accompanied the Afghan finance minister.
Under-invoicing costing kitty dear Rs150b ANNUAL LOSS
This study examines trade between Pakistan and the UAE from 2005 to 2012
ISLAMABAD
CUSTOmS TOdAY RepORT www.customstoday.com
P
akistan has been losing more than Rs150 billion due to under-invoicing in imported goods. This is part of the Rs600 billion lost each year due to tax evasion (smuggling), and misuse of concessionary duties. Even though smuggling and leakages under the Afghan Transit Trade (ATT) are frequently cited as major concerns by industry, under-invoiced and mis-declared imports, especially from the UAE are considered to be worse since they have an advantage of formal customs clearance documents that allows them to feed into the formal economy. In addition to the industry’s concerns, the government loses revenue owing to reduced duty, sales tax and income tax collections at the import stage. This study examines trade between Pakistan and the UAE from 2005 to 2012 and looks at import prices when Pakistan imports from UAE as oppose to when the same product is imported from other countries. Large difference between UAE and world prices from one year to another without any plausible explanation or a subsequent increase in demand would appear to indicate discrepancy in valuations at customs. Such discrepancy in prices are seen in sectors such as machinery and electronic equipment, dyes and other chemical agents, plastics, products of base metals such as iron and steel, and parts of vehicles.
No direct correlation between prices and market share was found along products that showed difference between the UAE and world prices. Many products reported UAVs prices to be vastly lower than world prices but this did not form a greater demand for UAE’s products. This is likely due to mis-declaration of imports However, inferences from this study suggest that the impact of such invoice discrepancies in imports from the UAE are in many cases difPicult to ascertain and may even be exaggerated. 1) A major chunk of imports from the LAB during the period under review belonged to petroleum fuel and oils (89pc in 2012). If we only consider the remaining product imports, imports from the LAB constitute a mere 3pc of Pakistan’s imports from the world in 2012. This is down from 5pc in 2006. The current nonpetroleum import value from the UAE is roughly $ 0.77 billion. Of these imports, only 9% of the product imports- as reviewed under this study-
indicated any signiPicant price discrepancies. As such any loss of revenue in taxes and duties at these values would be insigniPicant. 2) Valuation differentials as high as $240,000 per ton have been observed along some product lines. However, many such products with large price differentials between UAE and world prices do not appear to translate into major and consistently high market shares for UAE imports. Some examples include food preparations, iron and steel products, hormones, medicaments, dirigibles and parts. Given the small quantities imported from the UAE, one may conclude that even if large price differential indicate any discrepancy in invoicing, they have little or no impact on the total revenue of the government given their low market shares or the quantum of import values. Given the low volume of imports from the UAE and only a small
portion of those imports showing distortion in price valuations, the adverse impact of these discrepancies is nominal. More so if compared to the reported losses in revenue that Pakistan has suffered from exemption of duties under the Pakistan China PTA ($ 0.23 billion in 2012) or under the Afghan Transit ‘Trade (estimated to be $2.5 billion). In addition, China’s share in Pakistan’s nonpetroleum imports nearly doubled to 24pc from 13pc between 2006 and 2012 after the implementation of the Pakistan China FTA in 2007. Trade diversion toward China may also have resulted in reduced share of UAE in Pakistan’s non-petroleum imports. This is likely to continue in the future given the growing emphasis on regional trade and the developing Pakistan China ties.
Valuation differentials as high as $240,000 per ton have been observed along some product lines
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