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PAkISTAn’S fIRST InDEPTh nEwSPAPER On CUSTOMS

vol 2 Issue no. 17

karachi, Tue May 13 - Mon May 19, 2014

weekly

PREvEnTIng hARAM IMPORT

Government is drafting a law to restrict import of Haram edible ingredients into Pakistan which shall be promulgated within the current year, says Dastgir. | SEE PAgE 05 |

Regd. no, MC-1381

Price Rs. 50.00

25-30pc ShORTfAll

Unfair valuation guidelines inflict huge revenue loss Importers were completely left out of the process of issuing of the valuation guidelines. This speaks volumes about neglecting the taxpayers’ importance while deciding such core issues related to them

ExPAnDIng PnSC AMBIT KARACHI

CUSTOMS TODAY REPORT www.customstoday.com

The number of oil tankers has been raised to 5 and the corporation is planning to buy 15 more this year, says Karan Michael. | SEE PAgE 03 | SIgnIfYIng gwADAR

Gwadar port enjoys an unrivalled position among all the regional ports and is set to even surpass if developed properly, Senator Bizenjo. | SEE PAgE 06 | RElIEvIng IMPORTERS

Around70to80percentofthecases intheCustomsareofgenuine importerswhowillsoonbeprovided relief,saysDirectorCustoms IntelligenceAsifMarghoob. | SEE PAgE 02 |

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ustoms Collectorates in Karachi have recorded a steep shortfall of 25-30 percent in revenue collection in the month of April mainly due to imposition of unfair valuation guidelines at ports of the city. These guidelines were issued and implemented unilaterally by the collectorates without taking the stakeholders into conNidence. Importers were completely left out of the process of issuing of the valuation guidelines.

This speaks volumes about neglecting the taxpayers’ importance while deciding such core issues related to them.

Initially chambers and even political parties like MQM raised their voice against abrupt issuance of valuation guidelines without giving proper opportunity to the stakeholders to present their recommendations. But when there was no one to pay heed to the issue, these voices got suppressed over the time.

The importers were left at the mercy of the courts.

On April 7, President of the Karachi Chamber of Commerce and Industry (KCCI), Abdullah Zaki, while expressing deep concerns over valuation guidelines on imported goods, said that the trade and industry rejects these unjust guidelines as such malpractices are being implemented with a view to harass the importers. He pointed out that importers are kept uninformed about the changes in valuation guidelines and due to fears of escalating demurrage/detention charges, the importers Nind no other

option but to immediately clear the imported goods according to the value mentioned in valuation guidelines. The helplessness of these importers, who clear goods under valuation guidelines, is later on used as evidence by customs ofNicials to convince others.

MQM’s Abdul Rasheed Godil while talking exclusively to Customs Today expressed his deep concern over discriminatory and unjustiNied 96-items valuation guideline on imported consignments at Karachi ports. He said that corruption and smuggling activities increased due to these guidelines and national exchequer suffered huge revenue losses.

The Constitution of Pakistan does not allow any citizen to be condemned without hearing. But the process of issuing 'valuation guidelines' does not have any provision where the stakeholders are heard, nor is there any provision of review/appeal so that the aggrieved

The Constitution does not allow any citizen to be condemned without hearing. But the process of issuing 'valuation guidelines' does not have any provision where the stakeholders are heard party may be heard at least after any unjustiNied valuation guidelines.

Appeal is also a fundamental right under the Constitution which a businessman is denied here. Hence,

at the time when the collectorates did not listen to the stakeholders, they were left with no option but to press their fundamental constitutional rights in the court of law.

See page 04

02

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KARACHI

MAY 13 - MAY 19, 2014

Used vehicles import: Up to 50pc duty cut in the offing

ISLAMABAD: Federal government is considering reduction of customs duty on used imported vehicles from 10-59 percent. However, the auto manufacturers have reacted to this strongly. The reduction in customs duty may be granted on vehicles that are 800-1800 cc. A new tariff regime may be introduced on vehicles below 800 cc. However, the ban on vehicles more than three years old is most likely to be maintained. Government seems to break down the monopoly of the indigenous auto manufacturing sector.

Bajwa expresses concern over shortfall in duty collection BR ChairmanTariq Bajwa in his visit to Customs House, Karachi has held meetings with the high officials of Model Customs Collectorate (MCC) of Appraisement-East, MCC of AppraisementWest, MCC of Port Muhammad Bin Qasim and MCC of Preventive.

Sources in FBR Secretariat informed CustomsToday that the Collectors of all four collectorates Najeeb-ur-Rehman Abbasi, Muhammad Saleem, Dr Owais Jawwad Agha, Syed MuhammadTariq Huda, Additional Collectors, Deputy Collectors and Assistant Collectors were present on the occasion. During the meeting, FBR ChairmanTariq Bajwa expressed his deep concerns over the continuous shortfall in revenue collections, particularly the customs duty by all three collectorates.

On the occasion, Bajwa asked the customs officers to keep vigilant eye on mis-declaration, under-invoicing and tax evasion cases in order to increase the customs duty. He further asked the officers of MCC-Preventive to make the AntiSmuggling Organization more effective with a view to curb smuggling bids and to increase the revenue. During the meeting, Bajwa expressed his satisfaction over the recovery in oil section and urged the MCCPreventive officers to enhance the recovery further. —CT Report

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Vehicles clearance scam: Committee yet to reach conclusion he three member fact-finding committee formed on probing the scam of revenue shortfall of Rs 450 million in share of surcharge on the clearance of around 1900 vehicles has not yet reached its conclusions after passing the deadline set by Federal Board of Revenue in connection with compilation of report.

FBR had formed a three member committee in mid April comprising of Model Customs Collectorate of Exports CollectorWasif Memon (who led the committee), Directorate General of Customs Intelligence and Investigation Additional Director KhalilYousfani and Additional Collector Khalid Jamal of Audit Collectorate.The committee was given a deadline of April 30 to complete its probe into the said incident and reach the conclusion.

Sources informed CustomsToday that the said committee requires another week to conclude its final probe into the matter of revenue shortfall of Rs 450 million in share of surcharge on the import of 1900 vehicle.They further confirmed this scribe that the committee had convened only two meetings during the stipulated time, which produced no result in this regard.

Despite several attempts to contact Collector of MCC Exports, DrWasif Memon in order to obtain information over the current status of the probe, he was not available for comments. —CT Report

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April 2014: MCC Appraisement-East records shortfall of Rs6.95b KARACHI

SOhAIl RAB khAn www.customstoday.com

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odel Customs Collectorate of AppraisementEast has lagged behind its revenue collection target set by the Federal Board of Revenue for the month of April, 2014.

According to the sources, the FBR had set a revenue target of Rs 20,036.92 million for the month of April, 2014 for MCC AppraisementEast in share of customs duty, sales tax, withholding tax and federal excise duty altogether. However, it has collected total revenue of Rs 13,085.16 million with a shortfall of Rs 6,951.76 million.

Sources told Customs Today that the MCC Appraisement-East has collected Rs 3,673.14 million in share of customs duty against the set target of Rs 5,997.46 with a shortfall of Rs 2,324.32 million.

The collectorate has collected Rs 7,328.36 million in share of sales tax against the target of Rs 9,828.56 million with a shortfall of Rs 2,500.2 million.

MCC Appraisement-East has collected an amount of Rs 1,957.25 million in share of withholding tax against the target of Rs 4,151.5 million with a shortfall of Rs 2,194.25 million. The collectorate has collected a sum of revenue of Rs 59.4 million in share of federal excise duty against the set target of Rs 126.42 million with the difference of Rs 67.02 million.

It is pertinent to mention here that the MCC Appraisement-East has a history of collecting huge revenue in the past as during the fiscal year 2013-14. Sources informed this scribe that the major reason for shortfall in revenue collection was a massive decline in imports at Karachi port.

MCCAppraisement-west collectsRs15,680minApril,missestarget odel Customs Collectorate of Appraisement-West has managed to collect Rs 15,680 million for the month of April, 2014 in share of different heads including customs duty, sales tax, income tax and federal excise duty (FED).

According to sources, FBR had set a revenue target of Rs 20,920.74 millions for the month of April, 2014 for MCC Appraisement-West. However, it has had shortfall of Rs 5,240.74 million.

Sources told Customs Today that the collectorate has collected Rs 5,703 million in

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share of customs duty against the set target of Rs 8996.2 million with a shortfall of Rs 3,293.2 million.

MCC Appraisement-West has collected Rs 7078 million in share of sales tax and additional sales tax against the target of Rs 7,722.44 million with a shortfall of Rs 644.44 million.

The collectorate has collected an amount of Rs 2,785 million in share of income tax against the target of Rs 4,151.5 million with a shortfall of Rs 1,366.5 million.

However, in share of federal excise duty

Model Customs Collectorate of AppraisementWest has collected a sum of revenue of Rs 114 million against the set target of Rs 50.6 million with a surplus collection of Rs 63.4 million.

Sources told Customs Today that FBR Chairman owing to continuous shortfall in achieving the revenue targets had recently visited Customs House and asked the officers of Pakistan Customs to ensure proper check on tax evasion, mis-declaration and underinvoicing in order to increase revenue collection and attain the targets.

DirectorCustomsIntelligencevowstoproviderelieftogenuineimporters KARACHI

CUSTOMS TODAY REPORT www.customstoday.com

esponding to Karachi Chamber’s demands, Asif Marghoob Siddiqui, Director Intelligence & Investigation Customs, Federal Board of Revenue (FBR) announced that Additional Director Customs Karachi, KhalilYousfani will act as a focal person who will be responsible for resolving various issues being faced by importers and exporters in dealing with Directorate General of Intelligence & Investigation.

Talking to KCCI office-bearers and Managing Committee members during his visit to KCCI, Asif Marghoob further asked KCCI to nominate five representatives of KCCI as well in order to ensure effective coordination between the Directorate and

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KCCI. President KCCI, Abdullah Zaki, SeniorVice President KCCI, Muffasar A. Malik,Vice President KCCI, Muhammad Idrees and KCCI Managing Committee members were present at the meeting.

He admitted that around 70 to 80 percent of the cases in the Customs were of genuine importers who will soon be provided relief. In this regard, he assured to timely resolve a number of pending cases whereas priority will be given to KCCI’s recommendations.

Abdullah Zaki, President KCCI, while welcoming Director Intelligence & Investigation Customs, informed that movement of imports and goods via transportation within the city was constantly being disturbed by Directorate, resulting in intensifying the hardships of importers who are being harassed while Goods Declaration (GD) was totally being ignored at all levels.

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LAHORE 03

MAY 13 - MAY 19, 2014

fBR auditing Rahat fateh Ali khan’s accounts

LAHORE: FBR RTO-I has started auditing renowned singer Rahat Fateh Ali Khan’s accounts to examine his expenses against his income from his concerts. The singer has paid 5.6 million taxes in three years from 2010 to 2013 while he usually charges as many millions for one concert. The singer has landed into tax scandal crisis for the third time. Earlier, in the previous years, Rahat Fateh Ali Khan expressed his complete ignorance on Pakistan’s tax laws.

odel Customs Collectorate of Port Muhammad Bin Qasim has collected an amount of Rs 20, 255.49 million in the month of April, 2014 against the target of Rs 30,719 million, set by the Federal Board of Revenue in share of customs duty, sales tax, federal excise duty and income tax.

MCC Port Qasim has collected an amount of Rs 4,170.16 million in share of customs duty against the target of Rs 7,709 million with a shortfall of Rs 3,539.16 million.

The Collectorate has collected revenue of Rs 13,643.37 million in share of sales tax against the set target of Rs 19,700 million with a shortfall of Rs 6,056.63 million.

The Collectorate has managed to collect revenue of Rs 2,221.45 million in share of income tax against the target of Rs 3,090 million with a shortfall of Rs 868.55 million.

However, MCC Port Qasim has collected a sum of Rs 220.5 million in share of federal excise duty against the target of Rs 220 millions with an increase of Rs 0.5 million. —CT Report

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Customs special judge sends six to judicial lock up LAHORE

CUSTOMS TODAY REPORT www.customstoday.com

pecial Judge of Customs Tanveer Akbar has accused six of evading customs duty worth millions of rupees on import of betel leaves while sending them to judicial lock up.

The Customs Investigation and Prosecution Department had arrested the accused on three days remand for recovery of taxes and documents.

Earlier, the customs authorities produced the accused before the Customs Special Judge for extended remand. However, the court sent the accused into judicial lock up for three days.

The six accused taken into custody by customs officials included Ijaz Golati, Amir Yousaf, Saeed Khalid Ali, Fasial Zahoor and two others.

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PnSC sets to regain lost glory • PNSC earned $56 million from trade with PSO • Corporation’s profit till December 31, 2013 recorded at $1.6b • Govt planning to link Pakistani ports with to China, Central Asia through road network LAHORE

CUSTOMS TODAY REPORT www.customstoday.com

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eeping view of international sea transportation Pakistan can become the hub of all trade activities and transportation of goods from Eastern Europe and Central Asia to rest of the world. It is an unfortunate truth that successive governments paid no heed to exploit natural location of the country by developing its shipping industry and related infrastructure.

This was stated by Federal Minister for Ports & Shipping Kamran Michael here at a ceremony.

Kamran Michael said that now the present government had been busy evolving a revolutionary plan to link hot water Pakistani ports to China and Central Asia through grand network of roads. He claimed that development of shipping industry in the country was one of the most important priorities of the government.

He regretted that there was time in the past when Pakistan National Shipping Corporation (PNSC) was leading in South Asia. But with time the corporation lost its efNiciency and when I took the charge, the corporation had only three oil tankers and seven ships. That could barely fulNill the requirement of Pakistani imports and exports, he added. He said that the PNSC had to take ships on lease to meet its requirements costing millions of Dollars. With the unceasing efforts of our ministry the situation is getting better. The number of oil tankers has been raised to 5 and the corporation is planning to buy 15 more during current year.

The work on dredging and construction of new channels is also in process.

Kamran Michael said that during last month alone collaborative trade of PNSC with PSO has earned 56 million dollars.

— Exclusive Customs Today photo

April 2014: MCC Port Qasim collects Rs20.2b, shortfall remains Rs10.4b

Whereas the net proNit of the corporation as of December 31, 2013 was about $1.6 billion, the Minister claimed.

He said that as for the future of the PNSC was all set to play its due role in accumulating direly needed Ninancial resources for the country. “To enhance our business and number of our worthy clients we have established liaison with Sri Lanka, with the help and support of Sri Lankan High Commissioner in Pakistan.

At this juncture I feel proud in announcing that now Sri Lanka will do all her sea trade using Pakistani ships and oil tankers. This agreement on one hand will help PNSC to pay the lease of oil tankers and on the other hand generate more revenue.”

As regards improvement of shipping

Chinese and Korean investors are interested in investments on various projects related to ports and shipping

facilities in Pakistan is concerned, best facilities will be available to container ships after completion of the deep water port project, within next two years. In addition to that, Eastern zone of Port Qasim would start functioning very soon. The government has already started work on different projects for provision of international standard facilities at all sea ports of the country and in coming days those ports would play a role of “economic gateway of Pakistan”.

The federal minister said that a German company has showed interest in construction of iron and coal berths at a cost of $40 million while Chinese and Korean investors have also shown keen interest in investments on various projects related to ports and shipping.

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04 NATIONAL

MAY 13 - MAY 19, 2014

Alleged currency smuggler sent on 2 day remand

LAHORE: Customs Investigation and Prosecution Department has obtained two day remand of an accused allegedly involved in smuggling of foreign currency. Special Judge Customs Tanveer Akbar has sent accused Imran on remand, who was arrested by customs authorities for allegedly smuggling foreign currency over Rs 20 million.

IBM at Pak-Afghan border

AC Musakhel alarms FBR of rise in smuggling activities ssistant Commissioner of Musakhel through a letter has informed FBR Chairman, Member Customs and other high authorities of Pakistan Customs about the rising incidents of smuggling of Iranian diesel/petrol, arms and ammunition and other contrabands from Musakhel to other parts of the country.

In a letter, Assistant Commissioner disclosed that the smuggling of aforementioned contrabands was on the rise, while causing loss of billions of rupees to the national exchequer. He further revealed that the officials of Law Enforcing Agencies (LEAs) were also involved and patronizing the smugglers in their illegal activities.“The smuggled contrabands are being brought to Musakhel in Punjab and then moved to other parts of the country with the collusion of law enforcement officials,” he stated.

Furthermore, Assistant Commissioner sought effective and result oriented efforts from FBR authorities on war-footings in order to curb the illegal activities and to save the loss of billions of rupees to national exchequer. —CT Report

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Auction schedule announced for May odel Customs Collectorate of Appraisement-West has announced the auction schedule for the month of May following the directives of the Collector MCC Appraisement-West, Muhammad Saleem.

The auction of different commodities including confiscated vehicles, alloy rims, aluminium grills, plastic, motorcycles, electronic appliances and others items would be conducted at West Wharf, Karachi International Container Terminal (KICT), AlHamd International Container Terminal (AICT) and Burma Oil Mills Limited (BOML)Container Freight Station. The auction at West Wharf has been conducted from May 2-6, while the auction of remaining commodities would be held from May 2022. The auction at KICT would be conducted on May 13 and from May 23-28. Another auction would be held at AICT Bonded (Warehouse) from May 29-30.

An auction at BOML-CFS would be conducted from May 16-19. Deputy Collector Auction Naveed Iqbal will supervise the entire procedure of auctions. —CT Report

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lack of funds hampering scanners installation

ISLAMABAD

CUSTOMS TODAY REPORT www.customstoday.com

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ack of requisite financial resources and multifarious challenges being confronted by the Federal Board of Revenue have been hampering the installation of scanners at all exit/entry points on Pak-Afghan border under Integrated Border Management (IBM).

As per details, the FBR has been finding it hard to materialize the project of scanners installation as each scanner costs more than Rs40 million.

Although some quarters are describing the delay as indifference and apathy on part of the FBR, lack of financial resources is the main cause that has been restraining the board’s efforts to go all-out for executing the project.

Moreover, the FBR has reportedly for-

There are no scanners at Chaman and Torkham to monitor nato reverse cargoe

warded a summary to the higher authorities for special allocation for the project.

It is to be recalled that FBR Chairman Tariq Bajwa had assured the Supreme Court of installing scanners at all exit/entry points of Pak-Afghan border under IBM to monitor reverse Nato/ISAF military cargoes. In view of the US-led Nato forces drawdown by the end 2014, the apex court had directed the installation of scanners on the Pak-Afghan border points to avert the possibility of military equipment and gadgets falling into the hands of militants.

Currently, there are no scanners at Chaman and Torkham to monitor Nato/Isaf reverse cargoes despite the fact that both these border checkpoints are the most volatile areas.

The customs officials posted there are at high risk as they cannot go out from the Collectorate without security convoy. However, the FBR has been striving hard for effective vigilance of inward and outward movement of cargoes and making available a foolproof security system.

ISLAMABAD

CUSTOMS TODAY REPORT

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ederal Board of Revenue OfNicial Spokesperson Shahid Hussai Asad has said that FBR will reinforce its collection mechanisms as it is taking special measures to meet target of 2,345 billion rupees.

A source quoted Asad, who is also Member Inland Revenue, as saying that the government has decided not to put extra burden on masses through increasing sales tax in upcoming budget.

Shahid Hussain Asad said that the rate of sales tax will remain 17 per cent in the budget 2014-15. He said that instead of increase in sales tax FBR will reinforce its col-

— Exclusive Customs Today photo

BR has eliminated sales tax, customs duty and withholding tax on the import of potatoes while imposing 25 per cent regulatory duty on its export during the three months ending July 2014.The FBR has issued four notifications in this regard in line with the decision of the Economic Co-ordination Committee (ECC) of the Cabinet. Earlier there was 17 per cent sales tax, 5 per cent withholding tax and customs duty on the import of potatoes. Exemption is applicable on import of potatoes to limit of 200,000 tonnes during this period. —CT Report

from page 01 his has also given opportunity to lower customs staff to blackmail the importers that if their personal demands are not fulfilled, they send recommendations to their high-ups for issuing valuation guidelines. Since importers are not even called to give their viewpoints before such valuation guidelines, they are left with only two options: succumb to the blackmailing of the lower customs staff or close down imports. Some may have chosen the first option while some the other.

With such high-handedness and negligence of the whole importers community, imports are continuously on the decline and these businessmen are shifting their investments elsewhere.

Hence revenues fell down to around 2530% at Appraisement Collectorates (East & West), Karachi.

FBR must take notice of the situation at least now and take corrective measures to facilitate the business community and end their grievances regarding one-sided valuation guidelines. Valuation guidelines carry no legal status as these are issued on blank paper without signatures of any high ups. Also there is no provision regarding valuation guidelines in the Customs Act. Business community requires respect, good environment and protection against unilateral change in policies. FBR may not be realizing this grave situation as they are sitting on the other side of the fence. But if revenue targets are to be achieved, Revenue Authorities and business community have to be on same page. If valuation guidelines were issued to boost revenues then the answer has already come with the steep shortfall in revenue, proving their unworthiness as well as illegality.

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FBR taking special measures to meet target: Shahid Asad www.customstoday.com

FBR allows duty free potatoes import

Unfair valuation guidelines inflict huge revenue loss

lection mechanisms. “FBR has taken special initiatives to meet 2,345 billion rupees target.”

Shahid Hussain rejected reports of imposing any emergency in FBR to achieve the target.

He expressed conNidence that FBR will recover the shortfall. The Member FBR said that the revenue body could not end 500 billion rupees tax exemptions due to several international agreements such as Preferential Trade Agreements (PTAs) with different countries.

He said, under IMF package, FBR would not end these exemptions with single stroke of pen. Instead the exemption will be excluded in near future gradually. He said that some of tax exemptions would be weaned off gradually in next three years.

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NATIONAL

MAY 13 - MAY 19, 2014

05

Thai Customs rescues 225 turtles at airport

BANGKOK: Thai Customs at Suvarnabhumi airport have rescued 225 live spotted pond turtles from four unclaimed luggage bags. It was later revealed that they were smuggled in. The turtles were handed over to the airport's wildlife quarantine station. Many Thais buy turtles as rare pets or for good luck, as turtles and tortoises are widely associated with long life. A big spotted pond specimen can fetch up to a thousand dollar.

ellular companies including Digicom (QMobile) and Allied Electronics have taken stay-order from Sindh High Court in a case against Federal Board of Revenue, pertaining to increase 3 per centValue Added Tax (VAT) on import of cellular phones, it is learnt here.

Sources informed Customs Today that the cellular companies are of the view that they are already paying 17 per cent sales tax and not in the favour to pay 3 per cent VAT on import of cellular phones. It is pertinent to mention here that the cellular companies have already challenged the SRO280/2013 in Islamabad High Court and adopted the view point that FBR after introduction of 18th amendment was not authorized to issue any SRO without the consent of Prime Minister of Pakistan.

However, SRO280/2013 permitted that the Head of Department/Ministry can issue any SRO, as the 18th amendment delegates the power to ministry concerned to issue SRO. Later, Islamabad High Court rejected Petition No.2340/2013, filed by the cellular companies, and ordered them to deposit fixed duty costing Rs 1,026 million into national exchequer, on which Pakistan Customs enchased the bank guarantees and pay-orders of the cellular companies. —CT Report

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Nato vehicles airlifting operation begins he first flight of commercial multimodal operation from Jinnah International Airport (JIAP) Karachi carrying 15 military vehicles onboard took off for Bagram Air Base.

The transportation by air has been allowed to airlift vehicles meant for Afghan National Security Forces (ANSF) as special gesture by the Pakistan Government. The vehicles are of vital importance and urgently required by the ANSF. Defence Secretary Lt-Gen (r) Asif Yasin Malik witnessed the launching of the operation. —CT Report

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govt to get strict on illegitimate edibles: Dastgir ence and Technology will be taking lead under the new law.

CUSTOMS TODAY REPORT He further stated that Pakistan www.customstoday.com Quality Standards have already set up a laboratory for the purpose and guidelines about Halal food have been published keeping in view the ederal Commerce Khurram OIC guidelines.

Dastgir has told the National Meanwhile, Dastgir told an enAssembly that the govern- voys conference that they should ment is drafting a law to restrict im- enhance their efforts for carving out port of Haram edible ingredients an enviable position for the country into Pakistan which shall be prom- in the regional and global markets. ulgated within the current year.

To further foster economic While addressing the Parliaand trade relations with the Isment the minister said the lamic countries, the process for Ministry of Science and Pakistan-GCC Free Trade AgreeTechnology, Minment was initiated. istry of National Progress on the Food and Secustalled FTA negority and Mintiations could istry of create a level Commerce playing Nield are jointly for our exc ra f t i n g porters, Our geographic proximity ‘Pakistan said the with energy and oil rich Halal minister.

Author“I would economies of Middle East ity Act urge the and gulf region has 2014’ to envoys opened up many new bar the to more import of actively economic avenues Haram initiate eatable inand supgredients. port endeavThrough ours for expanthe act customs sion of trade in ofNicials will be emthe Middle East. Topowered to stop such gether, we can overcome import. It was the mandate of challenges and convert chalFood Ministry to check the import lenges into opportunities,” said of Haram edible items and assured Dastgir. He said Pakistan is ideally the House to ban such import im- placed among regions and countries mediately where Haram ingredi- stretching across Middle East, South ents are found.

Asia, Central Asia and China.

“It is our social and religious ob“Our geographic proximity with ligation," said Khurram Dastgir. He energy and oil rich economies of said the new law will be more spe- Middle East and Gulf region has ciNic with regard to dispensation of opened up many new economic avresponsibilities and Ministry of Sci- enues in diverse sectors of econISLAMABAD

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— Exclusive Customs Today photo

FBRsticksto3pcVAT: QMobilegetsstayorder

omy including export of merchandise goods, services, investments in energy, industry and infrastructure,” he added.

Growth in trade and investment, he said, is crucial for Pakistan at this juncture. He said that the beneNits of Pakistan’s membership of regional initiatives and bilateral preferential agreements with China, Malaysia, Sri Lanka and Indonesia could also be beneNicial for other economies and adjoining regions.

He said Pakistan’s trade missions established in UAE, Saudi Arabia and Kuwait undertake regular activities for tapping the regional potential.

The volume of trade between Pakistan and Middle Eastern countries during the year 2012-13 was recorded at $31.47 billion, he said, adding that Pakistan’s exports stood at $5.421 billion and imports from Middle East amounted to $26.05 billion.

Sindhrevenueemployeesstageprotest;policebatonchargeprotestors KARACHI

CUSTOMS TODAY REPORT www.customstoday.com

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ore than 1000 employees of All Sindh Revenue Employees Association staged protest demonstration in favour of their demands outside the Karachi Press Club.

The protestors presented their Charter of Demand which included equalised salary scale for Sindh revenue employees as that of employees of Sindh High Court; allotment of plots to the employees; release of over-time for the employees; restoration of sonquota for the employees; and restoration of magisterial powers for the employees.

A 4-member delegation of All Revenue Sindh Employees Association led by its Chairman Syed Sardar Ali Shah met with the Senior Minister Nisar Ali Khuhro at Chief Minister House for discussion.

The Sindh government refused to fulNill the demands of the associations. Ultimately the employees tried to march towards Chief Minister House for staging sit-in.

Later, the police ofNicials started baton-charge, tear gas shelling and use of water cannon for dispersing the protestors (employees). The police arrested dozens of protestors for violating law and order situation.

Later, the employees staged a sitin in front of the ofNice of Sindh Revenue Board in favour of their demands.

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SPECIALREPORT

MAY 13 - MAY 19, 2014

The project of gwadar-kashgar trade corridor should be executed on war footings as it would enhance importance of the port manifold ISLAMABAD

fAIZA ISRAR

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ember Senate Standing Committee on Port and Shipping Mir Hasil Khan Bizenjo expressed the hope that importance of Gwadar port will increase further with the establishment of Gwadar-Kashgar economic corridor.

Gwadar port enjoys an unrivalled position among all the regional ports and is set to even surpass if developed properly.

Sharing his thoughts with Customs Today during an exclusive interview here, Hasil Bizenjo pointed out that the present government still had four years and it could develop the port in a befitting manner.

“Gwadar port is set to bring about economic revolution not only in the area but the entire region and all out efforts should be made to materialise the dream,” the veteran Senator stressed.

He pointed out that there were some major issues that warranted contemplation and the government s h o u l d tackle them on priority basis to ensure tapping potential of Gwadar port, adding that Gwadar was a time-consuming and

gwadar port is set to bring about economic revolution not only in the area but the entire region

expensive venture and the government must ensure ample funds to derive benefits from the project for the provincial as well as national development.

He emphasised that the project of Gwadar-Kashgar trade corridor should be executed on war footings as it would enhance importance of the port manifold. Apart from the availability of a linkage, the proposed trade corridor will turn the port into a regional hub of trade and commerce and make it a gateway to the Central Asian states,” Senator Bizenjo argued.

He said that it appreciable that the government was working to develop two routes to Gwadar one from Gwadar to Turbat through Ratushera and from Panjgur to Nag and then again from Khusdan to Ratushera.

These projects will be completed in two years, headed.

The member Senate Committee on Ports and Shipping informed that though an MoU had been signed with China for the establishment of an oil refinery, the responsibility was solely of the Pakistani government to act wisely and accordingly to ensure the project.

About Balochistan, Senator Bizenjo clalimed that the province was getting more than its share under NFC award and royalty which definitely would go a long way in addressing backwardness and poverty in the province, adding that the federal government had also announced special posts from BPS 1 to 14 for people of Balochistan which was a positive step.

The member Senate Standing Committee on Port and Shipping

also expressed his concern that all the ports in Pakistan confronted with many problems due to apathy of the successive governments and strenuous efforts should be made to make available international standard facilities at these ports.

“By the way, it is of great significance for Pakistan to develop Gwadar port which will usher in a new era of prosperity not only for Balochistan but the entire country,” Senator Hasil Bizenjo concluded.

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MAY 13 - MAY 19, 2014

SPECIALREPORT 07

It is of great significance for Pakistan to develop Gwadar port which will usher in a new era of prosperity not only for Balochistan but the entire country

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08 EDITORIAL

MAY 13 - MAY 19, 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

what economic managers should do

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he budget preparation process has already been underway and main responsibility of generating revenue lies on the shoulders of the tax managers to come up with such proposal that ensures equitable distribution of burden in accordance with proportion of income earned by different sectors of the economy.

Instead of milking the same cow and burdening the existing taxpayers further, FBR is supposed to find ways and means to generate the desired tax revenues in accordance with increasing fiscal requirements of the country. At the moment, the registered taxpayers are already burdened enough with the existing tax rates. So this time the government should reduce the tax rate but ensure that non filers should be brought into the system by taking punitive actions in the budget 2014-15.

For undertaking important development projects in the country such as constructing motorways from Lahore to Karachi, Metro Buses in different cities, building Dasu and Basha dams and many others, Pakistan requires multi-billion dollars investments over next five to ten years in order to meet its infrastructure requirements.

Without mobilizing tax revenues, the Federal Government cannot overcome its shortage for infrastructure development funds.

Former federal minister and renowned economist Dr Hafeez A Pasha, while presenting a shadow budget this week in the federal capital, has asked the PML (N) led regime to eliminate Rs 200 billion exemptions in the upcoming budget.

The total cost of exemption and concessions were causing a loss of Rs 600 billion on annual basis.

There are over 12,000 concessionary Statutory Regulatory Orders (SROs) that need to be withdrawn.The main focus should be given to DirectTaxes in terms of abolishing Rs 100 billion tax exemptions being enjoyed by influential segments of the society.Withdrawing concessions for banking sector is also imperative.

Capital GainsTax (CGT) on transaction made in stock markets as well as in real estate of the country is important. Single digit sales tax rate in the upcoming budget is unbearable. It is contrary to the spirit of the value added tax in which the tax is deducted at every stage of value addition.

Government should not grant tax holiday like to Independent Power Producers as this exemption was causing loss of Rs 65 billion to the kitty yearly. In order to grant tax holiday to lure investment, the duration should not be more than 10 years. But there is need to take steps that bring non filers into the tax net. Out of 180 million population, there are less than 0.8 million return filers. Land transfers should be allowed to those who are return filers.

The owners of property above a minimum size should be brought into the tax net. As one punitive step, property owners who are required to file returns may not be allowed to sell or transfer their property if they are unable to present the last three years income tax returns at the time of registration of the transaction.

The future of SROs in light of int’l commitments ISLAMABAD

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he government has decided to implement key conditions related to revenue mobilization and energy sector during the upcoming budget 2014-15.

The country’s economic managers had made commitments with international lenders including the International Monetary Fund, World Bank and Asian Development Bank that Power sector subsidies would be granted in targeted manner and Benazir Income Support Program would be used as an instrument for providing cash transfer for paying electricity bills.

The prices of electricity will not go up in a major way during this summer season. Instead they will be increased substantially from October. From July 1, 2014, the prices of gas will be increased in order to ensure usage of this precious reserve in prudent manner.

The power sector subsidies consume at least Rs 350-500 billion per annum and without bringing reforms, the cash bleeding power sector can put the whole country’s economy at stake. There is need to undertake important reforms by appointing key ofNicials in distributing companies and other departments of the power sector purely on merit to turnaround the important power sector.

Another important condition is related to mobilization of tax revenues in the upcoming budget 2014-15. The revenue mobilization through removal of tax exemptions and withdrawal of concessionary SROs would be the forefront strategy of the government in the upcoming budget. How much the government implements its commitment is yet to be seen because there are various kinds of SROs. Some of them can really become revenue spinners others will not help generate revenue up to the desired mark.

Since the start of the IMF program, Pakistani authorities have issued a few Statutory Regulatory Orders (SROs) to

Revenue mobilization through removalof SROswould bethe forefront strategy ofthegovt inthe upcoming budget

address some implementation issues of already budgeted measures and address some legal concerns.

The budgetary implications of these SROs were negligible and costs were covered through administrative measures.

The authorities reaffirmed their commitment that in the future the SRO process granting tax exemptions and concessions will be eliminated. The authorities aim to finalize plans to reduce concessions and exemptions, including those granted through SROs. The ultimate objective of the exercise will be to increase 1 to 1.5 per cent of GDP over two years without increasing tax rates.

The authorities plan will include elimination of the first set of exemptions and concessions in the context of Budget 2014-15.

The consequent broadening of the tax base will generate much of the needed revenue increase, but it is also important to facilitate tax administration and to move toward a more equitable and competitive tax system.

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DI&I-Customs thwarts smuggling attempt

NOWSHERA: Directorate of Customs Intelligence and Investigation has thwarted an attempt to smuggle huge quantity of narcotics on Motorway while seizing the drugs. Superintendent Customs Intelligence Khwaja Iqbal said that acting on a tip-off, the customs intelligence officials signalled a truck to stop. On thorough search, 51 kg of hashish was recovered from the hidden cavities of the vehicle. However, the driver and the smugglers had abandoned the vehicle on the roadside and managed to flee the scene, the official informed.

Promotionofministerialstaffin doldrums;DPCneedsmoredetails he promotions of Pakistan Customs officials, below Grade15 are in doldrums, as the Departmental Promotion Committee (DPC) has not reached any conclusion during its meeting held on May7.

The sources informed CustomsToday that the DPC Chairman Dr Ifthikar Ahmed, Additional Collector-I of the MCCAppraisement (West) has asked the Establishment Branch, Revenue Division-FBR to produce the Annual Confidential Reports (ACRs) of the officials from their time of induction in the service of Pakistan Customs. Sources further informed that the DPC Chairman has asked the Establishment Branch as to under which law the ACRs of 5-year are mandatory for promotion of the officials.The other members of the committee including deputy collectors of MCC Appraisement-East, MCC of Exports, MCC of Preventive and MCC Port Qasim also agreed to the query raised by the chairman of DPC. Establishment Branch, Revenue Division has already submitted 3 to 5 years ACRs of 35 officials of Pakistan Customs, below Grade-15 on seniority-cum-fitness basis to DPC for promotion against 11 posts. —CT Report

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UnitedPanel,PakCustomsPanel finalizecandidatesforelections nited Panel has nominated Mateenullah for President of Preventive Service Officers Association, Abdul Ghaffar Khan as Vice President, Bashir A. Bhutto as General Secretary, Shahzad Wasti as Joint Secretary, Hafiz Khalid Mehmood as Treasurer. Qaisar Kamal Qureshi has been nominated for Treasurer, Preventive Services Club.

Pakistan Customs Panel has nominated Aurangzeb Shah for President of Preventive Service Officers Association, Mian Javed Iqbal as General Secretary, Muhammad Aleem as Vice President, S M Irfan Ali as Joint Secretary, Shahid Ahmed Khan as Treasurer Association. Nowsherwan Afzal has been nominated for Treasurer, Preventive Services Club. It is significant to mention here that the Kamil Hassan, Senior Preventive Officer (SPO) has already been elected unopposed for the post of Secretary Customs Preventive Services Club for the second time consecutively.

The polling on other posts would be held on May 15, 2014 at Customs House and Air Freight Unit (AFU) at Jinnah International Airport, Pakistan (JIAP). —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

Customs duty concession: fBR weighs up pros, cons of SROs ISLAMABAD

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BR has completed review of a number of concessionary SROs for amendment and revision to withdraw concessions in customs duty at the import stage in the new budget 2014-15.

The FBR has analysed the SROs on certain principles for review of customs concessions.

The customs related SROs have been considered by FBR for simpliNication/phasing out under the exercise in consultation with the relevant government department. Under the exercise, the FBR has analysed SRO 567(1)/2006; rationalisation of customs duty on Pathalic Anhydride (PA) industry; SRO 575(1)/2006; SRO 809(1)/2009; SRO 678(1)/2004; SRO 565(1)/2004; retaining entries under SRO 565(1)/2006; explanation to be added under SRO 565(1)/2006 and other proposals related to SRO 565(1)/2006.

The FBR's exercise has also analysed amendment to SRO 565(1)/2006 (S No 2) - change in description of components; amend to SRO 565(1)/2006 (S No 3) - change in description of manufactured goods; amend to SRO 565(1)/2006 (S No 4) - to exclude “FinType Evaporator” for the manufacture of refrigerators / visicoolers; amend to SRO 565(1)/2006 (S No 5) - to add “retarder / speed reducer without motor" for the manufacturing of semi-automatic washing machines; amend to SRO 565(1)/2006 (S No 6) - to incorporate detailed description of input materials used in the manufacturing of car air conditioners; amendment in SRO 565(I)/2006 (S No 9) -

change in description of manufactured goods; amend to SRO 565(1)/2006 (S No 20) - addition of raw material; amend to SRO 565(1)/2006 (S. No 64) - PVC manufacturing industry interpretation and application of SRO; amend to SRO 565(1)/2006 (S. No 74) - to add

The customs related SROs have been considered by fBR for simplification/phasing out under the exercise in consultation with the relevant government department

and correct certain entries; amendment in SRO 565(1)/2006 (S.No 88) - to delete CRC steel coils from welded steel pipes / tubes; amendment in SRO 565(1)/2006 - add special condition for the manufacturers of CRC steel coils from HRC steel coils (S.No 91); amendment in SRO 565(1)/2006 (S. No 106) - to delete locally manufactured raw materials.

The FBR has analysed SROs to encourage local manufacturing of automatic washing machines (new addition); local manufacturing of multipurpose engine above 36 hp (new addition); review of tariff structure on abrasive cloth sheet, belts/roll, sand paper, Nibre disc and bufNing paper manufacturing industry (new entry); duty tax exemption on local manufacturing of lead lamps (new entry); rectiNication of tariff anomaly faced by sodium laryl ether sulphate manufacturers (new entry); reduction in duty on import of inputs used for the manufacture of agricultural machinery & implements.

The FBR has also analysed amendment in SRO 655(1)/2006 - export of automotive components & assemblies; amendment in SRO 656(1)/2006 revision of minimum in-house facilities; amendment in SRO 656(1)/2006 - reduction in duty on tyres for vehicles of heading 87.01 under HS code 4011.2090 to 5%; amendment in SRO 499(1)/2009 imports vs local assembly of HEVS; amendment in SRO 693(1)/2006 & customs tariff to add the parts in respect of the new vehicles; amendment in SRO 693(1)/2006 & customs tariff - levy of additional duty on the import of localised parts / components of cars, motorcycles & tractors; amendment in SRO 693(1)/2006 and customs tariff - protection to locally manufactured road wheels; amendment in SRO 693(1)/2006 and customs tariff - re-classiNication of automotive whether strips (seals); amendment in customs tariff reclassiNication of air and fuel Nilters to cover all types of locally manufactured Nilters; amendment in customs tariff - rationalising tariff for pneumatic tyres of rubber; amendment in customs tariff and removing anomaly on unit of measurement and valuation-of auto parts; amendment in customs tariff.

Requestforrevisionofhighcustomsvalues To,

Ishaq Dar Honourable Finance Minister, Islamabad Respected Minister, With due reverence, I would like to draw your kind attention towards a serious matter pertaining to high duty/taxes on import of air-conditioners/split units, water dispensers, cell phones, computer accessories, laptops and other electronic appliances.

Sir, the smuggling of above-mentioned appliances is on the rise due to high customs tariff on the import of these electronic appliances.

Through this letter, I would like to inform you that the local assemblers of air-conditioners and split units are being beneNited by few ofNicers.

A particular maNia is patronizing the illegal means of trade which is continuously damaging the national exchequer and also affecting the import activities.

The recent revision in the Valuation Ruling of branded LED TVs is suitable and will deNinitely increase the legal import of branded LED TVs beneNitting the national exchequer.

The customs values of computer accessories and laptops should also be reviewed and the duty/taxes on import of those items should be Nixed at Rs1500.

I would also like to inform you that the guideline issue in clearance of consignments at Karachi Port has not yet been resolved and major difference persists in the clearance of consignments at Karachi Port and other dry ports, as high customs values have been imposed at Karachi Port.

I hope that you will take appropriate and effective measures in order to redress the aforementioned issues, as the import at Karachi is being badly affected by those high valued customs duty and taxes.

Yours sincerely, Muhammad Idrees, VP KCCI, Karachi

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MAY 13 - MAY 19, 2014

kyrgyzstan may delay joining Russia-led Customs Union

BISHKEK: Kyrgyzstan’s Prime Minister has announced his government’s intention to postpone his country’s entry into Customs Union led by Russia by one year. He added that the road map for Kyrgyzstan joining the Customs Union is not ready yet. It will finally be outlined by the Kyrgyz government in coming days and subjected to public debate. The PM said that once the road map is approved by the Kyrgyz people and adopted by the government, it will be sent for approval by the union's member states - Russia, Kazakhstan, and Belarus.

kARAChI: Pakistani Prime Minister Nawaz Sharif attends the groundbreaking ceremony of Port Qasim Coal Fired Power Project on May 6, 2014. The PM performed the groundbreaking of the first phase of coal-based power project of 1,320 megawatts at the Port Qasim.

Participantsof17thMidCareerManagementCoursevisitfBR group of 17th Mid Career Management Course visited FBR, headed by Acting Director General/Chief Instructor, National Institute of Management, Quetta Nazar Mohammad Kakar.

Ms. Riffat Shaheen Qazi, Member FATE, FBR, welcomed the visiting officers and briefly told them about the mandate, working and performance of FBR. She said FBR being the sole institution responsible for resource mobilization and revenue generation faced a difficult task of collecting tax revenue but the strenuous and dedicated efforts of the officers and workforce of FBR were helping broaden the tax net.

Shahid Hussain Asad, Member (Inland Revenue) Policy, FBR, while briefing the group of visiting officers currently attending Mid-Career Management Course (MCMC) at the National Institute of Management (NIM) Quetta said currently there are exemptions of around Rs. 500 billion which are planned to be withdrawn in phases during three years, starting from the next fiscal year which is also going to be a difficult year for those potential taxpayers who have not obtained NTN and also those who have an NTN but never file their returns.

Shahid Hussain Asad said FBR had formulated a strategy to go after the tax evaders by using information obtained from their transactions. —CT Report

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Indian customs seizes over 2.3 kg gold

NEW DELHI: Customs authorities in India have apprehended two passengers with smuggled gold worth Rs 6.1 million ($100,000) at Indra Gandhi International airport. Ever since raise of customs duty on gold import from 10-20 per cent, gold smuggling has seen exponential rise in India. Last year authorities across the country seized gold worth over Rs 5.65 billion. This is a five-fold increase over previous year’s official figures. Actual smuggling is estimated to be over 10-20 times higher.

Crackdown: 50 illegal petrol pumps demolished KARACHI

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he Inter-Agency Task Force (IATF) including the officers of Pakistan Customs (MCCPreventive), Commissioner House, Pakistan Rangers and Sindh police has demolished 18 more illegal petrol pumps on second day of the crackdown on the sale of smuggled Iranian petrol in different areas of city. The officers of InterAgency Task Force (IATF) have destroyed 50 petrol pumps in two days of the operation to control selling of smuggled Iranian petrol in different areas including Baldia, Manghopir, Orangi, Korangi, Malir and National Highway.

It is pertinent to mention here that the officials of Law Enforcing Agencies had destroyed 32 illegal petrol pumps on the first day of crackdown.

Pakistan Customs Spokesman Qamar Thalho said that the cases against the owners of those illegal petrol pumps have been registered and their arrest orders have also been issued by the competent authorities.“It is the biggest crackdown operation on the illegal petrol pumps in the history,” he added.

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CARTOONSSPCEIAL 11

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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