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Vol 1 issue no. 34
Karachi, Tue oct 08 - mon oct 14, 2013
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Regd. no, mC-1381
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REPlaCing SRo CulTuRE
We are not going to re-open the cases against the Order-in-Original issued to the Customs agents, but will give them an opportunity to file an appeal against the issuances of show-cause notices
$32.5m undER CSF KaraChi
Sohail Rab Khan www.customstoday.com
The country will receive an amount of rs32.5m by Oct 15 under Coalition Support Fund, says Finance Secy | SEE PagE 3 |
bRidging ThE gaP
We need to bridge the gap between Customs Dept and business community to get good results, says Collector Customs Junaid akram | SEE PagE 9 |
CaRToonS SPECial
| SEE PagE 11 |
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akistan Customs has devised a two-pronged strategy to generate additional revenue: hold auctions at regular intervals and pursue court cases for revenue recovery. The strategy is aimed at achieving the revenue target set by the Federal Board of Revenue (FBR) for Niscal year 2013-14. Collector Model Customs Collectorate (MCC) West Muhammad Saleem said this during an exclusive interview with Customs Today at his ofNice in Customs House, Karachi. Sharing the various methods for revenue generation, Collector Muhammad Saleem said that the customs department was going to streamline things after the division of PaCCs Collectorate into MCC-East and MCC-West on territorial basis. “We are going to expedite the revenue generation process by conducting two auctions in a month, adding that the said process will continue throughout the year”, he asserted. Responding to a query, Muhammad Saleem said that Pakistan Customs had to achieve the revenue target with an increase of 27 per cent as compared to the previous Niscal year and the ofNicials at all levels were trying hard to achieve the revenue target set by FBR for this Niscal year. The MCC-West Collector stated that Pakistan Customs was contributing a major share to the total revenue of the country, and its ofNicials were determined to facilitate importers, exporters and clearing agents. Answering another question, Saleem explained that at least six
months were required to determine the means to generate revenue and go into the reasons for increase and shortfall in revenue recovery. “The ofNicials are working hard to achieve the designated targets on quarterly basis as well as yearly basis”, he added. He maintained, “The ofNicials of Pakistan Customs have clear directives from their high-ups including FBR Chairman Tariq Bajwa, Member Customs Nisar Muhammad Khan and Federal Finance Minister Ishaq Dar to improve the performance and keep a vigilant eye on tax evasion, under-invoicing and decide issues on merit.” Collector MCC-West Muhammad Saleem said that it had been decided in discussions with the delegation of Karachi Customs Agents Association that the show-cause notices issued against them in Afghan Transit Trade (ATT) scam would be decided on merit after hearing the views of each and every Customs agent. “We are not going to re-open the cases against the Order-inOriginal issued to the Customs agents, but will give them an opportunity to Nile an appeal against the issuance of show-cause notices”, Collector MCC-West declared. — Exlusive Customs Today photo
in order to bring stability in economic policies and tariff regime, Commerce Ministry will replace the culture of SrOs, says Khurram Dastagir | SEE PagE 2 |
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02 NaTiONaL
OCTOBEr 08 - OCTOBEr 14, 2013
mobile phone import down by 8.2pc in July-aug
LAHORE: The mobile phone imports into the country decreased by 8.2 per cent during first two months of current fiscal year 2013-14. The imports of mobile phone into the country during July-August 2013 were recorded at $99.84 million against the imports of $108.756 million during July-August 2012, according to the data of Pakistan Bureau of Statistics (PBS). Similarly, the mobile phone imports into the country during the month of August 2013 edged down by 1.67 per cent and increased by 23.47 per cent.
FBr collects rs488b till Oct 3
Customs duty collection shows negative growth iSLaMaBaD
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ederal Board of Revenue (FBR) has collected Rs 488 billion from July 1 to October 3, 2013 against Rs 421 billion in the same period of previous Ninancial year, registering a growth of over 17 percent. FBR’s performance becomes critical in the wake of IMF’s loan of $6.67 billion under Extended Fund Facility (EFF) as achieving of quarterly target will pave the way for release of next tranche after successful review under the Fund programme. “IMF had assessed that FBR’s tax collection will be standing at Rs 436 billion for the Nirst quarter of the current Niscal year but FBR’s collection has gone up to Rs 482 billion, registering an increase by Rs 46 billion compared to the assessment of the Fund’s staff,” said the ofNicial sources. Internally, FBR is still facing a revenue shortfall of Rs 10 billion for the Nirst quarter as tax authorities had envisaged a target of Rs 492 billion for this period. Against the annual tax collection target of Rs 2475 billion for 201314, IMF had scaled down the target to Rs 2445 billion maximum in the
Sulphur’s customs value fixed at $172 per ton irectorate General of Customs Valuation, Karachi, has fixed the customs value of sulphur at $172 per ton on its import from the United arab Emirates and iran. The Federation of Pakistan Chambers of Commerce & industry (FPCCi) and other importers have asked the directorate to reduce these values according to the declining price trend in the global market. re-determination of customs values of these goods was undertaken to reflect the current price trend in the international markets. as per the ruling, the customs value of sulphur was decided throughValuation ruling No.487, dated November 7, 2012 and the Directorate General of Customs Valuation Karachi followed the valuation methods provided in section 25 of the Customs act, 1969. Transaction value method as laid down vide sub-section (1) of section 25 was found inapplicable due to nonavailability of sufficient information required for determining the Customs value under the law, it said, adding that the valuation methods of similar goods provided in section 25(5) & (6) of the Customs act were applicable and were pursued to decide customs values of sulphur in this case, it said. —CT Report
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FbR’s performance becomes critical in the wake of imF’s loan of $6.67 billion under Extended Fund Facility (EFF) as achieving of quarterly target will pave the way for release of next tranche after successful review under the Fund programme.
current Niscal year. According to FBR’s ofNicial data, out of total collection of Rs 488 billion from July 1 to October 3, 2013, the income tax collection stands at Rs 173 billion in the ongoing Ninancial year compared to a collection of Rs 152 billion in the same period of
the last Ninancial year. FBR’s collection in shape of sales tax was standing at Rs 249 billion in the current Niscal year compared to Rs 213 billion in the same period of the previous Niscal year. The collection on account of federal excise duty fetched Rs 32 billion in the on-
going Niscal year so far against a collection of Rs 23 billion in the same period of the last Ninancial year. Only, FBR’s collection in shape of customs duty declined by Rs 2 billion as it stood at Rs 55 billion during July 1, 2013 to October 3, 2013 compared to collection of Rs 57 billion in the same period of the last Ninancial year. The gross collection of FBR stood at Rs 509 billion compared to a collection of Rs 446 billion. The payment of refunds also declined by Rs 3 billion in the current Niscal year as the FBR paid Rs 21 billion refunds in Nirst quarter and three days of the ongoing Niscal year against an amount of Rs 24 billion refunds payment in the same period of the previous Niscal year. The revenue body, FBR ofNicial said, placed a system on repayment of timely refunds on the basis of Nirst-come Nirst-served, through which all refund claims Niled up to July 15 were cleared. In case of old refund cases, he said, FBR will place a transparent mechanism and, in the Nirst phase, a mechanism for the new refund claims will be put in place where Niling of claims would determine the basis for standing in the queue for obtaining refunds amount. Pakistan Revenue Automation (Private) Limited (PRAL) has issued a detailed analysis of growth in revenue collection in the month of Sep-
Stable policies to replace culture of SRos: Commerce Minister
russia bans import of food products from Pakistan akistan agricultural sector has to face another shock as russia has banned the imports of food products, i.e. fruits and vegetables from Pakistan. The ban would affect the total export of Pakistan which hover around $625 million as the export of horticulture products, mainly orange, mango and potato stand at $150 million to $170 million. russia's Federal Service forVeterinary and Phytosanitary Surveillance, in accordance with international Convention on Plant Protection, has temporarily imposed restrictions on imports of regulated products of high phytosanitary risk. according to rosselkhoznadzor, the restrictions have been imposed due to the systematic violations of international and russian Phytosanitary requirements to prevent the introduction and spread of quarantine facilities in the territory of russian Federation and the destabilisation of the phytosanitary situation in the country. all Pakistan Fruit and Vegetable Exporters, importers and Merchants association (PFVa) Spokesman Waheed ahmed said that the decision would badly affect the Pakistani exporters. he said Pakistani exporters of mango had to suffer a huge loss of over rs20 million. —CT Report
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KaraChi
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ommerce Minister Engineer Khurram Dastgir Khan has said that the government has started consulting with all the stakeholders to Nind out new means to increase exports. The commerce minister said that the government was seeking suggestions from everyone especially from the top exporters to remove obstacles they were facing in exporting their products. He claimed that the government would try its best to eliminate all the hurdles which were hurting export growth. The minister, answering a question, said that the Commerce Ministry would reduce culture of Statutory Regulatory Order (SRO) to bring stability in economic policies and tariff regime. SRO culture was used in the past as an instrument to extend Niscal beneNits to blue eyed individuals in the private sector, he added. He maintained that the government had no intention to give tax exemptions to exporters but they would be facilitated in development of infrastructure. It is pertinent to mention here that Prime Minister Nawaz Sharif
tember 2013. The target of tax collection for September 2013 was Nixed at Rs 229,436 million but only Rs 201,073 million were collected during the month as compared to Rs 180,774 million collected in the same period in September 2012. The authorities could achieve up to 86.6 pc of the total target and the growth was calculated at 11.2 percent. The target of direct taxes collection was Rs 111,400 million but Rs 83728m were collected. The targeted sales tax was Rs 82,626 million, but Rs 86,667 million were collected. That of federal excise duty, the target was Rs 10,011 million, while Rs 11,185 million were collected. Customs duty collection showed a decline as only Rs 19,493 million were collected against the set target of Rs 25,400 million. The record shows minus 1 pc growth in direct taxes as compared to September 2012, likewise growth in sales tax increased by 25.8% and 42.8 % in federal excise duty. Customs duty showed 0.1 percent negative growth in September 2013. The provisional collection made by FBR in the month of September 2013 through all Large Tax Payers Units (LTU) and RTOs is Rs 413,267.3 million including Rs 24,483.2m federal excise duty, Rs. 233,666.4m sales tax and Rs155,117.7 million income tax.
Commerce ministry will focus on africa, European union (post-gSP plus status), Far East and South america as export markets, says Khurram dastagir has given the task of doubling exports to Minister for Planning and Development Ahsan Iqbal. According to sources, the main focus of the amended Trade Policy will be pharmaceuticals, engineering goods, leather, specialised textiles and agro based products as well as food. OfNicials believe that
Pakistan has the potential to enhance exports of agricultural products to $10 billion from current $4 billion per annum. Commerce Ministry will focus on Africa, European Union (post-GSP plus status), Far East and South America as export markets, the sources maintained.
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NaTiONaL 03
OCTOBEr 08 - OCTOBEr 14, 2013
gwadar Customs seizes large consignment of narcotics
GWADAR: The Collectorate of Customs Gwadar’s KhurKhera check post seized a large consignment of narcotics (charas) worth millions of rupees in the early hours of September 28 from a truck transporting goods from Quetta to Karachi on RCD Highway. These contrabands were kept in secret cavities of the truck especially created for this purpose. The driver has also been arrested and an FIR has been lodged against him by the Anti-Smuggling Squad. This is the big consecutive success in making big seizures of narcotics by Collectorate.
bid to smuggle 9.250kg heroin to uK foiled nti-Narcotics Force (aNF) in two different cases has recovered 9.250-kilogram of heroin from two British-Pakistani Nationals at islamabad international airport. in the first case, an aNF airport team arrested a passenger Kamran Ghafoor, resident of Tehsil Gojar Khan and recovered 8kg heroin concealed in his bag. he was to travel by Emirates airlines Flight No EK-615 from rawalpindi to London (finally Birmingham) via Dubai. in the second case, the aNF airport Team, on suspicion, stopped a passenger Bilal Zafar Qureshi, resident of Kashmir Colony, Jhelum and during frisking his luggage and recovered 1kg heroin concealed in boxes of talcum powder. in the course of investigation, 250 grams of heroin concealed in his underwear was also recovered. he was to travel by Etihad airlines Flight No EY-232 from rawalpindi to UK via abu Dhabi. Both passengers are BritishPakistani Nationals. —CT Report
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7 PCS officers promoted to BS-19 even BS-18 officers of Pakistan Customs Service are temporarily promoted to BS-19 against DTL vacancies subject to reversion to lower post upon joining of original incumbents of the posts with immediate effect.The officers include Sanaullah abro, Nyma Batool, Farrukh Sajjad, Moin-ud-Din ahmadWani, Nadeem ahsan, Ziaullah Shams and agha Saeed ahmed. Sanaullah abro and agha Saeed ahmed will actualise their promotion from the date they return from deputation and join FBr. —CT Report
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Pakistantoget$32.5m underCoalitionSupportFund:FinanceSecy iSLaMaBaD
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ecretary Finance Waqar Masood Khan has informed the Senate Standing Committee on Finance, Revenue and Economic Affairs that the country will receive an amount of $32.5 million by October 15 under Coalition Support Fund (CSF). The Secretary Finance told the committee head by Senator Nasreen Jalil that a sub-committee has been constituted to pace up the work on 3G Licence auction, adding that an Acting Chairman Pakistan Telecom Authority has also been nominated. He said that increase in power tariff was approved by the Council of Common Interest (CCI).
In the meeting, State Bank of Pakistan (SBP) Governor Yasin Anwer refused to disclose the reasons behind rupee depreciation against dol-
lar and said rupee could further lose its value if he comments on it. “Governor central bank is not answerable for currency value change throughout the world therefore I will not make any comment on rupee deprecation,” Yaseen Anwar told the committee. He said that the State Bank was taking comprehensive measures to check money laundering, adding although it was a very difNicult task but not impossible. The SBP governor said that illegal currency business prevalent on PakAfghan Boarder whereas illegal money was also being transferred to international banks through Dubai. The committee expressed its concern that despite the fact that value of dollar has depreciated against rupee, the basic commodities were still being sold at old rates. Senate Standing Committee on Finance, Revenue and Economic Affairs Chairperson Nasreen Jalil, highlighting bad policies of
the present government, said that the government had failed to deliver as it had further increased the problems of the poor people by hiking electricity tariffs and POL prices. Senator Kulsum Perven urged the government to disclose the reasons behind the increase in dollar value and depreciation in rupee. Senator Sughra Imam suggested that the country must avoid getting loans from the International Monetary Fund, which “we have had to return with interest.” Senator Fateh Muhammad Hussani said that the SBP should be made autonomous and fully independent entity. Senator Usman Saifullah criticised loan agreement with the IMF. The members of the committee were of the view that inNlation has increased and urged the government to take steps for the relief of common man.
weboC being revamped to address customs agents’issues KaraChi
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eb-Based One Customs (WeBOC) Project Director (PD) Syed Tanveer Ahmad has said that Pakistan Customs is working hard to bring positive changes in the computerised system (WeBOC) to resolve the problems being faced by the importers and Customs agents. He expressed these views while talking to Customs Today at his ofNice. Regarding Customs agents’ reservations on Risk Management
System (RMS), the WeBOC PD said that the Pakistan Customs would soon introduce some latest and technical reforms in the WeBOC in order to facilitate the importers and agents. To a query, Syed Tanveer Ahmad said that the WeBOC team would meet the delegation of Customs agents soon and inform them about the latest developments. Meanwhile, All Pakistan Customs Agents Association (APCAA) Chairman Syed Shams Burney has said
that a 15-member committee led by WeBOC PD Syed Tanveer and comprising Customs ofNicials, agents and members of trade bodies has been constituted to resolve issues pertaining to the WeBOC. He said that a meeting of all the stakeholders has also been held in order to discuss issues related to WeBOC. “The WeBOC PD has assured his full support and cooperation to resolve the issues being faced by the Customs agents, importers and members of trade bodies”, Burney added.
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04 NaTiONaL
OCTOBEr 08 - OCTOBEr 14, 2013
Sugar export up to 500,000mt allowed
LAHORE: The government has allowed mills to export 500,000 metric ton sugar to ensure payment to sugarcane growers. The mills will export 250,000 metric ton sugar by October 31 and pay Rs1.7 billion to sugarcane growers, said a spokesman for the Pakistan Sugar Mills Association. He said sugar mills owners had requested the government that they had failed to pay Rs1.7 billion to sugarcane growers due to financial constraints. The government has also promised subsidy of Rs1 per kg sugar on 500,000 metric ton exports, he added.
FBrseesnoincreasein smugglingofforeigncurrencies iSLaMaBaD
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ederal Board of revenue’s (FBr) Customs intelligence Department has reported no significant increase in smuggling of foreign currencies during the last few weeks. Sources said that it is almost impossible to smuggle foreign currencies in big quantity owing to concurrent checking and monitoring by the customs staff and other agencies at airports. The FBr’s intelligence unit takes action against the smugglers on tip-offs, but the nationwide information revealed no major increase in smuggling of currencies during the last few weeks, sources added. The FBr has set up‘Special Bulk Cash antiSmuggling Counters’at all the airports to check the suspected passengers and to especially
F — Exlusive Customs Today photo
new KCaa office-bearers vow to solve problems KaraChi
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he newly-elected ofNicebearers and members, managing committee of Karachi Customs Agents Association (KCAA), took oath in a simple but digniNied ceremony held at a local hotel. After the oath-taking ceremony, the general body meeting of the Customs agents was also held in which future strategy was formulated to ensure speedy resolution of the problems faced by Customs
agents. Speaking at the ceremony, the newly-elected President KCAA Iftikhar Ahmed Shaikh said that the grievances of the customs agents would be resolved with collective efforts. “Owing to the prevailing issues of the Customs agents, the KCAA has decided to expand the managing committee and induct some pro-active members in it to resolve the issues of the customs agents,” President KCAA added. On the occasion, President KCAA Iftikhar Shaikh expressed his intent to form a think tank to resolve the issues of the Customs agents pertaining to WeBOC and Export. Shaikh vowed that the newly-
elected KCAA body of the officebearers and members of the managing committee will bring some positive changes in the association. He reiterated that all Customs agents are welcome to come up with their positive suggestions in the interest of the Association. “The newly-elected KCAA body will welcome any suggestion or proposal given by Customs agents,” he added. President KCAA Iftikhar Shaikh said that the association is in a position to work for the welfare of the customs agents. “After 15 years, the ofNice-bearers of the KCAA were elected unopposed”, he added.
monitor the outgoing international passengers, they said, adding that the customs staff has authority to check the luggage of any outgoing passenger over suspicion. according to the sources, the customs intelligence unit has not yet got any report of increase in the smuggling of foreign currencies. The strict screening of passengers by the antiSmuggling Counters at airports is the main hurdle for the smugglers to take huge quantity of foreign currencies out of the country. it is worth mentioning that the Federal Board of revenue in cooperation with State Bank of Pakistan is struggling to block smuggling of foreign currencies as the FBr and other departments have already taken steps to halt smuggling of dollars and other currencies. To monitor the persons engaged in suspicious activities, the Board is also maintaining a database regarding the individuals visiting the money changers regularly for business.
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iNTErViEW 05
OCTOBEr 08 - OCTOBEr 14, 2013
aPbF urges govt to revise export policy
— Exlusive Customs Today photo
LAHORE: All Pakistan Business Forum (APBF) urged the government to take business community on board in preparing policies to enhance exports so that fast widening trade deficit could be diminished. The APBF Executive Committee met here with its chairman Nabeel Hashmi in the chair and attended by President Rashid Mehr, Senior Vice President Imtiaz Rastgar, Yaqoob Izhar, Munir Bana and Faisal Afridi. The Committee suggested the govt to join hands with the private sector for increasing the exports.
Prawillbecollecting
Rs100b in 5 years: iftikharQutab newly-established authority meets first year target of Rs 37 billion
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n its short life the newly established Punjab Revenue Authority (PRA), has many milestones to its credit. Besides Ninalizing its administrative structure and developing rules and regulations and working procedures, it has also met its target of collecting revenue of Rs 37 billion Sales Tax on Services within the Nirst year of its initiation. Before the PRA was set up, the province was dependent on Rs 22 billion which it received as its share from the federal government. In an exclusive interview with Customs Today its Nirst Chairman Iftikhar Qutab, was frank and forthright in answering many question. He envisages PRA collecting Rs 100 billion in the next Nive years from the province on account of Sales Tax on Services. When was the Punjab Revenue Authority set up? Iftikhar Qutab: Through legislation, Punjab has established a semiautonomous organization, PRA to
collect and enforce sales tax on services. It has also enacted the Punjab Sales Tax on Services Act, 2012 in supersession of the Punjab Sales Tax Ordinance, 2000. The Authority was created as a result of 18th Amendment of the Constitution read with 7th NFC Award. PRA started functioning w.e.f 01-07-2012. Initially, it started functioning in the Committee Room of the Punjab Finance Department in Civil Secretariat. How many services are being taxed by PRA? To begin with, Punjab has kept the tax coverage limited only to nine categories of services covered under the repealed ordinance including Hotels, Clubs, Caterers, Advertisements on TV & Radio, (including Cable TV), Customs Agents, Ship Handlers, Stevedores and Telecom-
munication. We kept our struggle on and have been able to identify 28 more services, including Insurance and Re-insurance, Banking companies, Nonbanking Ninancial institutions, Stock brokers and Shipping agents, Services provided by property developers and promoters, contractual execution of work or furnishing, foreign exchange dealers, beauty parlors, clinics, slimming clinics, Management consultancy services, port operators, Freight forwarding agents, software or IT-based system, development consultants and technical, scientiNic & engineering consultants. Where do you see PRA in the next +ive years? The PRA plans to expand its network to nine Civil Divisions of the province during the current Ninan-
cial year. This will not only expand the tax base of the province but will also provide added facilitation to the existing and new taxpayers. The Authority is progressing in line with its own vision, mission, and core values and 6Gs strategy in order to reach and stabilize itself at a level where maximum judicious revenue mobilization for sustainable development could be accomplished. Establishment of a durable, modern and responsive tax management is another axis upon which the ediNice of sub-national revenue actualization is built upon in the shape of PRA. I am optimistic that in the next Nive years PRA will be able to collect a hefty amount of Rs 100 billion even if the number of services remains at 37.
FBr not yet notified rs5b tax relief measures iSLaMaBaD
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he FBR has not so far issued notification for relief measures announced by Finance Minister Ishaq Dar in consultation with the business community because Ministry of Law has not yet accomplished vetting of these amendments in the tax laws. The government had announced tax relief measures of Rs 5 billion by removing anomalies in laws, procedures with the purpose to facilitate taxpayers. “We have forwarded amendments in tax law to Ministry of Law for vetting which were not yet returned back. After completing this process, the formal notification will be issued to this effect,” said FBR sources.
Under the relief measures, the government decided to slash down Sales Tax on Fabrics from 5% to 3%. Rate of sales tax withholding on purchases from unregistered persons has been reduced from 17% to 1% which will not be adjustable. The sources said that Tanners Association was demanding for this incentive. Items added in the Third schedule to the Sales Tax Act 1990 vide Finance Bill 2013 (except for Fertilizer and Cement) have been omitted from the Third Schedule and subjected to 2% extra tax in lieu of sales tax at retail stage. Items chargeable to sales tax on retail prices have been exempted from sales tax withholding regime. Rate of withholding for wholesalers, dealers (including petroleum dealers) and distributors is reduced from current level of one-fifth (i.e. 3.4%) to one-tenth (i.e. 1.7%) of the applicable rate of sales tax. Commer-
rate of withholding for wholesalers, dealers and distributors is reduced from current level of one-fifth to one-tenth of the applicable rate of sales tax
cial importers who are subject to withholding on income tax have been excluded from sales tax withholding regime. Restriction imposed under (x) of SRO 1125(I)/2011 dated 2011 on refunds against local supplies has been done away with to allow refunds (after pre-refund scrutiny) as admissible under the relevant law. The rate of withholding tax on goods transport vehicles under section 234 of the Income Tax Ordinance, 2001 is reduced from Rs 5.00 per kg of the laden weight to Rs 3.00 per kg. The condition of provision of Computerised National Identity Card Number, National Tax Number (NTN) and addresses of retailers under section 236H to be provided in the withholding statement under section 165 of the Income Tax Ordinance, 2001 is waived off.
PRoFilE mr. iftikhar Qutab, originally belonging to Customs and Excise Group and now posted as Chairperson, Punjab revenue authority (Pra), Government of Punjab, has an illustrious civil service career spanning a period of more than 30 years. Qutab did his Master’s in sociology with distinction from the University of Punjab. he has also done LLB from Sindh Muslim Law College, Karachi, again with distinction. Mr. Qutab has the honour of winning two Gold Medals and one academic roll of honour besides several other awards. Tax Policy, Tax Management, revenue Budget Making and Legal Drafting his major areas of interest besides several other disciplines about society and culture. he has tremendous interest in social philosophy and political economy. he has lectured in several specialized training institutes and academies in and outside Pakistan. he has an experience of over 15 years in tax policy formulation in the Federal Board of revenue, islamabad and almost 15 years experience in tax administration in the field, working as assistant Collector, Customs & Central Excise to Chief Commissioner, inland revenue. his experience in tax management is wide and diverse. he has vast experience in drafting Sales Tax Laws, Federal Excise and Customs Laws. he has drafted Federal Excise act 2005, Federal Excise rules 2005, Value added Tax (VaT) Bill 2010, reformed General Sales Tax (rGST) Bill 2011 and numerous other rules, regulations, notifications and general orders. he has substantially contributed towards the drafting of Punjab revenue authority act 2012, Punjab Sales Tax on Services act 2012 and Punjab Sales Tax on Services rules 2012. his professional knowledge and acumen has also been acknowledged at international level. Mr. Qutab has been honoured with Meritorious Service award (Certificate) by the World Customs Organization (2004). Mr. Qutab has authored three books on social philosophy. he was awarded Gold Medal by Pakistan intellectuals Forum for one of his books. he has got a ‘Dr. Saleem-uz-Zaman Siddique award’ from Karachi University.
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SPECiaLrEPOrT
OCTOBEr 08 - OCTOBEr 14, 2013
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Kamil Museum of Customs tells:
The story of Customs from 1878 to date
During the British rule, Governor of Bombay Presidency Sir James Fergusson, the next high ranking person after the Viceroy, made the first appointments to HM Customs in Karachi, subsequent to the promulgation of the Sea Customs Act 1878.
KaraChi
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One of the treasures of Pakistan Customs lies hidden in the Directorate of Training and Research Building. It is known as ‘The Kamil Museum of Customs’. It is an embodiment of the process of evolution of customs in Pakistan, and a testament to its vital role in the national economy. The museum has been named after Mr Kamil Hassan, Senior Preventive OfNicer (SPO), who has tirelessly collected all the assets on display in the museum. The Kamil Museum brings together the history of Customs in the country from 1878, which witnessed the growth of the Collectorate of Customs in Karachi, up to the modern times. The museum contains photographs of the houses of the old customs ofNicials, original and recreated artefacts in order to relive the history of Pakistan Customs in its social as well as administrative contexts. The museum also contains the photographs and complete history of the Nirst Collector, Nirst Chief Collector, old Customs House, old epaulettes, the Nirst logo designated to Customs in 1878, after its establishment, Nirst Sea Customs Act 1878 and Nirst preventive ofNicer of Customs. The Kamil Museum reveals the entire history of the Customs Department through its preserved assets. When the East India Company aborted its mission in India during 1874, the charge of Indian Government was taken over by the Majesty’s Crown in United Kingdom. At that time, the necessity of a Customs
Act was felt and accordingly Sea Customs Act was enacted in 1878. Her Royal Majesty Queen Victoria approved the Sea Customs Act 1878 and allotted Her Majesty’s Crown to be worn by Customs ofNicers which were inscribed on shoulder epaulettes and peaked caps. The Department of Customs was designated as (HMC) “Her Majesty Customs”. The Bombay Presidency was a former province of British India. In the 17thcentury, it was made a trading post of the British East India Company, but later it grew to include much of Western and Central India as well as part of Sindh, (now Pakistan). During the British rule, Governor of Bombay Presidency Sir James Fergusson, the next high ranking person after the Viceroy, made the Nirst appointments to HM Customs in Karachi, subsequent to the promulgation of the Sea Customs Act 1878. The First Collector of Customs, CA Gaton, was appointed in 1878 and Edward Hamilton Aitkin, the First Chief Collector of Customs, was appointed for Karachi in 1906. The Governor in Council of Bombay Presidency issued a notiNication on April 12, 1901 under section 11 of Sea Customs Act 1878 and declared Karachi as Chief Port of Sindh and attached six minor ports to it for the purpose of shipment and landing of goods. The Customs Administration was regulated by Sea Customs Act 1878 and other allied acts were in operation up to 1969 in Pakistan, when all the statutory provisions were consolidated and the Pakistan Customs Act 1969 was enacted. Brief history of Customs building: On 17th February 1902, the Finance and Commerce
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Department of the Bombay Presidency allocated a piece of land to the Customs and Port Trust Authority for the construction of its permanent ofNices. G Wittet, a consulting architect to the Government of Bombay, prepared a plan for construction of joint building, which was made in the Victorian style. The construction of joint KPT-Customs Building commenced in 1910 and was completed in 1914. The total cost of the completion was around US$57,338 - but the newly-constructed building was Nirst used by the military in World War I as a hospital and transit camp. After, the end of the war, the building was inaugurated by His Excellency Lord Willington, Governor Bombay Presidency on January 5, 1916. The Nirst meeting of the Board of Port Trustees and Customs was held in the newlyconstructed premises on January 12, 1916. Since then, it was used by the Customs Department till it was shifted to new Customs House on May 18, 1987. The founder of the museum, Senior Preventive OfNicer (SPO) in Customs Department, Kamil Hassan while sharing his views with Customs Today said that he spent his 25 years on research and collecting the data since the establishment of the Customs House. “The things from 1878 have been discovered and brought into the museum during the last 25 years”, he said, adding, “I have also been nominated for the Pride of Performance Award by the government.” It is worth mentioning here that TMO Reilly was the Nirst Secretary of the Customs Preventive Service Club from (1916-1933) and Kamil Hassan has the honour of serving as the 23rd Secretary of the club.
1 The first marine staff celebrated the ceremony of first patrolling boat ML semark inducted in marine customs 2 inauguration of Kamil Museum of Customs by the then Chairman FBr Mumtaz haider rizvi at D.O.T at Old Customs house Karachi 3 The first morn Pakistan in Customs house (15th august 1947), Customs staff listening to the speech of Collector M. ilumuddin 4 SEa Customs act 1878 5 On the eve of transfer of Dr. V. Subramanian to Lahore 6 The first Preventive staff 1978 8 Mrs. O. Trinidad, the first female joined on 01-03-1946 10 Queen alexandra Victoria approved first SEa Customs act 1878 11 Governor General of Pakistan Khwaja Nazimuddin with National hockey Team 12 Mian ilumuddin, first Collector Customs 1947 13 This insignia was used by her Majes 14 Old Customs house Karachi 16 representatives of British Commonwealth of Nations saluted Pakistan flag at a Commonwealth Day celebration in Sussex 17 This crown epaulette was used by h. M. Customs during British Era 18 This crown was recovered from sea surveillance during British Era 19 Governor James Fergusson (1880-1885) 20 The first manual printer machine inaugurated by Collector Buckney at Customs house in 1930 21 The first Customs logo 1878 22 Customs centenary 23 T. M. Orelly first Preventi was used by hM Customs during British Era
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Founder & Chairman Zulfiqar ali Editor nasim ahmed 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
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FiR scare he spate of Firs registered by various official agencies against industrialists and traders in recent weeks has spread quite a scare among the business circles. instances of prosecution of erring individuals are not unknown in the past. But this time around it seems that this kind of action is being taken in a planned manner across the entire spectrum of the taxation landscape. Some recent cases include the Lahore Customs’ investigation and Prosecution wing launching an Fir against the city’s well-known department store, h. Karim Bukhsh. The charge leveled against hKB is evasion of customs duty on imported LCDs by misrepresenting their actual price. The customs authorities also conducted raids to arrest the owner of the firm. another Fir was registered by the authorities against a trader of hall road, Lahore for illegally importing 15kg of silver jewelry. it is alleged that the accused had not declared the quantity of the impugned import. Similarly, cases have been registered against businessmen and industrialists charged with violation of rules in the import of goods. This rush to register Firs also saw a serious dispute arising between the Customs Department and Fia when the latter lodged a report against customs officers for importing cars by using illegal means. The customs department took the stand that the Fir was a blatant violation of Section 217 of the Customs act, as Fia had not informed FBr before registering the case as required under the law. Customs sources also charged that Fia officials had registered the case because their demand for illegal gratification was not met. This is, so to say, natural justice in action, with the customs department getting a taste of the medicine it administers to others. That taxation authorities do not always observe the rules and prescribed procedures in lodging Firs against businessmen was proved last week when a division bench of the Lahore high Court quashed all the Firs registered against more than 350 industrial units by the Sales Tax Department. The bench held that the registration of cases and court proceedings against industrial units by the department were illegal and void as it had taken the action without adjudication and proper inquiry. it is not known if the rash of Firs is in pursuit of a directive from the higher authorities or the result of individual initiatives at the local level. But its cumulative effect has been to engender an atmosphere of panic and fright in the business community. Coupled with the recent decision to give FBr access to bank accounts, it will act as a damper on commercial activities and discourage investment and enterprise. instead of lodging Firs indiscriminately, a better way to deal with cases of violation of law would be to settle the matter through imposition of fines where culpability is established.
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Rupee rescued: how long will the reprieve last? LahOrE
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he rupee has been rescued for the time being, but how long will the reprieve last? The rupee has been under pressure for quite some time with its value progressively slipping against the dollar. The Nirst barrier was breached at the 100 rupees mark. But then the slide never stopped, and the rupee continued to hover around Rs 105-106 to a dollar. But in the middle of last week the market panicked and the rupee suddenly fell to close to 111 to a dollar, with wild rumours circulating that the Nigure could go up to 125-130. This created quite an alarming
situation. There was both a shortage and a scramble for dollars in the open market. Economists raised visions of a Ninancial meltdown and looming economic debacle. The regulators could not wait any further and had to intervene, with the result that the rupee was stabilized around 105-6 to a dollar in the interbank market, a recovery of one and a half percent over the prior day’s close. The position is holding for the time being but the market sentiment is still shaky and it is feared that volatility can return any moment unless the government takes some concrete precautionary steps. A clutch of complex factors went into the making of the depreciation crisis. In view of weak economic fundamentals, a level of rupee devaluation was no doubt
expected, particularly in the context of the post-IMF EFF regime in which the central bank has become a net buyer of dollars in the market. It is said that the rupee’s weakness in September has had much to do with panic and bad sentiment, triggered by the demand-supply gap in the immediate term. One factor in this is exporters’ holding back their dollars in anticipation of better rates and the recent spike in dollar demand for Hajj. But it is expected that the gap between the open market and interbank dollar rates will shrink in the Nirst week of October as substantial inNlows are expected before Eid. Some economists also attribute the depreciation of rupee to the power given to FBR to access information of account holders,
which has led to an increase in investment in real estate. Without doubt, active management is needed to stabilize the exchange rate in the interbank and open currency market in the long term. The central bank should take steps to curb imports or hike interest rates to help control the slide in the exchange rate. The pressure on the exchange rate could also be eased by increasing the Nlow of FDI and remittances. Coalition Support Fund payments, sale of 3G licences and privatisation could help ease the pressure on the balance of payments. Other possible measures are imposing a regulatory duty to discourage inessential imports and requiring Afghan traders to import goods against Letter of Credit instead of cash.
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PiCTOriaL
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dubai Customs delegation concludes a successful visit to China
BEIJING: The Dubai Customs delegation, headed by Ahmed Butti Ahmed, the Executive Chairman of Ports, Customs and Free Zone Corporation, and the Director General of Dubai Customs, concluded its official business visit to the People’s Republic of China. During the visit, the delegation inked an agreement with senior officials from the China Customs to develop an electronic connection between Dubai Customs and the China Customs. The delegation surveyed numerous aspects of the Chinese experience in customs.
CooperationbetweenCustomsDept,businesscommunityvitalforprogress — Exlusive Customs Today photos
lahoRE: Collector of Customs Junaid akram inaugurating the first ever branch of the National Bank of Pakistan at the Wagah Border while additional Collector of Customs Sadia Munib, Deputy Collector of Customs Shafiq-urrehman, LCCi chief Sohail Lashari, NBP SEVP and Group Chief, Commercial & retail Banking Tariq Jamali, , branch manager adil rasheed Bhatti and others were also present on the occasion.
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utual understanding, harmony and cooperation between the Customs Department and business community can play a vital role in the progress and prosperity of the country. This was stated by Collector of Customs Junaid Akram while inaugurating the Nirst ever branch of the National Bank of Pakistan at the Wagah Border. “We need to bridge the gap between the Customs Department and business community in order to get good results out of daily operations,” the Collector said. While appreciating the setting up of new NBP branch, he said that this would not only beneNit the Customs Department but also the business community and the general public. He said that the new NBP branch will
make easier the process of clearance of goods and articles, adding that customs duty collection will also get smoother. Tariq Jamali, NBP SEVP and Group Chief, Commercial & Retail Banking, said that NBP ofNicials would do their utmost to satisfy the traders, importers, exporters by
providing excellent banking services. He sought full cooperation of the business community for making the branch proNitable. The opening of the branch is aimed at facilitating the business community, he added. Jamali said that the branch has been opened especially to serve the
importers and exporters. Shahid Iqbal Dar, NBP Lahore region head, said that the branch will help enhance trade between Pakistan and India. He said that the bank will provide all banking facilities to the traders in this regard. On the occasion, Lahore Chamber of Commerce and Industry (LCCI) chief Sohail Lashari, lauding the initiative, said that the NBP branch will facilitate traders, importers and exporters alike. He said that as it is an online branch, it will further enable the business men save their precious time. Sohail Shaukat Butt, MNA, said that the banking facilities in the area will enable locals to beneNit from the branch. He said that earlier, locals had to go to Lahore for their banking needs. Additional Collector of Customs Sadia Munib, Deputy Collector oCustoms ShaNiqur-Rehman, branch manager Adil Rasheed Bhatti and others were also present on the occasion.
iSlamabad: French ambassador h.E. Mr. Philippe Thiebuad inaugurating Capital’s first Energy roadshow along with Schneider's President in Pakistan, Oman & UaE Mr. Benoit Dubarle and others in a local hotel.
iSlamabad: South asian Federation of Exchange (SaFE) the only industry association of the stock exchanges in the South asian region,has launched its USaiD funded project on regional integration at SaarC office, Kathmandu, Nepal. This announcement was by Mr. aftab ahmed, Secretary General SaFE, during a press briefing held at local hotel.
KaRaChi: Minister of Commerce Khurram Dastagir Khan inaugurating the Expo Pakistan 2013 at Expo Centre.
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dg miS re-designated as member iT at FbR
ISLAMABAD: In partial modification of Board’s letter No 3(2)SSM/2012(07)15441 dated 10.01.2012, the post of Director General (MIS) FBR (Hq) Islamabad is re-designated as Member (IT) FBR (Hq) Islamabad with immediate effect and until further orders. This notification is issued with the approval of Competent Authority.
Valuation rulings issued under Section 25a KaraChi
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FiR against 2 importers filed
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he Valuation rulings issued by the Directorate General of Customs (Valuation) under Section 25a of the Customs act, 1969 are mandatory and required to be followed for declaration/assessment of the imported/exported goods. Senior officials in Customs house Karachi told Customs Today that the issuance of Valuation rulings is in the best interest of traders. These enable the importers and exporters to self-assess their filed GDs, so that the GDs are proved as genuine without inviting any scrutiny on account of the application of Valuation rulings. all the other officers and Customs high-ups, including S a to Chairman FBr, islamabad, Member Customs, Chief Collectors of Customs (South), Chief Collectors of Customs (North), Director General intelligence and investigation islamabad, Director General Post Clearance audit (PCa) islamabad, Director General internal audit (Customs) islamabad, Director General Customs Valuation, regional Directors of intelligence and investigation in Karachi, Lahore and islamabad, Project Director (PD) WeBOC, Deputy Director (hQ), Directorate General of Customs Valuation, Chairman Valuation Committee of FPCCi, Federation house, Chairman Valuation Committee of KCCi and Karachi Customs agents association have been informed about the issuance of the Valuation rulings.
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he Research and Development (R&D) Department of MCC Appraisement-East has registered FIRs against the owner of M/s H A Karim International, Muhammad Azfar Javed and proprietor of A to Z company, Shaikh Muhammad Khurram Shahzad for millions of rupees tax and duty evasion by misdeclaration and under-invoicing. The FIRs bearing No.MCC/Misc/288/ 2013 and MCC/Misc/289/2013 against the accused persons revealed that the amount of revenue involved in duty evasion was Rs9,677,092 in the Nirst case and Rs 10,271,653 in second case, which means that a total amount of revenue loss in term of tax evasion was estimated as Rs19,948,745. Sources in MCC-Appraisement (East) told Customs Today that the Collectorate received information regarding evasion of a huge amount of revenue by HA Karim International
and A to Z company through misdeclaration of miscellaneous items. It was also disclosed by the sources that consignments of HA Karim International were Niled through Goods Declaration No. KAPEHC-7724-310713, KAPE-HC-9130050813,KAPE-HC-9136-050813 were got cleared through Customs Computerised System without physical examination and clearance of goods was managed at Karachi by a self-proclaimed customs agent Mian Tahir on the basis of self-clearance on the behalf of accused importer. The recoverable amount of duty has been worked out to be Rs9,677,092, which may be recovered from the importer, the sources said, adding that the importer had deliberately attempted to conceal the actual description of the goods. The sources further stated that the importer has violated the provisions Section 32 (1) & (2) read with the Sections 25 (A),79, 80, 155 (D), (H), (I) and (K) of the Customs Act, 1969 read with the Sections 3, 6 and 7 A of the Sales Tax Act, 1990 and Section 148 (1) of the Income Tax Ordi-
nance, 2001 and the importer is punishable under clause (14), (43), (101) and (103) of Section 156 (1) of the Customs Act, 1969 and Sections 33 and 34, 36 of the Sales Tax Act, 1990. “Due to the backdrop of all such violation of the Sections, an FIR has been lodged and investigation has been initiated to arrest the culprits involved in the crime”, sources revealed. Sources said that the same was done in the case of M/s A to Z company, but the evasion of tax amount in this case was much bigger than HA Karim International and the R&D Department has found that a huge amount of Rs10,271,653 has been evaded through misdeclaration of the miscellaneous items on GDs No. KAPE-HC-7720-310713, KAPE-HC9142-050813, KAPE-HC-9150-050813 and KAPE-HC-9153-050813. “The same types of violations of the Sections of Customs Act 1969, Sales Tax, 1990 and Income Tax Ordinance 2001 have been found against A to Z company and FIR has also been lodged against the culprits”, sources added.
action against tax evading hotels kicked off under-declaration by the Islamabad hotel industry. After taking notice, the Directorate General I&I IR has started struggle to bring this commercial industry into tax net. The Directorate of Intelligence and Investigation Inland Revenue has also started scrutinising the case of a famous guest house in the capital city and found that the guest house has not paying Sales Tax since July 2009. The Directorate General, under section 38 of the Sales Tax Act, 1990, has taken the record of the said guest house into custody. The case has now been sent to the Regional Tax OfNice concerned for further action.
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irectorate General Intelligence & Investigation Inland Revenue (DGI&I IR) has started taking action against the hotels involved in sales tax evasion and federal excise duty (FED). In spite of being the luxurious and most expensive, some hotels and restaurants situated in the federal capital’s posh areas are paying minimal taxes and causing huge revenue loss to the exchequer. The preliminary probe conducted by the DGI&I IR has exposed gross
hELPdESK wRiTE 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
Misappropriations of Export development Surcharge To, The Minister of Commerce Government of Pakistan Islamabad Sir, Export Development Surcharge of 0.25% of FOB Value is being collected from the exporters by the negotiating banks on behalf of the Government of Pakistan as per SRO No 10 (I) 2003 dated 04-01-2003. The funds collected from the exporters are meant to be used in Export Promotion Schemes, for example opening of retail outlets and exporters ofNices abroad, freight subsidy for live seafood, etc. But But from 04-01-2003 onwards a major por-
tion of the fund is being misappropriated by the Export Promotion Bureau/Trade Development Authority of Pakistan, senior ofNicials of Commerce & Trade Group, District Management Group and others. As per press reports appearing in Dawn dated 20-09-2013. “Prime Minister Nawaz Sharif had directed the FIA on August 6 to collect evidence and initiate criminal proceedings against ofNicials, exporters and companies allegedly involved in the scam involving ‘misappropriation’ of Rs 1.27 billion.” The Ministry of Commerce has constituted a committee to investigate disbursements made under the export promotion schemes in 2011, and 2012. The Finance Division released Rs 1 billion in 2011, and 2 billion in 2012 for
these schemes. It is proposed that the inquiry should start from the date of issuance of SRO No 10(I) 2003 dated Jan 04, 2003 till today. The total amount misappropriated may be ascertained and recovered from the concerned ofNicials and refunded to the exporters proportionately from w whose account EDS has been deducted by the Banks against exports. It is requested that SRO No 10(I) 2003 dated January 4, may be rescinded and Export Development Surcharge may be withdrawn, as the funds are being misappropriated. EDS unnecessarily adds to the cost of exports. Yours Sincerely, M S Lodhia Karachi
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7 indians held for smuggling monitor lizards
KOLKATA: Seven people were arrested from Ramkrishnapur in Kulpi for trying to smuggle two monitor lizards. Acting on a tip-off, the forest department and police cracked down on this racket that was active in smuggling live animals from Bengal to Saudi Arabia via Jharkhand. The monitor lizards were found at the house of a local, Arup Mondal, who was among the seven arrested. "The reptiles, each 1.5-ft long, are much in demand in the Arabian countries. Their parts are used for medicinal purposes," police said.
WHAT PAKISTANIS FEEL AS TAX TIME APPROACHES
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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