Seizure of smuggled NCP vehicles: FTO to take up suo motu case against FBR field formations

Federal Tax Ombudsman (FTO) has decided a suo motu case against irregularities of Federal Board of Revenue's (FBR) field formations in making seizure of smuggled non-customs paid (NCP) vehicles, determination of assessable value and conduction of auction of the seized vehicles.

During investigation, the FTO found that Custom collectorates while seizing the vehicles did not nominate or apprehend even a single unlawful owner or culprit. The criminal proceedings including lodging of FIRs have, invariably, not been initiated during the last ten years and most of the seizures had been affected against unknown persons.

The FBR's report, regarding seizures of vehicles by all the collectorates from July 2013 to January, 2019, submitted to FTO Office shows that the number of vehicles seized has increased every year. In this period, total 3,299 vehicles have been seized.

The FTO report states that the influx of non-customs paid vehicles and their seizures had increased which belies the plea of the FBR of asserting highest level of efficiency to curb the menace of smuggling of NCP vehicles. If anti-smuggling activities were conducted seriously with a view to discourage smuggling of vehicles, influx of such vehicles could have been dropped, reducing number of seizures.

According to the FTO report, in the last five years, 1,662 vehicles have been auctioned including 1,004 vehicles were auctioned by MCC (Preventive), Quetta, out of which 538 vehicles were disposed of in first auction, some below the reserve price. This was contrary to the instructions contained in para-7 of the Customs General Order (CGO) 12 of 2002.

Twenty-six vehicles confiscated vide single Order-in-Original (O-in-O) were disposed of just in first auction on 75-80 percent of the reserve price, before three months of issuance of order of confiscation. Names of owner/persons from whom the vehicles were seized were not indicated.

Dates of seizure of 621 vehicles were not mentioned and despite prior information, not in a single case offender could be rounded up by the staff of the Collectorate. No action was initiated against the persons involved in violation of Section 2(s) of the Customs Act, 1969 (the Act) and CNICs of successful bidders were not available in all 621 cases.

According to the FTO report, the tax functionaries used discretionary powers by exploiting conflicting provisions, regarding acceptance of bids in first auction of vehicles, in Chapter-V of Customs Rule 2001 and instructions issued by FBR vide Para-7 of Chapter-IV of CGO 12 of 2001, in arbitrary manner.

The last ten years data shows that the discretion vested in the office of the Collector had been exploited on the plea of ensuring efficient and speedy disposal in view of revenue target, weather conditions, space constraints, security situation, among other extenuating circumstances warranting quick disposal of goods.

Federal Tax Ombudsman has recommended it to FBR to review conflicting provisions regarding acceptance of bid in first auction, in Chapter-V of the Rules and Chapter-VII of the CGO and make necessary amendments with a view to ensure uniform application of law.

Federal Tax Ombudsman has recommended FBR to prescribe Model Auction rules for goods through electronic means as provided under sub-Section 1A of Section 201 of the Act and prepare and operationalize auction module in the WeBOC system to bring transparency and efficiency. FBR to make it mandatory for authorities concerned to put all auction schedule, complete in every respect, showing detailed specification of goods to be auctioned in accordance with the rules, on the official website of the FBR.

The FBR has to direct the Directorate General of Internal Audit (Customs) to carry out a detail audit of auctions conducted by the field formations during last three financial years to identify weaknesses in the rules, procedures and processes and make recommendations to improve law and procedures, internal control and compliance, added the FTO.