Failure of Pakistan Customs Computerised System (PaCCS), a project of $250 million, has made the Federal Board of Revenue (FBR) to consider shrinking its operation only to the manufacturing sector.
At present, the system is not only covering almost 70 percent of the countrys exports and imports consignments but is also providing lucrative opportunity to the commercial traders to clear misdeclared consignments because of its inferior parameters, causing immense losses to the national exchequer.
The system was launched in March 2005 aiming to revolutionise customs clearance process. However, all claims have been exposed as mere hype, without any substance, while the government suffered billions of rupees losses as evasion through PaCCS.
The developers of the system claimed that the system would make customs clearances quicker, simpler and corruption-free, and all relevant information would be available for traders at their fingertips, but system has failed to deliver the desired results.They had further claimed that the system would cover the entire spectrum of customs functioning, from the arrival of the vessel to clearances, adjudication, seizures, refunds and auctions. However, the older computer system (One-Customs) has been reverted in many cases to clear consignments.
TARIP module, which was inducted in PaCCS as priority to facilitate importers in all shipment related issues, has been dysfunctional for years, owing to intellectual property rights.
Before the commencement of PaCCS, Goods Declarations (GDs) was filed manually, where almost every consignment was examined. However, after computerisation of customs clearance process, a certain percentage are released by the Risk Management System (RMS) without any assessment or examination and out of total consignments, fewer are detected for physical examination.
The parameters of RMS were not properly modified in accordance with the present circumstances, providing safe passage to commercial importers, in particular to clear misdeclared goods consignments, which raised the issues related to short payment of duties and taxes. The Pakistan Revenue Automation Limited (PRAL) was established with substantial resources to provide solution pertaining to the computerised clearance system. However, FBR has taken Agility Logistics, UAE-based company, on board for the same purpose, raising several questions pertaining to the accessibility of the foreign company to all sensitive and confidential data. When contacted, official sources on phone at Islamabad said that the system, which provided maximum facilitation to importers and exporters, was not workable in Pakistan where the interest rate was so high.
They said the system was successfully running in developed countries where interest rate is very nominal. However, the situation is different in Pakistan.
They said that traders were always seeking those options through which they could clear misdeclared goods consignments and evade taxes, and duties.
Realising the flaws of the system, they said, the board was mulling to restrict its operation only to industrial importers, and added that commercial importers and exporters might be excluded from PaCCS. They said that board is revisiting it as priority to discourage the illegal practices being done by the commercial importers in particular. They hoped that the consignments pertaining to the commercial traders might be processed through One-Customs system.
They said that majority of commercial importers are used to tamper the contents to clear their misdeclared consignments, and added that PaCCS had failed to detect them because of its inadequate RMS parameters.
They ruled out the impression to wind up PaCCS operation completely, saying that the board could exclude commercial traders, who reportedly involved in tampering GDs of the consignments, from the system. As a result, several banned goods, including Afghan transit shipments, etc, have been cleared through PaCCS.
Sources said that the RMS and Post-Clearance Audit (PCA), considered to be the major tools of the system, are scientifically not up to the mark, and urged the board to modify its parameters to make the PaCCS as an asset for the country.
They suggested to the concerned authorities to remove all bugs from the system immediately, saying that the modules of the system should frequently be modified in accordance with the latest trends.
They expected that if the PaCCS operation was restricted for commercial traders, significant decline would be witnessed in the tax evasion and the board could save some Rs 50 billion to Rs 100 in this connection.
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