The Federal Board of Revenue (FBR) has proposed to the Ministry of Finance to disallow transport of Afghan transit cargo from Karachi to Amangarh (Nowshera) and Chaman through National Logistics Cell's (NLC) hired mechanical transport (HMT), as HMTs are neither registered with customs department nor they deposit financial guarantees for safe transportation of transit goods.
The FBR has informed the Finance Ministry that the Afghanistan- Pakistan Transit Trade Agreement (APTTA) 1965 envisages transport of transit goods in railway wagons from Karachi to Peshawar or Chaman and thereafter transport of the said goods by lorries from Peshawar to Kabul or from Chaman to Kandhar. Since the date of operationalisation of APTTA 2010, due on February 12, 2010, has been extended due to certain unresolved issues between the two sides, APTTA 1965 would continue to remain in force during the intervening period and so would its provisions relating to transport of goods imported for transit under the said agreement.
In November 2004, as a result of levy of infrastructure cess by the government of Sindh and resultant congestion at the port, FBR gave importers of Afghan transit cargo the option to transport their cargo through NLC in case Pakistan Railways fails to lift the same within 48 hours of its arrival. In April 2005, FBR moved a summary on alternative mode of transportation for transit to Afghanistan for the Economic Co-ordination Committee (ECC) of the Cabinet, wherein it was highlighted that a number of multi-dimensional representations had been received in FBR in which the designated agencies ie, Pakistan Railways (in case of Afghan Transit Trade goods - "commercial goods") and NLC (in the case of goods other than the Afghan Transit Trade goods - "non-commercial goods") had expressed their inability to transport certain consignments meant for transit to Afghanistan for logistic or technical reasons and permission for an alternative mode of transportation was sought from FBR by the aggrieved parties.
It was thus proposed that in case of inability expressed by both agencies to transport certain cargo, the FBR may be authorised to allow transportation through private transport companies already registered with FBR. The ECC of the Cabinet, however, in its meeting held on April 26, 2005, did not agree with the above proposals and decided that all transit cargo under the Afghan Transit Trade Agreement be transported through Pakistan Railways as per practice. The concerned field formations of FBR were accordingly informed about this decision.
Later on also, due to capacity constraints, the transit cargo under the APTTA 1965 could not be transported by Pakistan Railways, resulting in a situation where huge numbers of containers were stuck up and were lying at Karachi port terminals, as reported by the Collector of Customs (Appraisement), Karachi. In order to resolve the issue, the FBR allowed transportation of surplus cargo through NLC trucks till backlog was cleared. The above-stated fact was later on also brought to the notice of Cabinet Division. Moreover, due to persistent complaints of Afghan transit cargo being stuck up at the Karachi ports/terminals, as reported by Collector of Customs (Appraisement), Karachi and due to the fact that even NLC could not handle the above situation alone in the wake of post-October 2005 earthquake scenario, the FBR allowed transportation of stuck Afghan transit trade cargo in private vehicles hired by NLC, popularly known as 'Hired Mechanical Transport' (HMT), subject to the condition that the same would be operated by NLC and follow the same procedure as followed by NLC vehicles. This facility was extended "on one-time basis" with the condition that NLC should take full responsibility about safety of goods and complying with all customs formalities and procedures.
In the light of above facts it is evident that FBR never allowed transportation of Afghan transit cargo by NLC HMT other than a solitary instance in which such permission was given in January 2006 and that, too, on a one-time basis. Furthermore, the permission given to NLC trucks for transportation of Afghan transit cargo in November 2005 was also only to the extent of such surplus cargo which could not be handled by Pakistan Railways and only till the time the backlog was cleared. It is thus incorrect to assume on the part of NLC that transportation of Afghan transit cargo through HMT of NLC can continue unabated under any misconstrued sanction of FBR, sources stated.
The FBR had earlier on January 21, 2009 moved a note for the then Adviser to the Prime Minister on Finance and Revenue titled "Alternative mode of transportation for transit to Afghanistan", wherein it was proposed that all transit cargo (commercial as well as non-commercial) to Afghanistan may be allowed to be transported from Karachi port, Port Qasim or Gwadar port by Pakistan Railways or NLC or on vehicles of the road carriers approved by Pakistan Customs for bonded transport of goods. However, after due deliberation the matter was not decided.
The Federal Tax Ombudsman in its report submitted to the Supreme Court of Pakistan in the suo motu Case No 16/2010 observed that transportation of Afghan transit goods by HMT of NLC, without any appropriate controls, had been one of the major causes for abuse of transit facility by unscrupulous elements. The FTO thus recommended in the said report that no carrier shall be allowed to transport transit cargo unless it has licence of a bonded carrier with valid bank guarantee deposited with Customs to cover the risk of pilferage. It was further recommended by the FTO that no monopoly or first right of refusal should be available to any entity engaged in transportation of transit cargo. It is understood that FBR is bound to implement the above recommendations under section 11 of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000. Even otherwise, it is strongly felt that transportation of goods in transit to Afghanistan through HMT of NLC has become a serious issue, having grave revenue as well as economic implications. More so, since HMTs are neither licensed/ registered with Customs nor do they deposit any security/guarantee with the Customs for safe transportation of transit goods. It is further informed that in the recent hearing in the apex court on February 28, 2011, in the above mentioned suo motu case, the FBR had also informed the court that transportation of Afghan transit goods through HMT of NLC was not an authorised practice and had been stopped.
Sources said that it is a fact that Pakistan Railways and NLC cannot alone handle the commercial and non-commercial goods, respectively. The APTTA, 2010, therefore, allows transportation of goods in transit imported under the said agreement through customs-licensed transport operators only and that, too, after furnishing of sufficient securities to secure revenue involved in such transit goods. This will promote competition, safeguard revenue concerns and discourage monopolisation of transport sector. Since the said agreement has been put on hold for the time being, the FBR during the intervening period has proposed the following, in order to resolve the issues of backlog of all kinds of goods imported for transit to Afghanistan:
First, in case of goods imported under APTTA 1965 (commercial cargo), Pakistan Railways would be the preferred mode of transportation. In case the said cargo cannot be handled by it then only customs-licensed bonded carriers may be allowed to transport the surplus cargo against sufficient securities to the satisfaction of Customs.
Second, the FBR further recommended that in case of non-commercial cargo, the NLC would be the preferred mode of transportation. In case the said cargo cannot be handled by it then other customs-licensed bonded carriers may be allowed to transport the surplus cargo against sufficient securities to the satisfaction of Customs.
Third, the FBR added that the transportation of any type of transit cargo should not be allowed through the HMTs, hired by NLC, sources added.
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