FBR suffered no loss on account of ‘unlawful clearance’ of goods during import ban?

ISLAMABAD: The Federal Board of Revenue (FBR) has suffered no revenue loss on account of alleged unlawful clearance of goods worth US 847 million dollars during the import ban under the Pakistan Single Window (PSW) or “WeBOC” Customs clearance system.

According to a report submitted to the Senate Standing Committee on Finance here on Wednesday, no revenue loss has been observed by the investigating committee after scrutiny of sample data.

The report of the fact-finding committee revealed that the issue pertains to the alleged unlawful clearance of goods worth $ 847 million during the import ban. The scrutiny of the clearance data revealed the following issues related to the alleged misuse of the financial instruments module of Pakistan Single Window (PSW) or “WeBOC” Customs clearance system.

Firstly, clearance of large number of consignments valuing over $ 800 million against open account without tagging of Form-I (FI) by the concerned banks. Secondly, use of chapter-99 facility to avoid tagging of the FI; although the claimed exemption of Chapter-99 against duties/taxes were removed by the Customs during goods declaration (GD) processing. Thirdly, use of a single FI repeatedly against the multiple GDs with huge difference between the declared unit price and the self-assessed/Customs access unit price.

The issues were identified by the filed formations and Directorate General of Reforms & Automation, Karachi. The Board had constituted a committee to conduct fact finding inquiry on the alleged clearance of consignments without meeting the requirement of Financial Instrument.

The committee has submitted an interim report to the FBR. The terms of reference (TOR) wise findings of the committee is to ascertain whether the issue highlighted resulted in revenue loss for the government, with remedial measures, if required. After scrutiny of the sample data set, no revenue loss has been observed by the Committee.

The committee is, therefore, of the view that it is not correct to conclude that any GDs where Fl has not been tagged, is in violation of SBP regulations as they did not consider the allowed/extendable time period under law for settlement, to be made by the banks, which is an ongoing process as verified for a sample data.

Out of the total pointed out import value of $ 21 million, there is no legal violation in respect of GDs involving an amount of around $ 15 million (75% of the total amount). No FI was legally required in these cases due to non-involvement of any foreign exchange remittances from Pakistan against these imports and further, no loss of revenue is observed in these cases. The contraventions have already been framed against GDs, with inadmissible Chaptter-99 claim for avoiding tagging of FI, involving an import value of over $ 1 million for imposition of penalty.

The data of remaining GDs involving an amount of around $ 6 million is being shared with the relevant field formations for initiating similar action. The Collector of Customs Appraisement Peshawar had already proposed a remedial measure in the shape of a CRF, to address the misuse of Chapter-99 facility, which is pending action by the Directorate R&A Karachi.

The FBR further found that there is no violation of any Customs laws in use of a single Fl in multiple GDs as well as declaration of “Unit Invoice Value” and “Self Assessed Value” by the importer with any difference between the two, as long as the documents provided to the Customs substantiate the declared values. However, “post clearance due diligence” is to be carried out by the relevant banks to confine) the regulators requirement.

The committee has further reported that both PSW and Directorate General of R&A were proactive in taking corrective measures to fix system vulnerabilities and during proceedings of the committee they have not come across any evidence to suggest that there was any deliberate attempt to circumvent foreign exchange regulation, FBR’S report added.

Copyright Business Recorder, 2023