GDs, duties reconciled: FBR's fact-finding team clears 256 trucks

In a major development, the Federal Board of Revenue's fact finding inquiry team has cleared 256 trucks, which filed complete documents and paid due amount of duties and taxes of around Rs140 million at the Torkham border, raising doubts about baseless charges against senior customs officials including collectors.

Sources told Business Recorder that verification and reconciliation exercise was at its peak.

It was alleged by the Directorate General of Intelligence and Investigation that 355 vehicles, carrying imported goods, escaped through Torkham Customs Station without filing of the Goods Declaration (GDs) and payment of duty and taxes during October and November, 2019.

The factual position is that the reconciliation of 256 trucks cleared from Torkham has been completed.

The verification of less than 100 trucks is left and keeping in view ongoing reconciliation trend, the remaining trucks would also be cleared during this exercise. Around 18,000 goods declaration (GDs) have been reconciled and 27,000 vehicles data was sifted to verify the 256 trucks by the expert customs team.

If the allegations of clearance of 355 trucks without payment of duties and taxes from Torkham proved wrong, the FIR of Customs Intelligence would be considered as baseless.

Resultantly, allegations against senior officials needs to be dropped and they should be restored at their earlier positions.

The astonishing part of the story is that it was propagated that 355 containers passed from Torkham.

These were trucks and not containers as each container has space of five trucks.

The staff of Customs Intelligence is present at the Torkham Customs Station around the clock.

During the period under review, the Customs Intelligence has seized 1-2 containers whereas customs preventive and appraisement staff made 29 seizures at Torkham including seizures of weapons, drugs and many different goods.

Most of the imports from Torkham included coal (50 percent) used by cement factories (duties and taxes Rs2 lakh per vehicle); soap stones imports constitutes 22 percent (zero percent duty under 'DTRE' scheme); vegetables such as tomatoes, onions etc constitute 15-20 percent imports (very less duties and taxes like one truck of tomatoes subjected to duties/taxes of up to Rs40,000) and imports of seasonal fruits like grapes and apples is not more than 10-12 percent of total imports with duties and taxes of Rs5-6 lakh per vehicle.

Moreover, large quantity of transit goods including dry fruit and seasonal fruit to India is also cleared through Torkham under a special clearance procedure.

According to the fact finding inquiry report on Torkham Customs Station, MCC (Appraisement & Facilitation), Peshawar and MCC (Enforcement & Compliance), Peshawar submitted their replies. MCC (E&C), Peshawar has informed the Board about the deficiencies in the clearance systems, on-ground situation at Torkham, role of Terminal Operator (NLC) and actions taken by MCC (E&C), Peshawar. Based on their replies received and

after studying the procedures, considering the factual position on ground and the working environment at CS Torkham and other Customs Stations, a point wise comments/ reply to the main charges of malpractices leveled by DG I & I, Islamabad in his reports to Chairman FBR mentioned above are detailed as under:

Charge: 355 vehicles, carrying imported goods, escaped through Torkham Customs Station without filing of the Goods Declaration (GD) and payment of duty and taxes, only during the month of October and November, 2019.

Response of fact finding inquiry report: As a part of the fact finding inquiry, a reconciliation exercise was ordered to be carried out vide MCC (Enforcement & Compliance), Peshawar. So far out of 355 vehicles, identified by DG 1&1 (Customs), Islamabad its FIR No.1 1/2020 111 dated 03.02.2020, alleged to have escaped through Customs Station

Torkham without filing of GD and payment of duty and taxes, around

256 vehicles involving duty/ taxes amounting to Rs. 140 million

(approx.) have been reconciled. The exercise for verification of remaining vehicles is under process and shall be completed shortly. Since the

reconciliation process is underway, therefore final count of vehicles reconciled or otherwise will be given in the final report.

Consequent upon the office of the Chief Collector (North)'s order for fact finding inquiry, MCC (Enforcement & Compliance). Peshawar did its own internal audit and reconciliation and independently conducted an exercise.

For missing vehicles of October, 2019, an FIR No. 10/2020 dated 31.01.2020 was lodged by MCC (E&C), Peshawar against

the drivers, importers, clearing agents, officials of Terminal Operator at NLC yards, staff or MCC (E&C), Peshawar and staff or MCC (Appraisement & Facilitation). Peshawar. Further progress on that exercise will be reported.

Charge: The Certificates of Origin being submitted by the importers to

show the goods as of Afghanistan origin have been learnt to be fake/forged, resulting in the importers getting undue benefit of concession in duties and taxes as Afghan origin fresh fruits are subject to lower rate of duty. The probe in the matter revealed that no proper mechanism exists at Torkham Customs station to confirm/verify genuineness of the presented Certificate of Origin.

Response of fact finding inquiry report: The concession exists under fifth Schedule of Customs Act 1969 etc on fresh fruits from Afghanistan. Fresh fruits are being imported from Afghanistan over the past many years. However, no specific verification protocol exists for verification of import certificates of origin from Afghanistan. Nevertheless, the matter of verification of Certificates of Origin was duly taken up by the Appraisement Collectorate with the Board to get these verified formally through proper channel.

The Board referred the matter to Director General Afghanistan. Turkey & Iran proper mechanism exists at Ministry of Foreign Affairs followed by a reminder dated 22.01.2020, however, the presented Certificate of response on the outcome of formal verification is awaited.

Charge: Filing of one GD for multiple vehicles carrying the imported goods contrary to the requirement of filing separate import general manifests (IGMs) for each such vehicle (and consequently separate GDs) under Section 44 of the Customs Act, 1969. This practice entails the risk of evasion of duty and taxes through misdeclaration as not all the vehicles in the GD are examined and allowed gate-out separately in the WeBOC.

Response of fact finding inquiry report: The issue has been examined in the light of section 44 of the Customs Act, 1969. Section 44 requires filing of single IGM for each conveyance, however, the WeBOC system developed for the land Customs Station including Torkham does not prohibit multiple vehicles in a single GD and filing one IGM for multiple vehicles. Since the matter pertains to specific WeBOC module, therefore, it is proposed that input/ comments from the Directorate of R & A may be sought for further clarification on the issue.

Charge: Permission to allow road vehicles from Ghulam Customs Station which is prescribed route. The Afghan vehicles having Road Passes issued by Pakistan Embassy Kabul, Afghanistan are allowed thus a matter of grave concern to how Afghani vehicles entry only through Torkham meant for coming to Torkham were allowed to enter via Ghulam Khan custom station.

Response of the fact finding inquiry report: The allegation is not based on facts as the Customs staff does not allow entry to any Afghan registered vehicle, carrying road pass issued by the Embassy of Pakistan, Kabul at Ghulam Khan Customs Station. Article 7 of the earlier Protocol of the Afghan Transit Trade Agreement 1965; (dated March 2, 1965) provided for road pass.

The Directorate of Transit Trade exclusively deals with allowing/disallowing the road pass, entry only through Torkham. The Directorate of Transit Trade Peshawar has already highlighted the issue pertaining to road passes. It is further added that Ghulam Khan Customs Station is a prescribed route under the current Afghan Transit Trade Agreement (ATTA), 2010.

It is pertinent to mention that, owing to the peculiar geographic conditions of Torkham Customs Station, there is little space available for parking and examination of import/export and Transit cargo vehicles. The Terminal Operator (NLC) has not been able to put in place an Integrated Cargo Management System. There is no demarcated/fenced and secured area for different types of cargo (import, export and transit), let alone their controlled entry/ exit. Resultantly, vehicles are parked in open spaces, mostly on privately owned lands, market areas and road sides. Sometimes, due to heavy volume of import/export and transit cargo, the vehicles are parked up to Michni check-post, at a distance of around 3.5 kms from the main Torkham terminal.

Terminal Operator (NLC) has been asked time and again to improve the situation but all in vain. Nothing has been done by the Terminal Operator (NLC). However, NLC has categorically stated that they cannot act as per Terminal Operator Rules sub chapter XIV (sub rules 554-556).

The responsibility of Terminal Operator for sanctity of cargo, its security and its gate-out in WeBOC system is specifically mentioned in the Terminal Operator under CCS rules.

DG I&I (Customs), Islamabad in its special reports/letters addressed to the Chairman FBR has mentioned specific GDs, details whereof shall be given in the final report. Regarding fixing responsibility on the delinquent officers/officials, it is added that the reconciliation of alleged vehicles is underway and shall be finalized shortly. Therefore, final report will also incorporate the same. On the administrative side, corrective measures have already been taken through transfer/posting of officers/officials.

The previously posted staff at Customs Station Torkham has been transferred out and officers/officials of good repute have been posted. However, it is reiterated that such action will be taken against the staff involved ill corruption at the station. FIR to the affect has already been lodged by MCC (Enforcement & Compliance) Peshawar.

While a fact finding inquiry is under process, a number of initiatives have already been taken by the management to address the loopholes in the working of the customs stations which include:

1. Drafting of a Standard Operating Procedure (SOP) for safety, supervision and monitoring of import, export and transit.

II. Issuance of four Change Request Forms (CRF) to Directorate of Reforms & Automation, Karachi for making necessary amendments in the WeBOC Module through Directorate of Reforms and Automation, Karachi for proper monitoring of gates at CS Torkham.

III: Sepoys/staff posted at Gate-out stage of import have been suspended for the two reported of DG(I&I) Customs Islamabad.

IV. After visit of Chief Collector Customs (North) on 15.01.2020 to CS Torkham, an office order dated 17.01.2020 was issued by MCC (E&C), Peshawar.

V. Transfer/posting of well reputed (Class-IV and Executive) staff.

VI. Surprise/random visits by the Chief Collector to various field formations.

VII. Regular/fortnightly visit/ inspection by the Collector of customs stations/formations and submission of inspection reports to the Chief Collector.

VIII. Directives to the Terminal Operator (NLC) at the border stations to improve facilities at the terminal for examination, parking, storage, entry/exit of the import/export and Transit cargo, fencing of the yards, provision of the utilities and security of the Customs staff.