The Federal Tax Ombudsman, former Justice Munir A. Sheikh, has ruled that KICT operators/port authorities are bound to accept the Delay and Detention Certificate issued by the Customs and waive the demurrage charges.
The FTO has asked the Federal Board of Revenue (FBR) to issue a show cause notice to KICT under the Licensing Rules and Chapter XXI Rule 442 of the Customs Rules notified vide SRO 704(1)/2007 dated 14-07-2007 to give reasons for not accepting its certificate and state why penal action should not be taken under the Licensing Rules and under clause 1 of sub-section (1) of section 156 of the Customs Act.
The FTO gave this ruling on a complaint filed against the refusal of the Terminal Operator KICT to allow waiver and refund the demurrage charges despite the Delay and Detention Certificate issued by the Assistant Collector of Customs for the period 24-02-2007 to 20-03-2007.
It was stated in the complaint that when the consignment imported by the complainant vide Bill of Lading No MOLU-534858067 landed at KICT, Goods Declaration (GD) was electronically filed on 24-2-2007 for clearance. The consignment remained under the customs processing/examination of the goods and finally it was released on 20-3-2007 after 25 days.
Since the delay was due to customs processing, the Assistant Collector of Customs issued a letter dated 22-3-2007 to the KICT recommending waiver of the demurrage charges. It was stated that the goods were urgently needed and to avoid further delay, delivery of the goods was taken after payment of the demurrage charges amounting to Rs 48,717/- and at the same time the copy of the customs letter was submitted to KICT for waiver of the demurrage.
KICT staff kept on advising the importer to wait. Finally, a letter dated 21-05-2007 was sent to the Manager Finance, KICT, for refund of the entire amount of demurrage but the request was rejected on 22-06-2007.
In his findings the FTO noted with concern that while the customs issued delay certificate in March 2007, the KICT neither complied with the certificate nor sent a reply and when the importer sent a letter to KICT in July 2007, no action was taken.
He said it had been a practice established over a long period of time that delay certificates issued by the customs are accepted by the port/terminal operators as a matter of routine and no dispute had normally arisen.
He said KICT is operating under a notification/order of the Revenue Division and is subject to the provisions of the Customs Act and is expected to follow the established practices relating to clearance/detention of cargo.
He said the fact that the customs authorities also failed to implement their own certificate for delay in clearance proves neglect, carelessness and ineptitude in the discharge of their duties and responsibilities which amounted to maladministration.
The FTO said he had already recommended the Revenue Division to suitably amend the Standing Order dated 02-10-1999 by specifically incorporating a condition that the Terminal Operators/ Port Authorities should invariably accept the Delay and Detention Certificates issued by the customs and the demurrage charges should be waived. It seems that this recommendation has not been implemented.
The FTO again recommended that FBR: make appropriate amendments in the Customs Rules/PACCS Rules to ensure that the Terminal Operators/Port Authorities accept the Delay and Detention Certificate issued by the customs for detention of consignments in cases where the importer is not at fault; and;
(i) direct the Collector of Customs to:
(a) issue a show cause notice to KICT under the Licensing Rules and Chapter XXI Rule 442 of the Customs Rules notified vide SRO.704(1)/2007 dated 14-07-2007 to give reasons for not refunding demurrage charges in full and state why penal action not be taken under the Licensing Rules and under clause 1 of sub-section (1) of section 156 of the Customs Act; and;
(b) decide on merit the issues of refund of the demurrage and imposition of penalty for violation of the aforesaid provision of Customs Act and Customs Rules after affording KICT the opportunity of hearing.