KARACHI: The Collectorate of Customs (Adjudication), Quetta has vacated the show-cause notice issued to M/s Byco Petroleum Pakistan Limited by Customs.
The order issued by the Adjudication Collectorate Quetta stated that as per department, the remarks mentioned by M/s. HDIP transpire that origin of crude oil is Iran instead of UAE as declared by M/s. Byco Petroleum Pakistan Limited. As such the report has misdeclared the origin of goods to avoid financial sanctions on Iran. However, there is no implication or loss revenue or misdeclaration of HS Code on this import of M/s. Byco other than misdeclaration of origin as transpired in the test report.
On the other hand, M/s. Byco Petroleum Pakistan Limited stated that the said consignments of blended low sulphur crude oils were purchased from the UAE based oil company M/s Vitol Bahrain E.C, against irrevocable Documentary Credits (LCs) opened through National Bank of Pakistan, Corporate Branch, Karachi, in favour of UAE based oil company M/s. Vitol Bahrain E.C, which is, inter-alia, engaged in crude oil business in UAE since 1982.
As per LC the payment to supplier was to be transferred through banking channel within one month of B/L/shipment of goods. All the consignments were thereafter directly loaded from Fujairah Port UAE.
Before shipment of under reference goods the quality of under reference crude oil was duly confirmed/certified by surveyors M/s CISCO Ltd, LLC, Fujairah UAE,
Likewise, the certificates of origin of all the consignments were issued by M/s VTTI Fujairah Terminal Ltd, duly confirming the origin/ port of loading of under reference goods as Fujairah UAE. Similarly, the customs declarations filed at Fujairah port UAE also indicate the origin of goods as UAE.
M/s Byco further stated that the findings of HDIP relied by the department to term the under reference blended low sulphur crude oil of UAE origin to be of Iran origin are baseless and unsupported. Further the import documents coupled with authentic irrevocable letters of credits, bills of lading commercial invoices, origin certificates, surveyors, quality certificates and the standard specifications of variants of Iranian crude oils reflected in the certificates of National Iranian Oil Company (NIOC), Crude Oil & Petroleum Products Evaluation Department negate the observation of HDIP.
Moreover, it stated that the transfer of funds/amount of sale price in foreign exchange through letter of credits carried out through legal banking channel duly confirmed such payments made to UAE based supplier M/s. Vitol Bahrain E.C and termed the allegation of money laundering or transfer of such funds to Iran as totally false and unsupported.
It said that the basic criterion of test as per expert of HDIP was viscosity at 40°c and as viscosity at 40°c was high as such the test report remarks show that tested crude oil has characteristics of “Iranian Crude Oil”.
However, the HDIP report do not definitely confirm that crude is Iranian Crude Oil or of Iran origin but it only suggest that it has characteristics of Iranian Crude Oil . Therefore, as per expert of HDIP as test samples have Higher Viscosity at 40°C’ thus same has characteristic of Iran origin, which is not the case as lots of other crudes have high viscosity ranges as given in the chart submitted during the hearing.
Keeping the said in view, the Adjudication Collectorate Quetta stated that this was not basic criterion on which a crude oil can be termed as “Iranian Origin Crude Oil”. The other region crude oils also have high viscosity @ 40°c hence there was no solid evidence regarding crude oil being “Iran Origin” whereas there are multiple documents showing that crude has been imported from UAE, loaded at Fujairah Port UAE, imported under LCs duly opened in National Bank of Pakistan, having quality certification at Fujairah Port. Additionally, there is no loss of revenue as itself reported in contravention report as such there is no solid ground to penalize the M/s Byco.
Therefore, the department has failed to establish that either the documents produced by the M/s Byco for clearance of their consignment are non genuine/fake or test criterion based on crude oil of high viscosity which has been taken as only criterion for treating crude as Iranian is justified because other region have also high viscosity @ 40°c. In addition, the department has also failed to establish their case that origin of goods is Iran instead of UAE as declared by the M/s Byco.
Accordingly, the charges mentioned in the show-cause notice are not established, hence the show-cause in this case is vacated. The Collectorate also granted 60 days extension in terms of Section 179(3) the Customs Act, 1969.
Copyright Business Recorder, 2020