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Vol 2 Issue No. 15

Karachi, Tue April 29 - Mon May 05, 2014


Regd. No, MC-1381

Price Rs. 50.00


Govt plans to develop Gwadar as a‘free port’on the lines of Dubai, Singapore and Hong Kong ports, says PM Nawaz | SEE PAGE 04 |

Governmentisinprocessofbringingpositivechangesinrulesandbusiness environment to enhance the export in collaboration with the industry LAHORE


The govt cannot achieve 7% or above economic growth, unless the business community accepts new challenges, says Dastgir | SEE PAGE 03 | WITHHOlDING REFUNDS

The total payable refunds to taxpayers are Rs97 billion, admits FBR chiefTariq Bajwa in a briefing to the Senate Standing Committee on Finance and Revenue | SEE PAGE 02 | ADOPTING zERO TOlERANCE

FBR has adopted the policy of zero tolerance towards the officials and officers involved in corrupt practices, says Chief Management Bashirullah Khan | SEE PAGE 06 |

akistan and India has bright future for enhancing bilateral trade. Nevertheless, the government is vigilant of the fact that local industry should not suffer consequently in the wake of normalizing trade ties with neighboring India. This was stated by Chief Executive Officerof Trade Development Authority of Pakistan (TDAP) S M Muneer while exclusively talking to Customs Today. He also said that efforts were underway to double exports of the country by touching the desired mark of $50 billion over the medium term. It is relevant to mention here that Islamabad’s political leadership had decided to halt the process of normalizing trade relations with India till completion of political transition in New Delhi on account of ongoing elections.“We need to work hard to capture India’s huge market besides we also need to open other borders for mutual trade in order to reduce pressure at the Wagha border,”SM Muneer said, adding that the trade between the two countries will start competition in the region and ultimately the fittest will survive. Muneer said that TDAP was being put back on track through strict reforms and serious efforts were being made to achieve $50 billion export target in the coming years. Efforts were being put in place to make the TDAP a world class organization to facilitate


the business community. He added that government was in process of bringing positive changes in rules and business environment to enhance the export in collaboration with the industry. He, however, urged business community to bring their TDAP related issues into his knowledge directly. Commenting on the free trade agreements (FTAs), he said that such agreements had problems regarding fixation of tariffs and the government should take onboard the business community while finalizing further international agreements. A committee had been constituted at the TDAP with the private sectors participation to take full advantage of GSP Plus. Meanwhile, Pakistan Carpet Manufacturers & Exporters Association demanded representation in the Board of Export Development Fund. The association’s Chairman Akhtar Nazir Cooki and Vice Chairman Kamran Razi made this demand in a meeting with S.M. Muneer during his visit to the Association’s office. Briefing the TDAP Chief, the PCMEA office-bearers said the Authority should focus on enhancing exports to China. The carpet sector could benefit from duty-free access to EU market under GSP Plus status, if the government restored zero-rated regime for carpet industry to help ease its liquidity flow. A significant ratio of working capital of carpet exporters was already stuck in refund regime at a time when the carpet exports declined to $120 million from $300 million. TDAP CEO SM Muneer assured the association of early resolution of their problems. 

We need to work hard to capture India’s huge market besides we also need to open other borders for mutual trade in order to reduce pressure at the Wagha border

— Exclusive Customs Today photo




APRIL 29 - MAY 05, 2014

Guideline values of Base Oil reviewed

KARACHI: Customs Valuation Department has reviewed the customs guideline values of different grades Base Oil being used for lubricating and petroleum companies. According to the details, the Base Oil of Grade SN500, used for lubricating companies having HS Code 2710.1993 from Middle East origin has fixed at US$0.90per kilogram. The Base Oil of Grade N500, used for petroleum companies having HS Code 2710.1993 from Middle East and Far East origins has fixed at US$1.28 per Kg and US$1.30per Kg respectively.

APMSIDAdemands revisionofvaluation rulingofspareparts eniorVice Chairman, All Pakistan Motorcycle Spare Parts Importers and Dealers Association (APMSIDA), Khurram Riaz has expressed his strong reservations over the issuance of Valuation Ruling No.664 by the Directorate General of CustomsValuation to determine the Customs values of motorcycle spare parts being imported from different countries. Commenting on the recently issued Valuation Ruling No.664, Khurram Riaz termed it unjustified and demanded its revision immediately. Talking to Customs Today, Senior Vice Chairman APMSIDA said that the Directorate General of Customs Valuation has issued the said valuation guideline without taking stakeholders into confidence. Replying to a query, Senior Vice Chairman (APMSIDA) said that the association has also submitted an application in the Directorate General of Customs Valuation to review the valuation ruling No.664 for the larger interest of the traders. —CT Report


Customs values of Polyester Yarns re-determined he Directorate General of Customs Valuation has issuedValuation Ruling No.673/2014 in which it redetermined the customs values of PolyesterYarns under Section 25-A of the Customs Act, 1969. Earlier,Valuation Ruling No.461/2012, dated 05-07-2012 was issued in line with international price trend.The importers have been contesting that yarn value in international market especially China has significantly decreased whereas clearance formations are assessing imported Polyester Yarns of different deniers under Valuation Ruling No.461/2012, dated 05-07-2012 which is much higher than existing international prices. This prompted an exercise to re-determine the customs values of polyester yarn. —CT Report


FBR to set up new Directorate BR will set up a separate Directorate of Recovery in order to ensure the speedy recovery in terms of tax evasion. Sources confirmed CustomsToday that the FBR has drafted and sent these suggestions of setting up Directorate of Recovery in the budget proposals to the Ministry of Finance. Directorate of Recovery will work under the supervision of Director General (DG), a Grade-21 officer of Pakistan Customs appointed by FBR. FBR took this initiative keeping in view slow pace of recovery by Pakistan Customs. —CT Report


Govt withholds Rs97b refunds, admits FBR chief ISLAMABAD



he top taxman of the country admitted on that the government was withholding Rs97 billion refunds of taxpayers – an amount if extracted from latest collection brings actual growth in revenues to a level that is even below the nominal rate of national output. “The total payable refunds to taxpayers are Rs97 billion,” said Federal Board of Revenue (FBR) Chairman Tariq Bajwa, who has been struggling to achieve even the revised annual collection target of Rs2.345 trillion. For the current Piscal year 2013-14, the Parliament’s approved target is Rs2.475 trillion. It was for the Pirst time that any government ofPicial admitted that the FBR owed such a big amount to taxpayers, vindicating the business community and economists who were crying foul about the FBR’s claim of achieving over 16 percent growth in revenue collection. Bajwa was briePing the Senate Standing Committee on Finance and Revenue. However, Bajwa maintained that the amount the government owed to taxpayers was less than the comparative period when the outstanding refunds stood at Rs99 billion. As of April 22, the FBR has collected Rs1.671 trillion in taxes – claiming that it was higher by Rs222 billion or 15.3% over the

collection made in the comparative period of the previous Piscal year. By extracting the amount payable to taxpayers, the actual collection comes to Rs1.574 trillion, higher by just Rs125 billion or 8.6% over the previous year. The 8.6% growth in collection is far below the nominal Gross Domestic Product (GDP) growth rate. The nominal GDP is determined by calculating inPlation plus GDP growth rate. During the Pirst nine months of this Piscal year the inPlation rate was 8.6% while the ofPicial average growth rate in the Pirst six months (July-December) was 4.1%, bringing the nominal GDP rate to 12.7%. Bajwa did not disclose the actual refund claims, despite repeatedly being asked by Senator Ilyas Bilour of ANP. The other day Bilour had claimed that

the FBR has blocked Rs450 billion refunds – a claim which went uncontested despite FBR’s chief sales tax being present in the meeting. Bajwa said till April 22, the FBR has paid Rs87.3 billion in refunds to taxpayers, higher by Rs10.8 billion or 14% over the amount paid in refunds in the comparative period. He claimed that the FBR has developed a robust system of refund payments and even his relatives are not paid refunds before their turns. However, the committee contested the chairman’s claim and said that most of the time the FBR’s systems were not properly working in a deliberate attempt to delay refund payments. Meanwhile, FBR Chairman Tariq Bajwa reiterated the government’s resolve to expand tax net by bringing in new taxpayers, saying that at least 100,000 new taxpayers will be brought into the net annually. Addressing the second All Pakistan Chambers Presidents Pre-Budget Conference at Faisalabad Chamber of Commerce and Industry (FCCI), Bajwa appreciated the FCCI endeavour for holding this crucial conference. He said that most of the business community was patriotic and was ready to pay their due taxes but while making demands “we should keep in mind the present Piscal environment in which we are living.” He pointed out that only 70 percent of the country needs was being managed through revenue collected from taxes while the rest 30 was being fulPilled through borrowing.  — Exclusive Customs Today photo

Chief Collector Enforcement reviews performance he newly posted Chief Collector Enforcement (South) Muhammad Nazim Saleem held marathon meetings with the officers of different Collectorates including MCC-Preventive, MCC-Export, Anti-Smuggling Organisation (ASO), Air-Freight Unit (AFU) and others in his office. MCC-Preventive Collector Syed MuhammadTariq Huda, Additional Collector, HQ-I Shafqat Ali Khan Niazi, Assistant Collector MuhammadWasif Malik and other officers were also present on the occasion. Sources informed CustomsToday that the Chief Collector-Enforcement (South) during the meetings reviewed the performance of each and every department at individual level and asked the officers to adhere to result-oriented activities.They said that the Chief Collector-Enforcement (South) Muhammad Nazim Saleem also reviewed performance of Legal, ASO and Export departments. The officers concerned gave details presentations and briefed the Chief Collector about the cases and activities being executed in different departments. Nazim Saleem underlined the need for improving performance of the Collectorates and asked the officers to utilise available resources to achieve all the set goals. Collector MCC-Preventive SMTariq Huda and Additional Collector, HQ-I Shafqat Ali Khan Niazi and Additional Collector, AFU DrTahir Qureshi apprised the Chief Collector-Enforcement (South) of the problems being faced by the officers during performance of their duties. Shortage of staff in MCCPreventive at Preventive Officers, Senior Preventive Officers, Inspectors Preventive Officers and others levels was also discussed during the meetings. It was decided that the issue would be taken up with the FBR Chairman and Member Customs in the next meeting. —CT Report


FTO orders FBR to take action against officials for highhandedness ederal Tax Ombudsman Abdul Rauf Chaudhry has directed Federal Board of Revenue to take action against certain tax officials after taking serious notice of gross maladministration by the officials who have been deliberately blocking refunds of a foreign company for more than 13 years. However, no action has so far been taken despite lapse of nearly one year. The order issued by the Federal Tax Ombudsman shows that in a case of two non-resident contractors, M/s Ghazi Barotha Contractors, Regional Tax Office (RTO) Peshawar has been deducting substantial amount of tax from contract receipts of the contractors. After completion of the project, the foreign contractors declared huge losses in their returns of income and consequently claimed refund of Rs 784 million for assessment years 1996-97 to 2002-03. Instead of processing their refund claims, the tax officers created huge demand to cover up refund claim by treating the


taxpayers as Association of Persons. This assessment was annulled by the Income Tax Appellate Tribunal on the ground that assessment was unlawful and arbitrary. The High Court also endorsed the decision of the tribunal dismissing the departmental reference. The taxpayers again applied for refund, but RTO Peshawar transferred the case to RTO Abbottabad to delay the refund claim. RTO Abbottabad transferred the case to Large Taxpayers Unit (LTU) Islamabad, where the Chief Commissioner refused to issue refund despite taxpayers' repeated visits to his office and their meeting with FBR Chairman and Member IR. Instead, unlawful sales tax demand was created by LTU Islamabad - more than the refund claim but this demand was also deleted by the Appellate Tribunal. On complaint, the FTO had directed the department to issue lawful refund to the complainant. The representation filed by FBR to the President was also rejected. —CT Report


APRIL 29 - MAY 05, 2014

3kg marijuana seized by Qatar customs

DOHA: Officers of Qatar Airport Customs have thwarted an attempt to smuggle around 3 kg of marijuana into the country by an Asian male traveller. The individual was apprehended when he aroused suspicions of a customs officer at Doha International Airport. The officer alerted another officer concerned to perform a thorough search of his entire luggage. In the search, the officer found three big pieces of marijuana wrapped in plastic bags and weighing a total of 3 kg.

he three-member fact-finding committee of the Customs Department has initiated investigation into a scam involving Rs450 million in the clearance of 1,900 vehicles on short surcharge payment under theVehicle Amnesty Scheme. The committee, comprising Collector (Exports) DrWasif Memon, Additional Director Directorate of Intelligence and Investigation KhalilYousfai and Additional Collector (Audit Collectorate) Khalid Jamal, has been constituted to ferret out facts surrounding the scam and implement the FTO directives in this regard. Meanwhile, DrWasif said that it would be premature to say anything about the scam as inquiry was at the preliminary stage. He said the committee was constituted to ascertain facts and ensure implementation of the FTO directives. Six overseas Pakistanis, in a joint complaint to the FTO, accused the customs authorities at Karachi of releasing car imported by overseas Pakistanis involving infringement of age limit prescribed by the Commerce Ministry in SRO 1441(I)/2012. They said the complaint was investigated and the allegation of discrimination was found maintainable, hence the FTO recommended suitable measures to resolve the issue. Customs Department filed a review petition to set aside the FTO decision but it was rejected due to misrepresentation intended to mislead the FTO and the FBR.Taking all the facts into account, the FBR Member Customs sought a report from the Collectorate concerned on the issue. However, the report submitted by the Model Customs Collectorate of Appraisement (West) confirmed that customs officers at the said Collectorate had been doing jobs of either assessment of vehicles underVehicles Amnesty Scheme or as the assessments were made after reduction of age limit of cars from 5 to 3 years with effect from Dec 15, 2012. —CT Report


Country needs to access new markets to boost exports: Dastgir KARACHI



ederal Minister for Commerce Khurram Dastgir has said the government cannot achieve 7% or above economic growth, unless the business community accepts new challenges. He said products needed to be marketed to existing and new markets, stressing that businesses needed to prepare themselves for regional trade. “Let me remind you all, if you want fast economic growth then you should also prepare yourself for the risks because these two go hand in hand,” Dastgir said while speaking at the Korangi Association of Trade and Industry (KATI) — one of the biggest industrial zones in Karachi. “China, Malaysia and now India are all growing economically by fortifying regional trade. Pakistan cannot overlook this reality anymore.” Despite political standoffs, China’s bilateral trade with Taiwan is $200 billion while its trade with India is over $70 billion. India, which already has a trade balance in favour of China, has expressed interest in further expanding its trade with the neighbouring country. China became India’s largest trading partner in 2011 when their bilateral trade reached $74 billion. Dastgir said that the government wants to increase trade with neighbouring countries. “For this purpose, Prime Minister Nawaz Sharif is soon going to Iran.” Urging businessmen to adopt a more optimistic approach, Dastgir Pirmly said

— Exclusive Customs Today photo

Rs450mscam:Customs beginsprobeinto clearanceof1,900vehicles

that his ministry will support progressive minds in the bureaucracy because the country needs to access new markets of South America, South East Asia and Far East to increase its exports. “We are going to pick only progressive-minded ofPicers for the posts of commercial counsellors at the Pakistani embassies abroad so that they can effectively market Pakistani products in traditional as well as new markets,” he said. Dastgir recognises that there are a number of commercial counsellors working in different countries who have helped Pakistan in increasing exports to their relevant countries. “However, the

China, Malaysia and India are all growing fast by fortifying regional trade. Pak cannot overlook this reality anymore

government will appoint new counsellors only on merit next year in 2015.” Trade Development Authority of Pakistan (TDAP) Chief Executive SM Muneer and other top ofPicers were also present at the meeting. Muneer said that his organisation was making efforts to invite only genuine businessmen to attend trade shows. “From now on, we will ensure that only genuine foreign importers come to Pakistan to attend TDAP funded trade shows in the country,” he vowed. In recent years, TDAP has been attracting criticism on inviting irrelevant importers to trade shows in Pakistan instead of genuine ones. 



APRIL 29 - MAY 05, 2014

Anti-Money laundering Act: FBR urged to compile list of tax offences

ISLAMABAD: The Finance Division has asked the Federal Board of Revenue (FBR) to provide a list of serious tax crimes related to sales tax, income tax and FED to be declared as predicate offences under Anti-Money Laundering Act, 2010. In this regard, the Finance Division will convene a meeting of the working group to decide about serious Inland Revenue and Customs related crimes under Anti-Money Laundering Act, 2010.

Rs 65m WHT fraud

Newly-elected officebearers sworn in: KTBA body spells priorities he oath-taking ceremony of newlyelected officer bearers of Karachi Tax Bar Association (KTBA) was held at Bar Chamber, KTBA Building at Regional Tax Office. On the occasion, the newly elected KTBA President Syed Waseemuddin Hashmi, Vice President Muhammad Zubair, General Secretary Muhammad Aleem, Joint Secretary Arshad Ali Siddiqui, Librarian Noor Muhammad Dawood and members Executive Committee (EC) including Arshad Siraj, Muhammad Imtiazuddin Zubairi, Khalid Mahmood, Muhammad Farooq Siddiqui, Najam Irshad Khan, Younus Rizwani, Syed Sarwar Mohiuddin and Zubair Abdul Sattar Mesia took oath of their respective offices in the presence of former presidents of the association. On the occasion, KTBA General Secretary Muhammad Aleem informed the media that first executive committee meeting was held in which sub-committees on advisory, enews and views, membership, library and website, members’social activity, public relations and press, media, administration, education (CPE), finance bill, diary, benevolent fund, finance and related matters, members facilitation, indirect taxes and KTBA professional development programmes were formed under the chairs of its respective conveners. —CT Report


FBR needs century to meet April revenue target BR needs to collect Rs674.11 billion during the last quarter (April-June) of the current fiscal year to achieve the revised revenue collection target of Rs2,345 billion. As per details, the FBR has provisionally collected Rs1,670.89 billion during July-April 22 against Rs1,449.79 billion in the corresponding period last year, recording 15.3 percent increase. In April, the board provisionally collected Rs 96.195 billion in the first 22 days against Rs97.505 billion in April 2013, showing a decrease of 1.3 percent. Break-up of revenue collection figures revealed that direct taxes collection stood at Rs626.452 billion from July to April 22 against Rs531.990 billion in the same period last year, reflecting a 17.8 percent increase. Sales tax collection stood at Rs765.575 billion against Rs645.784 billion, showing an increase of 18.5 percent. The collection of the federal excise duty (FED) was Rs99.421 billion against Rs 88.987 billion, depicting a growth of 11.7 percent. The collection of customs duty stood at Rs179.445 billion during JulyApril 22 against Rs183.029 billion in the same period last fiscal year, reflecting a decrease of 2 percent. Except customs duty, all other federal taxes showed a better performance in July-April 2013-14 as compared to the previous fiscal year. The FBR has to collect Rs100.015 billion in the remaining days of April 2014 to meet the monthly target of Rs196.3 billion for the current month. —CT Report


Q Mobile official interrogated after raid on office KARACHI




akistan Customs has recovered a massive amount of Rs1,026 millions from different mobile companies including Digicom Telecommunication, New Allied Electronics (a sister-concern company of Digicom), Sana Enterprises, Mustafa Impex and Triple-S Telecommunication Company after the verdict of Islamabad High Court (IHC). According to the details, the cellular companies had registered cases vide petitions No. 2340/2013 and 1927/2013 in Islamabad High Court (IHC) regarding the issuance of Statutory Regulatory Orders (SROs) 480, 280 and 460 by Federal Board of Revenue (FBR). The cellular companies

sif Ali Abro Assistant Director Intelligence and Investigation-Inland Revenue, Karachi said that Q Mobile Manager (Operations) Babar Sultan was detained by their three-member team in a Rs65 million withholding tax evasion case. Asif Ali Abro conPirmed to Customs Today that Q Mobile did not pay Rs65 million WHT for a year and they raided the company ofPice in Clifton Karachi on Wednesday to recover the evaded amount of withholding tax. The main accused escaped the scene but the team managed to arrest Babar Sultan, the company’s Manager Operations for interrogation. Following the development, the company owners submitted a pay order worth Rs40 million and agreed to pay rest of the amount the next day. Later on Babar Sultan was released on this assurance. However, sources in the Q Mobile conPirmed that the company had cleared the remaining amount as per the promise. Asif Ali Abro further revealed that neither Sultan was arrested nor any FIR was registered against him rather he was released after questioning and assurance to pay the evaded tax money forthwith. Earlier Asif Ali Abro said, “Actually, Q Mobile had not paid 7% withholding tax on account of their TV commercials, advertisements, hoardings and other media campaigns for a year. But now they have paid almost 60 percent of the tax


in the aforesaid petitions challenged the SROs issued by FBR. In the petitions, the cellular companies denied the sales tax ratio imposed on import of the mobile phones. They were of the view that the FBR after introduction of 18th Amendment was not authorized to issue any SRO without the consent of Prime Minister of Pakistan and Federal Cabinet. FBR declared that Prime Minister had delegated the powers to FBR for issuance of SROs, adding that the Pakistan Customs only accepted bank guarantee and Pay Orders (PO) from cellular companies in form of payment and not accepted the Post Dated Cheques

(PDC). According to the Pakistan Customs officer, SRO480 and SRO460 which superseded the SRO280 imposed sales tax up to Rs250 to Rs1000 on import of per cell phone. According to the details, the Pakistan Customs has recovered an amount of Rs1026millions from six cases altogether-- in which two cases of Digicom Telecommunication contained pay-orders of Rs783million and 45million- recovered an amount of Rs84.23million from New Allied Electronics; Rs112million from Mustafa Impex and Rs1.77million from Triple-S Telecommunication company. —CT Report

Q Mobile senior accountant was arrested and FIR was lodged against him and other top officials of the company, confirms FBR Spokesperson Shahid Hussain Asad amount and would clear the rest on Thursday. The recovery from the company can even surpass Rs65 million”. It is to be noted that FBR Spokesperson Shahid Hussain Asad informed Customs Today that Q Mobile senior accountant was arrested and FIR was lodged against him and other top ofPicials of the company. He also conPirmed that the Q Mobile management had submitted a pay order for Rs 40 million

in the aftermath of the arrest. However, when contacted, Q Mobile Managing Director Mian Zeeshan and Country Head Zeeshan Yousuf conPirmed that their accountant Sultan was called by Intelligence and Investigation-Inland Revenue, Karachi only for investigation and denied registration of any FIR against any of the company’s ofPicial. In the presence of their lawyers, the company was unable to justify

non-payment of withholding tax on advertisement campaigns for one year. Thus the Directorate of Intelligence and Investigation-IR averted huge revenue loss to the exchequer as a big chunk of money has been recovered. The Directorate acted diligently and systematically over the past two months, analysing data of the company carefully and detected withholding tax evasion amounting to Rs65 million. 

Gwadartobeagamechangerforwholeregion:Nawaz GWADAR


rime Minister Nawaz Sharif onThursday said the current government plans to develop Gwadar as a‘free port’on the lines of Dubai, Singapore and Hong Kong ports. The Planning Commission has been tasked with an exercise to hire international consultants for this purpose. The Prime Minister said the government had a broad-based plan for the development of Gwadar under which the port city would have a state-of-the-art airport and a fully developed seaport. He said a new security force would also be raised for the security and protection of foreign nationals, particularly the Chinese citizens, working on various projects in the area. The Prime Minister said that the


matters relating to development of Balochistan, peace and security and PakChina Economic Corridor were discussed in the meeting with Chief Minister Balochistan Dr Abdul Malik. The ways and means to connect Kashgar (China) and Gwadar through road and rail links were deliberated in detail, he added. Nawaz expressed his government's resolve to lay a network of roads in Balochistan during the current PML-N government's tenure. Earlier, during the briefing, the PM was apprised that in relation to Pak-China Economic Corridor, Rs 162 billion had been allocated for Balochistan only. He was informed that the provision of clean drinking, a 300-bed hospital, a technical training centre, a 19-km expressway and the expansion of airport and port had also been planned for Gwadar. He directed the Finance Minister to release Rs 1.6 billion for the dredging of port.


APRIL 29 - MAY 05, 2014

ANF seizes 8kg heroin, 376kg charas; arrests 9 drug peddlers

LAHORE: Anti Narcotics Force (ANF) recovered 8 kg heroin, 376 kg charas and arrested nine drug peddlers, seizing three vehicles from their possession during operations conducted in various areas of Punjab and Balochistan. ANF Rawalpindi, on information conducted a raid at Ramzan Hotel at Gilgit and recovered 8kg charas from personal possession of Ghazanfar Ali r/o Sakurdu, District Baltistan.

Importers, traders hail Yahya appointment as DG Customs Valuation

Rs7,764,732 tax evasion case

ONO issued against M/s Shaikh Tube Mills, Javaid Umar Enterprises KARACHI


— Exclusive Customs Today photo

mporters, traders and other stakeholders expressed their contentment over the appointment of MuhammadYahya as Director General (DG) CustomsValuation by Federal Board of Revenue (FBR). Talking to CustomsToday, importers and other stakeholders were of the view that the issues faced by them through issuance of ‘unfair’valuation rulings could be redressed properly under the leadership of newly appointed DG CustomsValuation MuhammadYahya. They hoped that the DG Customs Valuation would take all stakeholders into confidence before determining the Customs values of any description/commodity. It is pertinent to mention here that importers and other stakeholders had expressed their deep concern over the issuance of 21 Valuation Rulings of different commodities in just four days. They were of the view that the high valuation rulings would definitely support the illegal means of trade. They appealed to the newly appointed DG CustomsValuation to take effective measures to make the entire process of determining the customs values of commodities transparent and take the stakeholders into confidence before issuance of valuation rulings. —CT Report



he Collector of Customs, Adjudication-I has issued an Order-in-Original (ONO) No. 520/2013-14 against M/s Shaikh Tube Mills and its clearing agent M/s Javaid Umar Enterprises on mis-declaration of description of alloyed prime hot rolled steel sheets in coils imported vide GD IGM No.5549. According to the details, the case was instituted by the Model Customs Collectorate (MCC) of AppraisementWest on October 21, 2013 and conducted two hearings on Nov 5, 2013 and Nov 19, 2013 respectively. The Collector of Customs Adjudication-I on March 27, 2014 made the judgment in the presence of Imran Iqbal, Advocate from the respondents’ side and Muhammad Khalid, appraising ofPicer, MCC-Appraisement (West) from the prosecution. As per details, it was reported by the MCC-Appraisement (West) that M/s Shaikh Tube Mills, imported a consignment declared to contain alloyed prime hot rolled steel sheets in coils weighing 1004.880MT vide GD IGM No.5549 dated 15-5-2013, index No.11 under PCT heading 7225.3000 chargeable to customs duty @5per cent, which further reduced to zero per cent under FTA SRO 659(1)/2007 dated 13-6-2007 and Piled a GD for home consumption No. HC-115878 dated 16-5-2013 through their authorized clearing agent M/s Javaid Umar Enterprises (CHAL #18) for clearance thereof. The GD was processed under 1st

Appraisement System for examination of the goods. The shed staff upon examination conPirmed the quality of goods as prime, but did not conPirm the description of goods, keeping in view that through naked eyes, the conPirmation of alloy or non-alloy steel, is quite difPicult, moreover, the conPirmation is as so necessary due to the facts that non-alloy steel sheets are classiPiable under PCT heading 7208.9090, attracting customs duty @ 10per cent. Whereas, alloy steel sheets falls under PCT heading 7225.3000 attracts the customs duty @ 5per cent. The shed staff, therefore, sent representative samples for laboratory test to conPirm exact description and complete chemical composition for conPirmation of the aspect regarding alloy or non-alloy of imported goods. Afterwards, the samples were sent to M/s A Q Khan Research Laboratory for requisite test purposes where from the laboratory vide its test report No. MIC13-CUS-872 dated 3-7-2013 conPirmed the complete chemical composition of the representative samples. When said percentages were examined in the light of dePinition of alloy steel given at Chapter Notes 1(f) of Chapter 72 of Pakistan Customs Tariff, the percentages of elements given therein were not found in consonance with the criteria given therein, by virtue of which the goods were found to be of non-alloy steel, which are classiPiable under PCT heading 7208.9090 attracting 10per cent customs duty instead of declared PCT heading 7225.3000 attracting 5per cent customs duty. Subsequently, importer requested for testing of the samples on the plea that M/s A Q Khan Laboratory does

not possess facility to test the presence of Boron into the samples. The request of the importer was considered and sample was sent to another laboratory M/s Peoples Steel Mills for conPirmation of alloy or non-alloy steel. M/s Peoples Steel Mills vide test report No.28380/MTR-2539 dated 19-9-2013 reported the goods as of non-alloy steel. The Pindings of M/s Peoples Steel Mills are similar to the test results, earlier, reported by M/s A Q Khan Laboratory. Both the laboratories conPirmed the goods as of non-alloy steel, which is classiPiable under PCT heading 7208.9090 attracting 10per cent custom duty. It was further added the documents furnished by the importer M/s Shaikh Tube Mills, through their clearing agent M/s Javaid Umar Enterprises (CHAL No.18) at the time of import were showing the description as hot rolled steel coils of alloy steel of PCT heading 7225.3000, whereas, upon test the same was found to be hot rolled steel sheets of non-alloy steel, attracting classiPication under PCT heading 7208.9090 chargeable to customs duty @10 per cent, which depicted that the importer deliberately and willfully attempted to clear the goods through their clearing agent as alloy steel with an intent to hoodwink the government’s legitimate revenue to the tune of Rs7,764,732 and found guilty of an offence of mis-declaration in terms of Section 32(1)& (2) of the Customs Act, 1969 punishable under Clause 14 of Section 156(1) of the Customs Act, 1969 read with SRO499(1)/2009 dated 13-6-2009. In the light of above reported facts, M/s Shaikh Tube Mills and its clearing agent M/s Javaid Umar En-

terprises were issued show-cause notice as to why impugned goods should not be conPiscated and penal proceedings should not be initiated against them for violation of above mentioned provision of law. The Collectorate was represented by Muhammad Khalid, appraising ofPicer. He defended the charges leveled in the show-cause notice. He stated that laboratory report conPirmed contents of the show-cause notice. The judgment taken by the Collector of Customs Adjudication-I, Shahanshah Hasnain stated: “I have heard both sides in detail, the goods were examined two times by the department. Both test reports conPirmed department’s point of view, in this situation it is clearly established that the department’s view was correct. Goods have been found to be non-alloy. As regards, mis-declaration, in this case the department itself was observing that keeping in view that through naked eyes, the conPirmation of alloy or non-alloy steel, was quite difPicult. This difPiculty faced and accepted by the department was equally applicable in case of importer/respondent, who could not Pinally decide as to whether goods were alloy or nonalloy and therefore declared goods as per bill of lading, packing list and invoice etc. In view of the aforesaid position, merit of the case is that the difference in the description of the goods in this case does not appear to be based on deliberate mis-declaration. Therefore, the charges of misdeclaration were not found established. Goods may be released on payment of duty/taxes in term of PCT classiPication of the goods as determined by the department. The case is disposed off accordingly”. 

— Exclusive Customs Today photos




APRIL 29 - MAY 05, 2014


FAIzA ISRAR ederal Board of Revenue has accomplished 80 percent automation for putting in place Human Resource Information System (HRIS) and remaining 20 percent work will be completed within next few months, FBR’s Chief Management Basirullah Khan said. “We are undertaking strenuous efforts to link all HR data with HRIS. Once the online system starts functioning, all matters pertaining to transfers, postings, location, promotions and proPiles of the FBR ofPicials and ofPicers will come under one head and will be only a click away,” FBR Chief (Management) Bashirullah Khan expressed these views during an exclusive chat with the Customs Today. Bashirullah said that there were two areas falling in his domain - Inland Revenue Service (IRS) and its Pield formation, adding that the Chief (management) had to deal with all affairs pertaining to postings, transfers, promotions, disciplinary proceedings, permissions and granting of leaves of these departments. “There are a total of 11 sections under the purview of the FBR Chief (management) including Pive sections dealing only with service related matters of employees from BPS 1 to 22,” he pointed out, adding that service proPiles were prepared and all related problems including discipli-


nary proceedings and actions, leave of all nature and other such matters were dealt under the MIR (4) of Government Servants (EfPiciency & Discipline) Rules, 1973. Similarly the other three sections deal with the affairs of employees from BPS 17 to 22 respectively, he added. Bashirullah disclosed that in addition to these responsibilities, the FBR Chief (management) had to look after all the affairs of a number of ex-cadre employees in Inland Revenue (IR), about 850 employees in the IT Section and secondcadre employees of IR besides affairs of the newly appointed employees, adding that the department also had to devise a foolproof plan for their role, effective performance and promotion. The Chief (management) said that the FBR had a sanctioned strength of 27,000 posts from BPS 1 to 22 but currently it was being run with only 23,000, adding that no new recruitment had been made since 1995 and the shortage of staff had been affecting the performance of Pield formation and indirectly revenue collection. “Due to a ban on recruitment these posts could not be Pilled so far,” he pointed out, adding that the FBR Chairman Tariq Bajwa as well as Member (Admin) Shahid Jatoi had already made it clear that all these posts must be Pilled in a transparent manner. He claimed that they were in constant contact with the National Testing Service (NTS) and the Federal Public Service Commission (FPSC) to ensure re-

cruitment of talented candidates on the basis of purely on merit. “You see, the FBR Chairman Tariq Bajwa has adopted the policy of zero tolerance towards the ofPicials and ofPicers involved in corrupt practices and he has issued clear directives regarding initiation of disciplinary proceeding against all such ofPicers under Government Servants (EfPiciency & Discipline) Rules, 1973,” he disclosed, adding that the department always ensured to assign honest and dedicated ofPicers to inquiries to decide cases on merit. Bashirullah claimed that unlike past, discipline had been ensured through strong administrative measures and strict enforcement of laws, adding that prompt action was taken to avoid unnecessary leave, wilful absence from duty and poor performance. He also appreciated and welcomed the up-gradation of the post of inspector from BPS 14 to 16, saying that now their recruitment would be made through the FPSC. 

FBR Chairman Tariq Bajwa has adopted the policy of zero tolerance towards the officers involved in corrupt practices by issuing clear directives regarding disciplinary proceeding against such officers under Government Servants (Efficiency & Discipline) Rules, 1973


APRIL 29 - MAY 05, 2014

Founder & Chairman zulfiqar Ali Editor Rahil Yasin For advertising & subscription +92-322-3370002 Phones: 042-35781643-4, Fax: 042-35781645 Address: 627, Siddiq Trade Centre, Gulberg, Lahore


Phasing out concessions


nder the IMF’s bailout package of $6.64 billion for Pakistan’s struggling economy, the time has come when the government will have to deliver on key and politically tough conditions on taxation side.The government is in the process of finalizing list of exemptions which will be abolished in phases starting from next budget 2014-15 by incorporating it as part of next Finance Bill 2014. There is also need to broaden the tax base by abolishing number of existing exemptions but there will be dire need to bring down rates of IncomeTax as well as SalesTax into single digit with the objective to reduce the tax burden on existing taxpayers without compromising tax revenues. On one side, the tax base should be expanded while on other hand the incidence of burden should be decreased to give incentives for coming into tax net. In order to finalize the list of exemptions which are going to be abolished in the next budget, Finance Minister, Senator Ishaq Dar had chaired a meeting of the high powered committee constituted by the government to review concessionary regime in totality.This committee will also identify those set of exemptions which will be abolished in the first year starting from July 1, 2014. The government intends to do away tax exemptions of all taxes including IncomeTax, SalesTax, Federal Excise Duty and Customs Duty. Some Statutory Regulatory Orders (SROs) will be withdrawn especially on Customs side with a view to rationalize tariff in a bid to provide level playing field. The committee had threadbare discussions regarding the said existing concessionary regime with the view to identify concessions/exemptions which could be rationalized, simplified, minimized and deleted in the budget 2014-15. While appreciating the spade work done by the technical sub-committee in consultation with the representatives of the various Chambers of Commerce & Industry, the Finance Minister directed the administrative Secretaries of different Ministries/Divisions to re-evaluate the recommendations so that new investments in textile, energy and ship-making sectors are encouraged and level playing field is created for all the stakeholders in the economy beside harvesting the fruits of GSP plus status accorded to Pakistan.The Minister also directed that while re-evaluating the recommendations of the technical subcommittee, concessions affecting common man should not be withdrawn and cascading principles of tariff rationalization be observed in letter and spirit. But it is yet to see that how the common man is protected in this whole process.There is need to identify certain sectors which are exempted in accordance with international standards such as basic food items and medicines and education (not expensive schools and universities), all other sectors should be brought into the tax net. 

Adopting next generation technology ISLAMABAD



akistan has entered into latest next generation mobile services known as 3G and 4G by selling Pive lots of spectrum out of total six. One license of 4G was obtained by China Mobile (ZONG) while another remained unsold. In this auction process, Pakistan Telecommunication Authority (PTA) as a regulator had sold four licenses of 3G technology and one 4G by generating revenues to the tune of Rs 111 billion against the desired target of Rs 120 billion envisaged in the budget 2013-14. However, the credit rating agency, Moody says that the revenue generated through 3G and 4G auctions was less than their expectations. But experts on Information Technology always insist that launching of technology is much more important than generating revenues if one takes long term view of promoting this important sector for the country. In the past, the PPP led regime had envisaged Rs 50 billion, then Rs 70 bil-

lion and Pinally Rs 79 billion during the last three years of its rule but it failed to move ahead as every time serious questions were raised on transparency of the process. Now two remaining licenses will be sold including one 4G technology and another on account of Instaphone and both these licenses can bring Rs 50 billion even at the existing base price. The government will have to bring fresh Information Memorandum (IM) for auctioning these two licenses and the base price might be enhanced and other changes in conditions might be introduced. With launching of 3G and 4G spectrum auction in Pakistan, the Gross Domestic Product (GDP) will go up by 1 to 1.8 percent at least over next few years. It was the only sector which can kickstart economic activities and can boost GDP growth over the next few years. Pakistan requires such push-up on economic front when the sluggish activities in the wake of energy outages and security concerns are playing havoc with the prospects to turnaround the economy. “Pakistan can come out from vicious cycle of 3 to 4 percent of GDP after sell-

With launching of 3G and 4G spectrum auction in Pakistan, the GDP will go up by 1 to 1.8pc in next few years

ing out 3G and 4G in the country and the growth will cross 5 percent of GDP,” said economists. The cellular companies, according to experts, will have to invest at least $500 million each by all four winning parties so total investment along with license fee would cross $3 billion mark. According to government estimates, the latest auction will provide 900,000 new job opportunities in telecom sectors over the medium term in next three years. China Mobile, which won both 3G and 4G spectrum in recent auction, will invest $1 billion more in the country in order to modernize its network, placing research and development framework and ensuring skilled workforce. Mobilink, which had already invested $3.9 billion in Pakistan, was now intended to increase its investment up to $4.7 billion in months ahead. The Telenor will also increase its investment beyond $2.5 billion. The cellular companies had already invested on improving their networks to run 3G and more investment is on cards in months and years ahead.


APRIL 29 - MAY 05, 2014


PTC paid Rs17b: Collection from Cigarette manufacturers rises by 21pc

ISLAMABAD: FBR received over Rs17 billion FED, sales tax and income tax from a leading cigarette manufacturer during January-March 2014, showing an increase of 21 percent as compared to last year. According to quarterly results announced by Pakistan Tobacco Company for the first quarter ended on March 31, 2014, the company contributed more than Rs17 billion to government revenues on account of excise duty, sales tax and income tax, which depicts a 21 percent increase over the corresponding period last year.

Wizards fail to woo MPs: Senate body rejects ST Amend Bill ensing violation of the Supreme Courts orders, the Senate Standing Committee on Finance rejected SalesTax (Amendment) Bill 2014, saying that it will put additional sales tax burden on consumers through CNG stations. The committee chaired by Senator Nasreen Jalil decided not to recommend tabling of the SalesTax (Amendment) Bill 2014 in the National Assembly.The committee members from both the ANP and MQM opposed the bill, the PPP abstained from the panel while the PML-N Senator favoured of the bill.The committee chairman pointed out that the committee was not going to recommend the bill to the National Assembly due to lack of unanimity over the issue. She said that there were clear orders of the court and committee could not go against court orders. Federal Finance Secretary DrWaqar Masood said the recommendations of the committee on SalesTax (Amendment) Bill 2014 should be backed by a strong rationale. Whatever is the recommendation of the committee of the National Assembly, there should be a solid basis and logic behind the decision. FBR ChairmanTariq Bajwa informed the committee that the Supreme Court vide its judgements dated June 6, 2013 and December 10, 2013 declared the extra sales tax at 9 percent on the supply of CNG as against the Constitution and law. Accordingly, the court directed the FBR to deposit Rs28 billion collected as extra sales tax with effect from July 1, 2007 to December 10, 2013 with the Registrar Supreme Court of Pakistan. According to him, as the prevailing legal dispensation empowers the FBR to issue refund of sales tax only to the registered persons. —CT Report


WRITE TO US YOUR GRIEVANCES: Through CUSTOMS TODAY platform HElP DESK, now you have chance to DIRECTlY write your problems to top govt. functionaries. If you have any grievances, queries, questions or suggestions, you can write in this section as it provides easiest access to you to approach Customs and Revenue authorities. WHO can write in this section? Importers & Exporters, Customs Agents, Chambers of Commerce, Trade Associations and Customs Officers TO WHOM you can write? Honourable PM, Minister/Secretary for Finance & Revenue, Minister/Secretary for Ports and Shipping, FBR Chairman, Member Customs and Chairperson Senate/National Assembly Standing Committee on Finance & Revenue. Send your letters at:

100thNMC PARTICIPANTS VISIT FBR group of fifty three senior civil servants undergoing the 100th National Management Course (NMC), along with the Rector, Dean and the faculty of the National School of Public Policy (NSPP) visited FBR House last week. The group was welcomed by Member Facilitation & Taxpayers’ Education (FATE) Ms. Riffat Shaheen Qazi. She briefed the visiting officers and faculty of NMC about the organizational structure, working and revenue collection performance of FBR. The Chairman FBR Tariq Bajwa, in his comments, gave a detailed outline of the various policy and operational challenges faced by FBR and highlighted the strategies adopted by FBR to address these issues. He also discussed the major initiatives of FBR to enhance revenue generation through audit and enforcement initiatives and efforts to broaden the tax base. He highlighted the measures being adopted by FBR to improve the tax-to-GDP and bridge the tax gap. The Rector National School of Public Policy Muhammad Ismail Qureshi thanked FBR for providing the participants of NMC with an opportunity to interact with FBR’s top management. —CT Report


Exporterssufferinghugelossesduetorupeeappreciation To, The Honorable, Federal Minister for Finance, Islamabad Respected Sir, With due respect, I would like to draw your attention towards a sensitive issue pertaining to negative impact on export activities due to the dramatic decrease in US dollar rates. Sir, a signiPicant imbalance has been developed in exports due to the rapid decrease of US$ rate against the Pak rupee and it has put a negative impact on overall trade activities of the country. Through this letter, I would like to inform you that the exporters’ community has been facing a loss of around US$1 billion due to the immediate decrease in

the dollar rate. Although we are granted GSPplus status, the export community is neglected by the government, as we

are depositing 3 per cent sales tax on export of our brands. The federal government and Ministry of Finance should take effective

steps to facilitate the exporters by reducing the sales tax and ensure provision of rebate facility, as this facility is being provided in our neighboring countries including India, China, Thailand and others. The export community is being faced with issues including absence of proper infrastructure, energy crisis and worst law and order situation. The government should ensure proper law and order situation and eradication of electricity load-shedding in order to increase the exports of the country. We hope that the competent authority should take immediate notice of the issues and grievances highlighted through this letter. Yours’ sincerely, Abdul Jabbar Dalal, KARACHI


APRIL 29 - MAY 05, 2014

Duty on cotton yarn import: PAF fears fall in value-added textile exports

KARACHI: The Economic Coordination Committee (ECC) decision to withdraw 5 percent duty exemption on import of cotton yarn will cause a huge fall in value-added textile export under GSP plus facility to EU countries. The decision will have serious repercussions for the textile sector which is already reeling from many other challenges, said Pakistan Apparel Forum (PAF) Chairman Muhammad Jawed Bilwani.

Customscommittedtofacilitatetrade:RoziKhanBurki LAHORE


hief Collector Customs Central Region Rozi Khan Burki has reiterated the Customs Department’s pledge to spare no effort to facilitate trade in the central region to boost customs revenue collection. He was addressing a farewell party organised by the FRA Customs Union in honour of the outgoing Customs Collector Zeba Hai Azhar, Additional Collector Mohsin Rafique and Deputy Collector Rizwan Salabat at Mughalpura Dry Port here. Mr Burki informed that all lower grade customs employees would be taken on board through resolution of their genuine grievances to enable them work with peace of mind. He declared that role of importers and exporters in the economic growth and development was of great significance and the customs department would leave no stone unturned to boost trade volume with other countries. Speaking on the occasion, outgoing Collector of Customs (Appraisement) Lahore Zeba Hai Azhar said that she had spent a good time in Lahore and did her best to increase revenue collection, adding that she was lucky to have worked with the committed Customs officials in Lahore. Incumbent Collector Customs (Appraisement) Zahid Khokhar urged the customs officials to concentrate on collection of revenue to ensure achievement of target, adding that he was well aware of the problems being confronted by the staff and would make sincere efforts for their solution. On the other hand, FRA Customs Union President Amir Haider Hoti demanded the customs authorities to restore weekly off on Saturday or revise time schedule as 9am to 4pm. Hoti also demanded that the customs inspectors should not be forced to work as gatekeepers instead the department should hire services of security agencies in view of the worst law and order situation in the country. He also urged the management to divide common pool funds equally between the newly made two collectorates. All the staff and high-ups also offered fateha for the deceased staff members including Waqar Shah, Muhammad Fiaz and Sher Afgan. 


ISlAMABAD: Federal Minister for Finance Senator Mohammad Ishaq Dar chairing a meeting at FBR Head Office to review its performance.

— Exclusive Customs Today photos

lAHORE: Chief Collector Customs Rozi Khan Burki presenting shields to Collector Customs Appraisement Zahid Khokhar, outgoing Collector Customs Appraisement Zeba Hai Azhar, Additional Collector Mohsin Rafique, Deputy Collector Rizwan Salabat, and FRA Customs Union President Amir Haider Hoti.

KARACHI: TDAP CEO SM Muneer in a group photo with Pakistan Carpet Manufactur ers & Exporters Association Chairman Akhtar Nazir Cooki, Vice Chairman Kamran Razi, Muhammad Javed, Sheikh Saeed and others.


APRIL 29 - MAY 05, 2014

Single digit sales tax to eliminate malpractices in refund claims: FPCCI

KARACHI: Syed Mazhar Ali Nasir, Acting President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) demanded for reform in existing sales tax regime. He emphasized reduction of sales tax to single digit in the upcoming federal budget for the fiscal year 2014-15. Syed Mazhar Ali Nasir demands reduction in sales tax to single digit (non-refundable, non-adjustable at import and manufacturing stage) in Pakistan.

100,000 taxpayers to be brought into net ISLAMABAD



BR has planned to bring one hundred thousand individuals and businesses in the tax net before the end of the current Piscal year. According to sources within FBR it has been decided to ensure that the tax collections are equal to at least 12 per cent of the GDP at the end of the current Piscal year. However, it is seems an unrealistic task as currently tax collection constitutes a little over 8 per cent of the GDP for the moment. Sources said that under the guidelines of the Ministry of Finance, a private Pirm was hired to locate the tax evaders and those not disclosing their income accordingly and fully. A number of big shots including shareholders of stock markets, currency dealers, real estate brokers, wholesale dealers of fruits and vegetables, brick kiln owners, poultry farmers located in isolated localities, hatcheries, honey farmers, etc. These people, the sources said, are being sent notices that they are guilty of mis-declaration of their assets and income which is a crime. They are asked to voluntarily

deposit taxes and warned of registration of cases and raids at their business premises if they do not comply. Sources further said that the authorities believe this step is meant for increasing revenue as well as en-

“Every night the same drea. I have to file for Chapter 11 because of so many taxes!”

hancement of tax net in Pakistan. Economists believe that to bring Pakistan’s economy on sound footings the revenue generated through taxes should be at least 20 per cent of the GDP as modern

countries of the world have. Tax evasion of the kind in Pakistan leaves the relevant authorities to rely on indirect taxes that cause price hikes and create hardships for the low salaried classes. 


APRIL 29 - MAY 05, 2014

Published by M. F. Riaz, Off. 91, 3rd Flr, Gul Plaza, M.A. Rd., Karachi, for Customs Today and Printed at Dhoom Printing Press Masheer Mahal Building, Off: I. I. Chundrigar Road, Karachi

Tuesday april 29 monday may 05, 2014  

Pakistan’s first in-depth newspaper that presents balanced news reports, analysis and reviews regarding Customs, Federal Board of Revenue (F...

Tuesday april 29 monday may 05, 2014  

Pakistan’s first in-depth newspaper that presents balanced news reports, analysis and reviews regarding Customs, Federal Board of Revenue (F...