FBR to withdraw collectors’ valuation powers

ISLAMABAD: The Federal Board of Revenue (FBR) has decided to withdraw Customs collectors’ powers to determine the assessable values of imported goods in order to levy duty and taxes at the import stage.

Sources said that the tax department in this regard has asked the government to approve the proposal to do so as submitted in the Finance Supplementary Bill, 2021.

It may be recalled that an investigation of the department of Customs Intelligence and Investigation last month had unearthed the corruption of billions, committed at the valuation stage, at Quetta Customs during the period between 2015 and 2021.

In consequence of this valuation fraud committed by successive officials at Quetta, the collectors’ valuation powers were abolished in 2019 but again restored through the Finance Bill, 2021, to help ease penal consequences for the culprits of the scam. 

Now, FBR has once again decided to abolish these powers through the Supplementary Bill, 2021.

It is pertinent to note that FBR had initiated an inquiry against ex-Customs collectors of Quetta on the report of Customs I&I. Initially, this fact-finding inquiry committee had reportedly declared the lower staff, including appraisers responsible for the scam as they seemed to have been under pressure. However, later it was learnt that the inquiry committee was able to fix responsibility on the real culprits and submitted its report before the chairman FBR on November 25.

Sources said that FBR, in the supplementary bill, has also proposed to reverse two earlier amendments made to the Customs law through the Tax Laws (Third Amendment) Ordinance, 2021 in September this year after the investigation proved ill motives behind the move.

According to the first proposal, an appeal against the decisions of DG Valuation Customs shall be now filed before judicial fora instead of the Member Customs (Policy) in consonance with the principle of separation of judicial and executive functions.

This law was amended to transfer appeals against the decisions of DG Customs Valuation to Member Customs Policy in a bid to benefit the alleged culprits of the valuation scam at Quetta.

Similarly, the second proposal seeks to eliminate corporate guarantee as security in the cases of provisional assessments of duty and taxes on imported goods. This law had been amended to facilitate Customs officials by adding corporate guarantee as security. 

However, Profit learnt that certain unscrupulous elements have already taken advantage of this earlier amendment in the Customs law which had added the worthless security of a corporate guarantee for provisional assessments. 

“In October this year, FBR had directed provisional assessments of certain pending consignments involved in the Quetta valuation scam against just undertakings, putting massive revenues involved in these cases at risk,” they added.

Profit learnt that importers, in collusion with Customs officers, had planned to replace bank guarantees worth billions of rupees, taken for the provisional assessments of MG vehicles imported in Karachi, with corporate guarantees.

It is pertinent to note that the Senate Standing Committee on Finance and Revenue on Monday had also discussed issues related to the valuation of imported goods. 

The Chairman Committee Senator Talha Mahmood told the chairman FBR that 94 consignments of pistachio worth $287 million were imported between July 2016 to June 2018. “What is the tax department’s policy if you have 50 tonnes of pistachio and one person imports 10kg to damage the whole valuation?” he asked. 

He was told that the Customs Act has a laydown mechanism to cater to every situation while courts are also present to address the gaps. However, he added that there is a need to establish a national valuation commission as institutional deficits exist between federal and provincial governments. 

During this meeting, member Policy Customs had alleged that Customs Intelligence officials had personally maligned him.

The committee chairman directed the chairman FBR not to take any action against his colleagues till the committee discusses the matter in detail.