Committee fails to finalize inquiry into MG's under-invoicing case

The inquiry committee, tasked to probe the alleged under-invoicing of MG motors, reportedly is using delaying tactics in finalizing the inquiry.

Sources said that the four-member inquiry committee led by Director General Customs Intelligence and Investigation Rasheed Shiekh failed to furnish a report in the MG under-invoicing case.

A four-member probe committee was supposed to submit a report by May 15, 2022.

Sources said that the committee members are waiting for the written instructions of the Public Accounts Committee for investigating the alleged under-invoicing matter. 

The MG motors scam has been already adjudicated by the Collector Adjudication Karachi however such an adjudicated case needs to be reopened by the FBR  through a written order under section 195 of the Customs Act as Chairman FBR or member customs legal can mandate a probe committee to reinvestigate such an adjudicated case, sources added.

Sources also said that member customs legal has asked incumbent chairman FBR to decide on re-opening of the adjudicated order in the MG case but no response has been given to her so far.

According to the TORs of the probe committee, its members have been required to determine the fair value of imported MG vehicles under section 25 of the Customs Act. 

Sources said that the valuation department of FBR determines fair values of imported goods under section 25 usually by following the deductive value method of customs valuation. 

In the deductive value method of customs valuation given under section 25 of the Customs Act, the basic idea is, to begin with, the market value in the country of importation of imported goods similar or identical to the imported goods being valued and work back all through from country of importation to the country of exportation deducting from the market value all the expenses incurred from the country of exportation to the country of importation.

The expenses which are to be deducted under the law from the market value of similar/ identical goods to arrive at the assessable value of the goods being valued include duty/ taxes payable on importation/ sale in the country of importation, usual costs incurred on account of transport and insurance and the additions to value usually made on account of profit and general expenses incurred on the sale of similar/ identical imported goods in Pakistan. 

Under the deductive value method of customs valuation, the determination of the true assessable value of  10,000 MG vehicles allegedly under assessed by the customs at Karachi has to begin with the market sale value of  MG vehicles imported into Pakistan other than the 10,000 MG vehicles in question.

If the probe committee follows this FBR's usual and most commonly used valuation practice for MG vehicles too,  the revenue losses caused in the  MG motors scam may swell far beyond the presently alleged amount. However, by following the FBR's favorite deductive value method of customs valuation,  the probe committee members may end up spoiling the career of their benefactor who is accused of the scam.

The scribe approached Chairman FBR and DG Customs intelligence and investigation for comments but no reply was received till the finalization of the story.