Customs unlawfully clears goods worth $847m during import  ban

A large number of importers with the alleged connivance of Pakistan Customs officials bypassed the mandatory requirements of Financial Instruments of Pakistan Single Window (PSW) and managed to clear goods worth billions of rupees in violation of import ban.

Sources said that unscrupulous importers with the help of customs officials cleared imported goods without tagging the required electronic Import Form (PSW-FI) in customs’ WeBOC.

Under the filing and processing of the Goods Declarations (GD) in One Customs, the importers  are required to get a Financial Instrument (FI) issued from the banks in respect of all modes of payment which may be letter of credit, contract, advance payment, open account to complete an import or export transaction.

The Directorate of Reform and Automation customs Karachi in its working hours found  that a large number of imported goods had been cleared unlawfully in the last one year without the mandatory Pakistan Single Window Financial Instrument.

The importers were able to file their Goods Declarations on “open account” without having express permission or waiver for tagging of PSW-FI by the concerned banks.

“As a result, there is no PSW FI available against such gate out over 50,000 GDs involving $800 million in the system”, sources added that the GDs without PSW FI can be increased in coming days.

In addition, the respective banks have also not uploaded the required financial instruments in the PSW system in respect of such GDs.

Sources said that there are also billions of rupee liability on banks with regard to import made on deferred payments as the government had imposed a ban on import and questions arising which mode of payment the traders/importers adopted in payment of goods.  

The directorate of Reforms and Automation also pointed out that certain importers were found circumventing the requirements of attaching FI unlawfully by claiming wrongful exemptions under chapter 9901, 9903, 9905, 9908, 9909, 9910, 9911, 9913 and 9916 to avoid submission of mandatory PSW Form-1.

As a result, they were able to file GDs without the required FI involving $21 million .

Sources said that the assessing officers during assessment simply removed the claimed exemptions on such GDs by amending declared HS codes/SROs and cleared the goods without FIs under actual HS Codes.

In addition, a huge difference of more than 250% has been found between the invoice unit value and the declared unit value by the importers.

In one case, importers declared just 1100 dollar value in one open account against an assessed value of $64000 depicting how big the volume of this scam is, sources added.

Sources said that a number of solar importers were found involved in mis-declaration of unit invoice value and by doing so, they misused single FI against multiple GDs in case of solar panels, PSW FIs involving approximately $26 million were used unlawfully.

Sources said that SBP just allowed import of machinery or parts of machinery through open accounts but almost all the goods cleared under the grab of machinery or parts of machinery and Customs officials had made billions of rupee by clearing the goods unlawfully.

Member Customs Operations on the query of this scribe informed that Electronic Import Form requirement is not applicable for certain concessionary imports.

That concession was claimed by certain importers, and GD filed without EIF, as per the mechanism. However, the concession was not found admissible & duty/ taxes were charged.

When it was detected that the importers had wrongly claimed concessions, then contravention cases were  framed against them adding that a high level inquiry committee has been formed to examine the issue in detail.