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Customs Appraisement West asked to recover Rs 243.515m evaded duty/taxes from KICT

Customs Appraisement West asked to recover Rs 243.515m evaded duty/taxes from KICT

KARACHI: The Customs Collectorate Appraisement West has been asked to recover Rs 243.515 million evaded duty and taxes from the Karachi International Container Terminal (KICT) Limited at the earliest, it is learnt.

The sources told Customs Today that Deputy Director of Post Clearance Audit (PCA) Karachi Sajid Ali Baloch has forwarded a letter to Deputy Collector, Recovery Cell of the Customs Appraisement West about the huge recovery from the KICT.

According to sources, the Customs Appellate Tribunal-III Karachi headed by Chairman/Member Judicial Justice (retd) Malik Mazoor Hussain and Member Technical-I Karachi Zulfikar A Kazmi has dismissed the appeal of the respondent vide Customs Appeal No K-1307 of 2015 dated 7.6.2017.

By this judgement we intend to dispose of the instant appeal filed by the appellant against ONO 646/2014-15 dated 22.6.2015 passed by the Collector of Customs Adjudication-I Custom House Karachi.

Brief facts of the case are that the appellant cleared two units of imported super brand used quay cranes complete with spreader, standard accessories, fittings and spare etc through their clearing agent M/s Port Connection Private Limited by availing benefits of serial no 16 of SRO 575(I)/2006 dated 5.6.2006 without fulfilling the mandatory requirement of valid approval issued by the Board of Investment for availing the said exemptions. BoI had examined the case in light of the input sought from Engineering Development Board (EDB) and conveyed to the Federal Board of Revenue that import of used machinery such as Quay Crane do not fall within the scope of SRO 575(I)/2006 dated 5.6.2006 for availing the concessionary rate of duty.

Hence the appeal was refused issuance of mandatory permission/certificate required for availing the given exemption of taxes under SRO 575(I)/06 dated 5.6.2006. However, the appellant succeeded in clearance of the impugned goods on payment of 5 percent custom duty and 5 percent advance income tax and without payment of sales tax and additional sales tax as prescribed under PCT 8426.1910 and thus they had incorrectly availed the benefits of Serial No 16 of SRO 575(I)/2006 dated 5.6.2006 which was otherwise not admissible in the absence of valid permission/certificate issued by the BoI. By availing this inadmissible benefit the appellant succeeded in clearance of two used Quay Cranes on payment of duties and taxes.

Due to this under and incorrect availing of benefits of exemption, it was ascertained that the appellant had short paid/evaded leviable taxes of worth Rs238,015,337 including sales tax along with additional sales tax Rs226,681,274, income tax Rs11,334,063.

Many opportunities of hearing were provided to the appellant since filing of this appeal but the case remained pending and hence a final hearing opportunity was given on 10.5.2017 when Shehryar Advocate, appeared for the appellant. He elaborated the content of appeal and prayed for setting aside the impugned order.

Arif Maqbool, SA represented the respondent. He defended the impugned order on the basis of their given comments and facts as placed on record. Record has been carefully perused and arguments put forth by the appellant as well as the respondent have been duly considered. The only issue involved in this case is the admissibility of exemptions from sales tax and income tax under the ambit entry No 16 of the table to Federal Government’s exemption Notification SRO 575(I)/06 dated 5.6.2006 on the impugned cranes imported by the appellant. A plain reading of this notification reveals that it had allowed certain concessionary rates of customs duty and exempted from the whole sales tax the import of plant, machinery, equipment and apparatus including capital goods.

The notification specified such plants and machinery etc for forty-one different agricultural, industrial and service sectors. The appellant had claimed and availed exemption under Serial No 16 which allows all the machinery, equipment and other capital goods of any PCT Heading for five service sectors. On 2.8.2013 the appellant filed GD and got the two cranes cleared without this requirement of BOI certification. Respondent had failed to throw light as to how clearance was allowed without this certification.

However, it has only been hinted that self assessment by such corporate persons like the appellant green channel is used for online clearance and it is an automated function. Later when questioned, the appellant could not give any plausible reason for their failure of having not abided by the said condition of BOI certification on the event of filing of GD and clearance of goods. The appellant at a belated stage wrote of BOI, EDB and FBR and got the clarification but as such the mandatory requirement was not fulfilled and the same cannot be waived or relaxed retrospectively.

This observation by us is pertinent in a situation where complete self-assessment and self reliance has been allowed on-line and the importer is trusted and allowed to assess the goods on his own responsibility such a situation, the appellant cannot qualify availing exemption without having fulfilled the statutory requirement under section 155-D of the Customs Act, 1969. Therefore we are convinced to conclude that impugned order has adjudged the instant case lawfully and correctly. We thus find no reason to interfere with it and such the appeal fails to carry any substance or merit, hence the same is hereby dismissed.