Importers withdraw suit after petition as Customs counsel cornered them legally

KARACHI: In view of strong and technical arguments advanced by the Counsel for MCC, Preventive, two importers/plaintiffs withdrew a suit filed by them. Earlier their constitutional petition was also dismissed as withdrawn by an appeallate bench of High Court of Sindh.

According to details Karachi Corporation and Reliance Importers and Exporters, plaintiffs initially imported a consignment declared to be Hydrocarbon Solvent RIK-350 Petroleum Distillate (in bulk) 3300 M.Tons from UAE and filed an Into-Bond Goods Declaration (GD) No.KOIL-IB-1834 dated 30.03.2017 through their authorized clearing agent M/s Time Clearing Services (CHAL No.781) declaring the HS Code 2710.1919 (others) attracting 03% Customs Duty.

The Custom officials took samples and forwarded the same to the Industrial Analytical Center, HEJ Laboratory, Karachi University, Karachi and as per analysis report of the samples was found to be as complex mixture of aliphatic and aromatic hydrocarbons

After aforesaid test report, it was found that the declared description is neither a trade name nor it is a generic name of the goods, resultantly a dispute emerged regarding the correct classification and value of imported goods. Consequently the matter was forwarded to the Chairman, Classification Committee, MCC Appraisement, East, Custom House, Karachi for determination of correct classification of HS Code vide letter No.SI/Misc/IB-04/2017-Oil(P) dated 08.03.2017. The case was also forwarded to the Directorate General of Valuation, Custom House, Karachi for asserting the fair value of the goods.

In the meanwhile the plaintiffs filed a Complaint No.FTO/ONL/000085/2017 dated 22.05.2017  before the Honorable Federal Tax Ombudsman (FTO) against the Classification Committee for delay in finalization of the PCT Heading of the imported cargo of the plaintiff.

FTO dismissed the complaint of the plaintiff with the observation that no case of maladministration is made out against the department. FTO however asked the FBR to consider the matter in the meeting of Classification Committee  as matter primarily pertains to classification.

The Classification Committee issued a Ruling in the form of Public Notice No. 10/2017 (A) dated 20.06.2017 in a similar case by concluding that the impugned goods i.e. “Hydrocarbon Petroleum Distillate” are appropriately classifiable under HS Code 2710.1940 (Customs Duty @20%) and the goods falling under the aforesaid HS Code can only be importable by approved Oil Marketing Companies in terms of Appendix-B, Part-II of Import Policy Order 2016-17.

Khalid Rajpar advocate  representing the respondent/defendant MCC, Preventive argued that plaintiff has intentionally committed offence In terms of sub-Section (2) of Section 32 of the Customs Act. 1969, for the offence of any mis-declaration and consequent evasion of taxes penal action can be taken within five years of the relevant date. In this regard, reliance is placed on a judgment of the Honourable Supreme Court of Pakistan in case of Baba Khan V/s Collector of Customs, reported as PTCL 2000 CL. 688.

The plaintiffs/petitioners sensing a decision against them-selves first withdrew CP-D 4734 0f 2017 and now the suit as a result of which Pakistan Customs tax collection for the similar consignments would increase considerably.

It is pertinent to mention here that importers were evading taxes and were violating import policy also by importing an item which can be imported by Oil Marketing Companies only duly registered with the Petroleum ministry against a license.

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