Curbing under invoicing; Clearing agents advised to ascertain correct C&F value

KARACHI: All the customs clearing agents have been advised to get freight memo from the importer and the same should be added in Freight on Board (FOB) value to ascertain the correct C&F value.
The Karachi Customs Agents Association (KCAA) has advised all of its members to avoid unnecessary inconvenience and delay in clearance of imported consignments.
The agents have also been forwarded the instructions that before filing of Goods Declaration (GD) all documents provided by the importers should be checked and scrutinized such as invoice, packing list, bill of lading, copy of L/C or contract and FTA certificates etc.
Further, for those items where valuation ruling is issued the same should be mentioned at the time of filing of GD.
These instructions surfaced after interesting facts were unveiled as the free trade agreement (FTA) between Pakistan and China was grossly misused by Pakistani importers with help of their Chinese exporters just because of ignorance of customs officials.
It was identified that most of the Chinese imported goods were being declared at FOB value and the customs authorities cleared the same, enabling the importers for under-invoicing.
Sources in Pakistan Customs said that the goods declaration filed under FTA must be along with C&F (Cost and Freight), but in order to evade taxes the GDs were filed with the valuation of FOB.
The FOB means the value of goods does not include shipping expenses while C&F includes the value of shipping and insurance charges.
The sources said that due to clearance of goods under FTA at FOB the exchequer deprived from due share of about Rs2500-3000 on per GD processed.
The FBR report itself pinpointed that the under-invoicing was a big grey area in Pakistan-China FTA causing loss to the exchequer along with other threats to the economy.
The Customnews.pk investigation had revealed that a large number of Pakistan importers had strong connections with Chinese companies and they quote the prices of imported goods as per their desires. It is discovered that several Chinese companies are facilitating the Pakistan importers while making their export invoices and quote the prices matching the requirement of FTA to evade duty and taxes.
It is discovered under the investigation that neither customs officials asked or get verified the prices from Chinese companies at clearance stage nor they bothered to match the prevailing prices of same Chinese products exported to other countries.
Sources said that there was huge difference between the value of declared by China export to Pakistan and the value of Chinese imported goods into Pakistan. They said that this under-invoicing had incurred billions of rupees losses to national exchequer.
The investigation further revealed that some traders are buying goods from third country and import the same via China to avail the facility of FTA.

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