KARACHI: The Collectorate of Customs Adjudication-I has penalized M/s Green Star Social Marketing Pakistan for availing undue benefit of exemption from whole of the sales tax and income tax under special classifications provisions and directed the recovery of short-paid revenue.
According to the details of the case, MCC-Port Qasim, reported that M/s. Green Star Social Marketing Pakistan (Guarantee) Limited had imported consignments declared to contain Contraceptive IUD – intrauterine Device Multi-load Cu375 Standard and filed a Goods Declaration for clearance thereof under the special classification provisions available vides Chapter 9927 of Customs Tariff.
The claimed special classification provisions under Chapter 9927, allows exemption of customs duty only, however, Sales Tax of 16%, additional Sales Tax of 3% and income Tax at a rate of 5% are leviable. The Goods Declarations were accordingly processed by the assessing staff but final demand of taxes was not transmitted to the importers due to the reason that the WeBOC computerized system was not updated to this effect. Besides, the importers did not inform the Customs regarding short payment of government taxes.
The importers got their goods cleared without payment of taxes to the tune of Rs 15.13 million. Had this flaw in the WeBOC computerized system gone undetected, the government would have been lost to its legitimate revenue. Therefore, a show cause notice was served upon the importers.
Shahanshah Hasnain, Collector Adjudication-I notes in the order that on examination of the issue in depth it was found that the provisions of the Hs Code 99.27 deal with the sectors, services, which are exempt from payment of custom duty if the goods have been imported for the requisite, prescribe purposes.
The HS Code 99.27 does not specify the goods of exemption of custom duty, whereas the Sr. No. 60 of 6th Schedule to the Sales Tax Act, 1990 deals with the exemption of sales tax to the goods specified in First Schedule to the Customs Act, 1969 chargeable to duty in terms of Section 18 of the Customs Act, 1969. The importers were aware of the fact that if the goods are declared for exemption of sales ax in terms of Sr. No. 60 of 6th Schedule to the Sales Tax Act, 1990 then they have to make the declaration on face of the Goods Declaration (GD) for clearance of goods under respective PCT Heading of 39269020 and 4014.1000.
It is pertinent to mention here that both of these PCT classifications do not cover the goods for exemption of customs duty. Moreover, according to the contents of Section 13 of the Sales Tax Act, 1990 and as per the contents of the preamble paragraphs of the 6th Schedule of the Sales Tax Act, 1990 the sales tax exemption is only available at import stage and not subsequently.
Therefore, there is no question to allow exemption of sales tax at the subsequent stage. Therefore, charges leveled in the Show Cause Notice stand established. Department shall recover the amount of duty and taxes as determined in the Contravention Report from the importer.
A fine of Rs. 500,000 and a personal penalty of Rs. 500,000 are imposed on the importer for each consignment, which is recoverable from them by the department.

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