KARACHI: The Classification Committee of Customs (PCT Committee) has dismissed the reference application of M/s PTCL to redefine the classification of Smart TV Set Top Box, and now M/s PTCL is liable to pay Rs430 million evaded through misclassification.

The Classification Committee in its meeting observed that M/s PTCL had been claiming concession under PCT heading 85.28 when this PCT Heading was included in the concessionary notification notified through SRO 575(I)/2004. Ever since the revocation of the aforesaid SRO, there was a departure from classification under PCT heading 85.28 to 85.17 with reference to the impugned item. Moreover, the incorrect classification by M/S PTCL was not only detected by the MCC Islamabad but also the R&D Section of the MCC Appraisement East followed by the Directorate of internal Audit, Karachi.

Sources said that first detection officer was Shahid Ibrahim Dasti of Appraisement West who created a demand of Rs50 million; Appraising Officer of Appraisement East Dost Mohammad made a case for Rs 110 million and Additional director Umar Shafique of DG Internal Audit created a demand of Rs270 million. This amount was short paid by M/s PTCL because of the incorrect classification claimed by them.

The Committee observed that Set Top Box under reference is not the one having capability to provide the internet services rather the Set Top Box is meant for Smart TV having capability to provide Television Cable Service provided through IP modem. Cable Television Streaming through the internel modem is convened into TV signals for display on TV sets. Basically the Set Top Box under reference is a sort of TV tuner converting electronic signals into video signals irrespective of source.

Explanatory Notes suggests that this group includes the apparatus whether or not designed to incorporate a video display or screen such as ‘receivers of television broadcast (terrestrial, cable or satellite which do not include a display device (CRT, LCD etc).

These apparatus receive signals and convert them into at signal suitable for display. A modem can be incorporated for connection to the internet.

Since the smart TV set top boxes classified under PCT heading 85.17 are only meant for gaining access to internet hence this PCT heading is not the appropriate PCT heading when read with the explanatory note.

Since the item under reference serves the purpose of receiving apparatus for television; hence according to General Rules for Interpretation, the smart TV set top box/IPTV is clearly classified under PCT 8528.7290.

The Classification Committee headed by Zeba Bashir Ahmed observed that PTCL case does not qualify for discussion in the PCT Committee as there existed no ambiguity or lack of clarity at any point in time in the past.
It is an irony that honest officers are making all out efforts in detecting and plugging revenue leakage, but they are not awarded or incentivized.

An official said that officers detecting revenue leakage and make efforts for the recovery are awarded, this would make a big difference and billions of rupees of government’s legitimate revenue would be recovered while mis-declaration and under-invoicing would be reduced.