KARACHI: The Model Customs Collectorate (MCC) Appraisement-East has prepared a contravention report against M/s ICI Pakistan as the company in connivance with their clearing agent defrauded the national exchequer of Rs33.94 million.
According to the details, M/s ICI Pakistan in connivance with their agent M/s Mehran Corporation misclassified the imported goods to avail undue benefit of concessionary SROs.æ
M/s. ICI Pakistan Limited imported 34 consignments of ‘WANNATE 8019’ from China and sought clearance under PCT Heading 3909.5000 through their authorized clearing agents M/s Mehran Corporation. The importers determined their liability of payment of applicable duties & taxes amounting to Rs9.491 million, paid the same and sought clearance claiming benefit of custom duty exemption against FTA certificate in terms of SRO-659(I)/2007 besides exemption of sales tax & additional sales tax in terms of SRO-1125(I)/2011.
The consignments were released as per importers’ declaration on payment of custom duty at 0.0%, sales tax 2.0%, additional sales tax 2.0% & income tax 3.0%.
In pursuance of receipt of credible information regarding evasion of duty & taxes by the importers & clearing agents, R&D’s team thoroughly scrutinized relevant database/record of the Customs WeBOC & PaCCS systems as well as relevant literature/Material Safety Data Sheet & laboratory test report. Detailed scrutiny thereof revealed that the importers have succeeded in getting clearance of the impugned goods by deliberately mis-declaring description as ‘WANNATE 8019 Polyurethane’ instead of actual description ‘WANNATE 8019’ & wrong PCT Heading 3909.5000 instead of correct PCT Heading 3824.9091 with the active connivance of their clearing agents, and availed undue benefit of sales tax & additional sales tax exemption.
Perusal of the relevant literature retrieved from the web as well as HEJ Laboratory’s Test Report confirmed that the impugned item i.e. ‘WANNATE 8019’ is rightly classifiable under PCT Heading 3824.9091 and does not qualify for the claimed benefit of sales tax & additional sales tax exemption.
Moreover, the importers are also not entitled for the claimed benefit of custom duty exemption in terms of SRO-659(I)/2007 as they have not come up with clean hands as compulsorily required for availing any facility of duty/taxes exemption under the prevailing law and procedure.
Thus, the impugned goods are rightly chargeable to custom duty of 5.0%, sales tax 17%, additional sales tax 3.0% & income tax 3.0%.
Moreover, MCC (PaCCS) had already settled the instant issue pertaining to classification of modified MDI vide an Assessment Alert in 2010.
It may be mentioned here that in one of their aforesaid 34 consignments M/s ICI Pakistan had claimed clearance of the impugned goods against their wrongly declared PCT Heading 3909.5000. However upon Custom’s interception, they got the consignment cleared against provisional assessment pending laboratory testing of the impugned goods, on the basis of their undertaking to the effect that they will abide by the final decision of the Customs authorities.
There existed no dispute of classification of the impugned goods which required consideration by the Classification Committee. However in pursuance of M/s ICI Pakistan Limited’s request, the issue was formally referred to the Classification Committee for lawful decision on merit.
Chairperson Classification Committee categorically clarified that the above mentioned available material evidence sufficiently confirms that the issue of classification of the impugned item has repeatedly been decided and, hence, the referred case does not merit consideration by the Classification Committee.
It has sufficiently been proved that the impugned goods are rightly classifiable under PCT Heading 3824.9091 and do not qualify for the claimed benefit of sales tax & additional sales tax exemption.
However despite having complete knowledge of the aforesaid facts, the importers M/s ICI Pakistan Limited and clearing agents M/s Mehran Corporation mis-declared the impugned goods in terms of description and PCT Heading and evaded legitimate Government revenue by availing undue benefit of sales tax exemption.
Being established cases of deliberate mis-declaration, they are also not entitled for the claimed & availed benefit of custom duty exemption in terms of SRO-659(1)/2007.
The importers and their clearing agents caused colossal loss to the national exchequer to the tune of Rs33.940 million.
Meanwhile, M/s ICI Pakistan attempted to get cleared another consignment imported from China comprising the similar item in the similar manner. However, the consignment was held and a demand of Rs1.116 million has been generated against the importers.