KARACHI: The Directorate of Post Clearance Audit (Customs) has prepared two contravention reports creating a cumulative demand of Rs135.589 million, which M/s Karachi International Container Terminal (KICT) evaded by claiming inadmissible benefit of concessionary SROs through mis-declaration.

According to the details reaching Customnews.pk, the Directorate scrutinized the import data and documents provided by M/s Karachi International Container Terminal Limited. It was been observed that the importer, when failed to get exemption under SRO 575(1)/2006 from Board of Investment, have availed exemption of taxes on various items imported under SRO 659(I).

The Directorate has detected four Goods Declarations (GDs) whereby the goods were misdeclared, misclassified and assessed under inappropriate PCT codes. Hence the importer evaded a huge amount of customs duty and consequential taxes to the tune of Rs135.589 million.

In all four GDs, declarations of goods were not according to shipping invoices and not in line with the description of goods in the letter of credit (LC). PCT codes against various items were misclassified and were misreported. Various items were cleared from Customs without payment of customs duty claiming exemption under SRO 659(I)/2007 and declaring wrong serial numbers of said SRO to avail undue benefit.

The goods imported include complete Hybrid system for their RTGs which is composed of cabinets containing battery packs and different electrical, electronic components, generators, steel platforms and installation materials for the system.

M/s KICT also evaded duty and taxes through availing inadmissible benefits of concessionary SROs on the import of Cable Reel and Control Box; high voltage cable; HV transformers; HV switch gear; platform, walkways and handrails.

Accordingly, notices were issued to M/s KICT for explaining and clarifying as to on what basis concessions were availed by them to justify their declared classifications. The importer however failed to come up with any tangible reason or evidence and was also unable to refute the charges leveled against them. Contravention reports are forwarded for initiation of adjudication proceedings in the case.

Meanwhile, Directorate of Post Clearance Audit (Customs) has made an audit observation against M/S KICT involving evasion of taxes amounting to Rs238 million.

M/s. Karachi International Container Terminal Limited imported 02 units of used Quay Cranes complete with spreader, standard accessories, fittings and spares and applied to the Board of investment (B0I) for exemption under SR0 575(1)/2006 and issuance of the mandatory Annexure “B”.

The Board of Investment examined the case in the light of the input sought from Engineering Development Board and conveyed to the Federal Board of Revenue (FBR) that import of used machinery such as Quay Crane and Reach Stacker did not fall within the scope of SRO 575(1)/2006 for concessionary rate of duty, therefore, FBR may decide on the admissibility under the relevant SRO and import policy.

BOI refused issuance of mandatory Annexure “B” required for exemption under SRO 575(1)/2006. Department wrote M/s KICT that they have availed exemption under SRO 575(1)/2006 but have not provided the mandatory Annexure “B”.

Despite the fact that exemption was not allowed, but still M/s KICT succeeded to clear these 02 Quay Crane on payment of 5.0 percent Customs Duty and 5.0 percent Advance Income Tax and without payment of Sales Tax and Additional Sales Tax availing benefit of SRO, which was not admissible without the mandatory condition of certificate by the BOI in the prescribed form of Annexure “B”.

M/s KICT has been advised to deposit Rs238.018 million in the national exchequer.

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