Dredger import: High Court links hearing of PQA’s case with the submission of leviable duty and taxes

KARACHI: The High Court of Sindh has advised Port Qasim Authority (PQA) to deposit post-dated cheques of leviable duty and taxes along with the penalty with the nazir of the Court so that their petition against the judgment of Customs Appellate Tribunal could be heard. The Court has fixed the hearing date in the second week of August 2015.

PQA had approached the High Court against the order of Tribunal, which asked the Authority to pay leviable duty and taxes along with the penalty thereon outstanding against them pertaining to the import of a dredger.

PQA has agreed to submit the PD cheques of the subject amount with the Nazir of the Court praying the Court that the impugned dredger should not be arrested and hearing in the case should be convened.

It is only due to the efforts and dedication of Principal Appraiser Tariq Aziz and Advocate Masooda Siraj that this significant amount of government revenue would be secured.

An official said that Principal Appraiser Tariq Aziz did not leave even a single stone unturned and strengthened the prosecution at its most while Advocate Masooda Siraj pursued the case in a very professional manner.

PQA through the counsel before High Court raised the question that whether Tribunal was justified by not giving benefits of exemption of duties under SRO 567(l)/2006 and sales tax under SRO No. 551(1)/2008 and income tax under Second Schedule to the Income Tax Ordinance, 2001.

PQA’s counsel further submits that the Customs authorities issued recovery notices Whereas dredger in question has also been detained, which has caused serious prejudiced to the PQA adding that PQA was ready and willing to furnish bank guarantee for the amount of duties and taxes as demanded by Customs and the postdated cheques in respect of the amount of penalty with the Nazir of Court and the Customs be directed not to arrest the said dredger.

It may be recalled that Customs Appellate Tribunal has upheld the order passed by Customs Adjudication against M/s Port Qasim Authority (PQA) and advised the authority to pay the leviable duty/taxes and the penalty imposed thereon.

According to details of the case, PQA imported one unit Dredger, Dong Hai Jun 7001 and filed home consumption Goods Declaration (GD) under self clearance vide PCT heading 8905.1000 claiming the benefit of SRO 551(1)/2008 for exemption from payment of sales tax and exemption of payment of income tax.

The dredger was examined and it was found that fuel, spare parts and 06 grandfather clocks were also there in the dredger. Since, the importer did not fulfill the prerequisites of claimed SROs and the vessel was not registered with Marine Mercantile Department nor holding National flag, the GD was processed and assessed at statutory rate of duty/taxes leviable on dredger, spare Parts, fuel and clocks.

However, the importer did not pay the duty and taxes, leaving the imported dredger un-cleared. The Collector Model Customs Collectorate, Port Muhammad Bin Qasirn, received information that the above referred imported dredger had been removed from the port area and was being used deep in the Pakistani sea waters without fulfillment of legal formalities and payment of duty/taxes.

The dredger was then examined by the Customs into the deep sea and it was found that dredger was fully operational without payment of duty/taxes and it was not even put out of Customs charge.

Had this fact gone undetected the government exchequer would have suffered a loss to the tune of around Rs900 million in terms of duty and taxes.

The Customs Adjudication established that PQA knowingly and willfully tried to evade duty and taxes by claiming inadmissible exemptions of duty / taxes under claimed SROs at the time of filing of goods declaration. The order noted that the duty and taxes demanded via the Show Cause Notice were receivable from the importer. A penalty of Rs 30 million was also imposed upon M/s PQA.

The Tribunal noted that PQA imported a Dredger Dong Hai jun-7001 under Merchant Shipping Ordinance, 2001 from Zhou Shan, China. The appellant filed the GD for clearance under PCT Heading 8905.10000 valuing $36.95 million claiming the benefit of SRO 551(1)/2008 for exemption from sales tax and from income tax under Income Tax Ordinance, 2001.

Upon the examination along with the one unit used Dredger, standard accessories and spare parts, grant father clock (06 numbers) and 160 MT fuel were also found.

Customs Authorities found that the vessel was not registered with MMD nor held Pakistan flag and the exemptions claimed were not admissible.

The Tribunal rejected the appeal filed by M/s PQA and upheld the decision of the Customs Adjudication.

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