KARACHI:Justice Shafi Muhamad Siddiqui of High Court of Sindh (SHC) on Monday issued notice of an application filed by pakistan Customs to the Port Qasim Authority for Jan 12.

Masooda Wahab advocate filing the application prayed for an urgent hearing in the matter as according to her PQA is using the three tugs without paying custom duty and other taxes and it is a case of revenue loss to the exchequer.

The application was made in a suit 996.2015 filed by the PQA seeking release of 4 tug boats. PQA is seeking exemption while Pakistan Custom maintains that Custom duty and other taxes are applicable and payable.The controversy has arisen as Federal Board of Revenue (FBR) has decided to recover Rs807 million as concealed amount of duty and taxes including additional surcharge on import of three tugs acquired by Port Qasim Authority.
The FBR examined the available exemptions under Merchant Shipping Ordinance, 2001 and clarified that exemption of customs duty under SRO 567(I)/2006 dated June 05, 2006 and sales tax under SRO 551(I)/2008 dated June 11, 2008 was not available in the case of the three tugs that were acquired by PQA on the basis of lease agreement with M/s Global Marine Services.

FBR maintains that Section 15 (C) of Merchant Shipping Ordinance, 2001, ships belonging to the government of Pakistan only were exempt from registry. Similarly, as per rule 2(1)(d) of Merchant Shipping (Registration of Ships) Rules, 2002 flag state means a state whose flag a ship is entitled to fly.While concluding the observation, the FBR directed the Model Customs Collectorate (MCC) of Muhammad Bin Qasim to collect leviable customs duty and sales tax on import of three tugs by PQA.

According to details, the PQA imported three tugs, included: Tag Sharif Alert GD (goods declaration) date July 28, 2011; Tag Sharif Pilot GD date July 28, 2011; and Tag Sharif Verve GD date August 31, 2011.
Sources said that these tugs were imported with all machinery and fittings as temporary importation and subsequent exportation within two years at Port Qasim.

PQA also claims duty drawback taking the benefit of SRO 450(I)/2001 dated June 18, 2001. Aca‚ A However, they have not fulfilled the pre-requisites and conditions as laid down in the claimed SRO besides conditions specified in the relevant SRO.
The investigation of customs officials revealed that tugs were being used by PQA without any legal authority/coverage and remained operational from the date of its arrival into Pakistan territorial waters prior to release and out of charge by the customs authorities.

The conditions of the SROs defined that ships and other floating crafts including tugs, survey vessels and other specialized craft purchased or bareboat chartered by a Pakistani entity and flying Pakistani flag; and ships of gross tonnage of less then 15 LDT and all floating crafts including tugs, dredgers, survey vessels and other specialized craft purchased or bareboat chartered by a Pakistani entity and flying Pakistani flag except the ships or crafts which are acquired for demolition purposes or are designed or adapted for use for recreation or pleasure purpose.