Customs suffers revenue loss as Chief Collector Appraisement South comes lenient on scammers

KARACHI: The mishandling of the M/S BBJ Pipe Industries case by the office of Chief Collector Customs Appraisement South has caused huge revenue loss to the national exchequer, it was learnt.

M/s BBJ Pipe Industries was caught evading government revenue through mis-declaration of imported goods and Customs Adjudication found the importer guilty and fine, penalty was accordingly imposed.

Even though, the green channel profile of M/s BBJ Pipe Industries remained intact. According to general practice, any importer having green channel status if found involved in evasion is deprived of the facility and subsequent consignments are processed through red channel.

Since then the company has imported 143 consignments out of which only 22 were marked for examination and even these were not examined. Hence, over 90 percent of the consignments imported by M/s BBJ Pipes were not examined despite the established fact that the company had earlier resorted to misdeclaration for evasion.

This is all because of Chief Collector Appraisement South Abdul Rasheed Shaikh ordered withdrawal of a contravention report served on M/s BBJ Pipe Industries for mis-declaring secondary quality rolled steel coils as prime quality rolled steel coils and evading government revenue.

Customs served two separate contravention reports on M/s BBJ Pipe Industries, however one was withdrawn on the directives of Chief Collector while the other was forwarded to Customs Adjudication. Chief Collector had withdrawn the contravention as the importer had voluntarily paid the evaded amount of revenue.

Collector Customs Adjudication Dr. Shazia Ikram penalized M/s BBJ Pipes Industries and clearing agent M/s Chanar Associates for attempting to evade government revenue through claiming inadmissible benefit of concessionary SROs.

M/s BBJ Pipes imported a consignment declared to contain prime quality hot rolled steel coils from Taiwan under PCT heading 7208.3790, 7208.3890 and 7208.3990 attracting customs duty 11%, sales tax 17% and income tax 5.5% and sought clearance against concessionary rate of customs duty 5.0 percent under SRO 474(I)/2006 and SRO 565(I)/2006 and also claimed income tax exemption.

The consignment was cleared without physical examination. R&D MCC Appraisement East had information that certain importers were importing secondary quality goods under the guise of prime quality and evading the government revenue by claiming inadmissible benefits of concessionary SROs.

The consignment was M/s BBJ Pipes Industries was examined and found to be containing secondary quality goods. The consignment was accordingly seized. Importers voluntarily opted for payment of leviable duty and taxes.

The importer had made a deliberate attempt to clear the secondary quality goods under the guise of prime quality with an intent to deprive the government from its legitimate revenue to the tune of Rs38.593 million.

However, the imported approached Customs Appellate Tribunal challenging the order-in-original passed by Dr. Shazia Ikram imposing penalty of around Rs3.0 million. Tribunal on the basis of practice that Chief Collector had ordered withdrawn the contravention report in the similar case vacated the show cause notice and subsequent order-in-original.

It is interesting to note that the entire R&D team who had detected the case was given the performance reward also.

An official said M/s BBJ Pipe Industries was just one example and Abdul Rasheed Shaikh had ordered withdrawal of a number of contravention reports.

Moreover, the legal committees of the collectorates in Appraisement South do not approach higher forums against the questionable withdrawals of contravention reports because of Abdul Rasheed Shaikh.

Moreover, the unscrupulous elements were given safe passage and number of consignments that had been detected for fraud were manipulated to be declared as frustrated cargo and the same were re-exported.

Sources said Chief Collector was actually patronizing the unscrupulous elements including smugglers while the assessment of Customs was being weakened by making inappropriate and frequent transfers and postings.

Sources said Abdul Rasheed Shaikh was allegedly the front man or facilitator of someone in the government and was running a big scam.

In past any one of the dry port in the country was used to be the hub of mis-declaration, under-invoicing and smuggling, but this time Customs Appraisement South is that hub, which the unscrupulous elements consider a free pass.

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