Karachi: Traders and Customs officials have expressed serious concerned over the inter-port movement system at Karachi Export Processing Zone (KEPZ), which is the primary channel for smuggling even the prohibited goods.

The Federal Board of Revenue (FBR) has put forth the proposed Tracking and Monitoring of Cargo Rules, 2023. The proposed rules over-looked the smuggling and revenue loss in the garb of inter-port movement to KEPZ from sea port.

In the case of KEPZ, which falls under the inter-port movement system, there is no requirement for the importer or investor or their Customs agent to file a goods declaration (GD). Moreover, there is no official record of the transport manifest unlike the TP module, which requires all details uploaded in the WeBOC system.

An official said, the Customs agent/importer take the delivery from the Bonded Carrier on an illegal authority letter, and move the goods to the KEPZ without even declaring the goods. During the transit, the undeclared goods are switched with low-value and low-tariff goods such as used clothing.

The actually imported goods usually high-tariff goods and contraband items then find their way to the market. And when these ordeals are caught, no one can be held responsible since there has been no record at all.

There are apprehensions that these rules could potentially lead to the establishment of export zones, special zones, and free zones under inter-port movement, which may result in an upsurge in smuggling and corruption. It is worth noting that certain trade and Customs laws currently do not apply to Export Processing Zones or Free Zones.

Customs authorities have detected numerous instances where prohibited items, commercial goods, and high-tariff items were apprehended, having been fraudulently imported and subsequently smuggled into tariff areas.

An official stated that whenever Customs intercepted such attempts, the importer or investor disowned the goods, claiming that their identity had been misused. Despite the clear exploitation of this facility, the Member Customs Policy overlooked the issue and did not transfer KEPZ to the TP module, as was done for all other export zones where imported goods are duly declared.

It is important to note that KEPZ is not an off-dock terminal, and inter-port movement should only apply to off-dock terminals. The smuggling network operating within KEPZ has hindered its transition to the TP module. Inter-port movement has become a gateway for smuggling activities, as companies disown seized goods and assert that their identities were misused.

There are concerns that all export zones could be subjected to inter-movement despite being designated as free zones, potentially exacerbating issues related to smuggling and corruption within these zones. The implications of the proposed Tracking and Monitoring of Cargo Rules require careful evaluation to mitigate any potential negative consequences in the trade and Customs landscape.

Among the existing export zones Sambrial Export Processing Zone, Risalpur Export Zone, Gujranwala EPZ, Gwadar EPZ, and Sadak EPZ. However, apart from Karachi Export Processing Zone (KEPZ), all the other export zones operate under the TP module.

The TP module entails the filing of a TP Goods Declaration by the investor or Customs agent, declaring the imported goods, and deploying a bonded carrier according to the manifest. All these details are uploaded in the WeBOC system. The investor, agent, and bonded carrier bear responsibility for the movement and any potential pilferage of the goods.