Messrs GULISTAN TEXTILE MILLS LTD., KARACHI VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2002 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1989 (2001)

Custom Act (IV of 1969)----

‑‑‑‑Ss. 18B & 195‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2 (3) (v) & 9‑‑‑Pre‑Shipment Inspection charges ‑‑‑Refund‑‑‑Maladministration‑‑‑Claim of refund of 2% Pre‑Shipment Inspection charges levied under S. 18B of the Customs Act, 1969 was declared ultra vires of the powers of the Federal Legislature by the Supreme Court of Pakistan ‑‑‑Department neither sanctioned the refund nor indicated as to why the claims had not been sanctioned in spite of lapse of more than four years‑‑‑Validity‑‑‑Plea that no action was taken on the refund applications for four years had substance‑‑‑Even after receipt of ruling from Ministry of Law and Justice Division and C.B.R.'s directive, no action was taken which portrayed a serious flaw in the administration of the Customs Department and endorsed the general public image about the want of responsiveness of the Customs Authorities to the letters, requests, reminders and personal pleas of the dealing public ‑‑‑Appraisement Collectorate had undertaken special efforts to dispose of the pending claims under a crash programme‑‑‑Sustained system of responsiveness to the various problems and difficulties of the importers and exporters and monitoring thereof at the higher level should be introduced in all Sections of the Department‑‑‑Two such‑like refund claims had already been disposed of and the cheques had also been issued to the applicants‑‑‑Federal Tax Ombudsman, in circumstances, recommended that Central Board of Revenue should direct the Collector of Customs (Appraisement) to re‑examine the propriety of the decision under S.195 of the Customs Act, afford opportunity of hearing to the complainant to represent his case, and decide the case on merits within four weeks.

Zamir Siddiqui, Representative for the Complainant.

Ashhad Jawwad, Deputy Collector of Customs (Appraisement Law) for Respondent.

DECISION/FINDINGS

The complaint relates to the refund of 296 Pre‑Shipment Inspection charges levied under section 18B of the Customs Act which was declared ultra vires of the powers of the Federal Legislature by the Supreme Court of Pakistan. The complainant filed two refund claims of Rs.5,834 and Rs.9,206 before the Assistant Collectors of Customs incharge of Groups IV and VI, Custom House, Karachi, for payment made against 1 bill of entry and 2 Bills of Entry respectively. The complainant stated that since filing the refund claims, he had been repeatedly requesting the Collector of Customs and the Assistant Collectors of Customs but in spite of lapse of more than 4 years, the respondents have neither sanctioned the refund nor indicated why the claims had not been sanctioned.

2. He further stated that on a reference from the C.B.R., the Law and Justice Division advised that all importers who had paid 296 PSI charges and filed refund claims were eligible for refund, The complainant argued that this was a clear case of maladministration as defined in clause (v) of subsection (3) of section 2 to the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000. He requested that the Collector of Customs be directed to refund 296 Service Charges' amounting to Rs.15,404 alongwith mark‑up of 1596 and suitable action taken against the Collector and the Assistant Collectors of Customs for illegally withholding the complainant's money without, any valid reason.

3. C.B.R. forwarded, vide letters, dated 18‑9‑2001 and 26‑9‑2001, two replies to the complaint, dated 14‑9‑2001 and 22‑9‑2001, submitted by the Deputy Collector of Customs (Appraisement Law). The Deputy Collector referred to the ruling of Law and Justice Division that refund of service charges be made only to those importers who had not passed the incidence to the public. The complainant produced Auditor's certificate, dated 19‑1‑2001. The refund of the amount was sanctioned and Refund Payment Order from the complainant was required for preparation of cheque.

4. The Deputy Collector, further that after the decision of the apex Court hundreds of refund claims were filed by the importers and after receipt of direction from the Federal Tax Ombudsman, the Collectorate had launched a crash plan and made special arrangement to settle all pending claims within three months.

5. During the hearing of the complaint, the Deputy Collector of Customs (Appraisement) submitted a letter, dated 22‑10‑2001 stating that refund in respect of 2 Bills No.2945, dated 12‑11‑1996 and No.4347, dated 17‑11‑1996 had been sanctioned and issue of cheques was under process which would be completed within a week. With regard to the Bill of Entry No.439, dated 3‑3‑1997, he informed that the refund has been rejected by the Assistant Collector of Customs. He submitted a copy of Order‑in‑Original, dated 3‑9‑2001.

6. Mr. Zamir Siddiqui, Secretary of the Group representing the complainant submitted written arguments, dated 23‑10‑2001. He stated that the order of rejection of refund was not sustainable in law as Law Division or C.B.R. had no authority to interpret Supreme Court's judgment. The Customs Act also did not contain any provision parallel to section 3B of Sales Tax Act or section 3D of Central Excises Act with the provision relating to passing on of the incidence of taxes to the consumers. The introduction of section 18B of the Customs Act was held as ultra vires by the Supreme Court. Once a decision had been given, the levy of 2% Pre‑Shipment Inspection charge should be considered to be the customs levy and the Customs Department had no authority to collect or retain his charge.

7. With regard to the audit certificate, he argued that the Collector of Customs (Appraisement) had acceded to the request of APTMA that for claiming refund of the PSI service charges a certificate from a Chartered Accountant that the incidence of the charges had not been passed on to the consumers was to be furnished. A certificate to this extent had been furnished to the Custom House.

8. The comments filed and statements made above show that there is substance in the complainant's plea that for four years no action was taken on the refund applications. Even after receipt of Law and Justice Division ruling and C.B.R.'s directive, no action was taken. This portrays a serious flaw in the administration of the Customs Department and endorses the general public image about the non‑responsiveness of the Customs Authorities to the letters, requests, reminders and personal pleas of the dealing public.

9. However, the Appraisement Collectorate has undertaken special efforts to dispose of the pending claims under a crash programme. It needs to be emphasized that a sustained system of responsiveness to the various problems and difficulties of the importers and exporters anti monitoring thereof at the senior level should be introduced in all sections of the Department.

10. During hearing it was reported that two refund claims had already been disposed of. The Collector of Customs has reported that the cheques have also been issued. With regard to the refund claim rejected by the Assistant Collector of Customs, it is recommended that C.B.R. direct the Collector of Customs (Appraisement):

(i) to re‑examine the propriety of the decision under section 195 of the Customs Act, afford opportunity of hearing to they complainant to represent his case, and decide the case on merits within four weeks; and

(ii) report compliance and the decision taken to this Secretariat within six weeks.

C.M.A./M.A.K./300/FTOOrder accordingly