ALOFT INTERNATIONAL TRADING CO., KARACHI VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2009 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2216 (2009)

Customs Act (IV of 1969)---

----S. 155-E---Customs Rules, 2001, Rr.455 & 460---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.10 & 11---Non-payment of rebate claims---Complaint against non-payment of rebate claims by Model Collectorate of Customs against exports---Customs department in reply had stated that three cheques were issued and forwarded to the given address of the complainant and complainant/exporter having not made any electronic correspondence with the department in terms of S.155-E of the Customs Act, 1969, department could not confirm the receipt of the letters claimed by the exporter to have been written to the department---Complainant stated that department should proactively identify, whether the cheques were received by the addressee or not---If the cheques were not so received or returned undelivered on account of incomplete or erroneous addresses, etc., it should be possible for the department to locate such cheques---Written and oral submission of both sides revealed that customs department had not put in place any reconciliation system to confirm whether or not the cheques issued by them had been duly delivered to the relevant addressees---Rules 455 to 460 of Customs Rules, 2001 which governed the "Duty Drawback" were also silent in that regard---Effective reconciliation system was urgently required for the Customs Department---Recommendations were made to the effect that (i) Collector Customs (a) to investigate why the cheques of Duty Drawback issued by his Collectorate had not been duly delivered to the complainant; (b) ascertain the whereabouts of the cheques; (c) Confirm from the State Bank, whether or not the cheques had been encashed and settle the issue; (ii) F.B.R. to put in place a sustainable system of reconciliation of cases of non-delivery and misdelivery of cheques; (iii) FBR to make efficient and foolproof arrangement with the State Bank for expeditious redressel of such situation; (iv) recommendations be complied and compliance of said recommendations be reported within specified period.

Nadeem Ahmed Butt Authorized Representative for the Complainant.

Salamat Ali, Deputy Collector (Customs) Departmental Representative for Respondent.

Syed Barkat Ali Bukhari, Consultant (Dealing Officer).

FINDINGS

DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN.---Messrs Aloft International Trading have filed this complaint against non-payment of rebate claims by Model Collectorate of Customs (PACCS) against exports vide Goods Declaration (GD) Nos.EG-195688 dated 23-2-2007, EG-278355 dated 24-5-2007 and EG-566660 dated 4-3-2008.

2. The Customs Department in reply has stated that Cheques bearing No.(i) 23708, dated 3-3-2007 for Rs.10930 (EG195688) (ii) 49406 dated 29-5-2007 for Rs.5376 (EG278355) and (iii) 129823 dated 1-4-2008 for Rs.2566 (EG 566660) were issued and forwarded to the given address of the Complainant/Exporter. It is also stated that the Exporter did not make any electronic correspondence with the Department in terms of section 155E of the Customs Act, 1969. Therefore, the Department could not confirm the receipt of the letters, claimed by the Exporter to have been written to the Department. It is further stated that a letter dated 1-8-2009 was written by the Customs Department to the State Bank of Pakistan to issue No Objection Certificate regarding non-encashment of already issued cheques so that duplicate cheques could be issued. But no reply was received.

3. Hearing in the case was held on 9-9-2009. Mr. Nadeem Ahmed, proprietor, appeared on behalf of the exporting 'Company and Mr. Salamat Ali, Deputy Collector, appeared for the Customs Department.

4. During the hearing, the Complainant stated that the Department should proactively identify whether the cheques were received by the addressee or not. If the cheques were not so received or returned undelivered on account of incomplete or erroneous addresses etc., it should be possible for the Department to locate such cheques. He informed that he had been personally meeting the Assistant Collector concerned to get the letter written to the State Bank of Pakistan (SBP) to ascertain the encashment position of the cheques under reference. He however, informed that he was not sure whether or when the SBP would reply the departmental letters, as on personally approaching the State Bank of Pakistan, he was verbally told that the department should search and locate the returned cheques in their own return mail section.

5. In reply, the DR, Mr. Salamat Ali, Deputy Collector stated that the cheques had been issued against the Goods Declarations in question and their numbers and addresses were available on the computerized record of the Customs Department. The old cheques could be cancelled and new cheques issued only if either the old cheques were found or. NOC from State Bank of Pakistan was received after confirmation that the cheques already issued, have neither been encashed nor would be encashed in future.

6. The Complainant also pointed out that there was no reconciliation system available with the Department to crosscheck and verify the delivery, misdelivery or non-delivery of cheques and that there was no standing arrangement between State Bank of Pakistan and the Customs Department to address difficulties in such cases where duty drawback cheques issued by Customs Department are not received by the relevant exporters.

7. The written and oral submissions of both -sides reveal that Customs Department has not put in place any reconciliation system to confirm whether or not the cheques issued by them have been duly delivered to the relevant addressees. Rules 455 to 460 of Customs Rules, 2001, which govern the "Duty Drawback under PACCS", are also silent in this regard. The Complainant's grievance could have been efficiently and effectively addressed had the system of cheque delivery being followed by the Department been able to reconcile the factum of cheque issuance with due delivery thereof to the relevant exporters. Therefore, an effective reconciliation system is urgently required for the Customs Department.

8. Referring cases to State Bank of Pakistan after pointation by the aggrieved exporters without properly following them up and not establishing a foolproof and sustainable in-house system of reconciliation to forestall recurrence of such hardships to the exporters is tantamount to maladministration in terms of section 2(3) of, the Federal Tax Ombudsman Ordinance, 2000.

Recommendations.

9. In view of the foregoing findings, the following recommenda tions are made:--

(i) Collector Customs MCC (PACC) to:

(a) investigate why the cheques of duty drawback issued by his Collectorate have not been duly delivered to the Complainant;

(b) ascertain the whereabouts of the cheques under reference;

(c) confirm, without further delay, from the State Bank of Pakistan, whether or not the cheques under reference have been encashed and settle the issue involved promptly on merit.

(ii) FBR to put in place a sustainable system of reconciliation of cases of non-delivery and misdelivery of cheques;

(iii) FBR to make an efficient and foolproof arrangement with the State Bank of Pakistan for expeditious redressal of such situations, while forestalling the chances of double payments.

(iv) Recommendations at i(a), (b) and (c) above be complied and reported within one month; and

(v) Compliance of Recommendations at (ii) and (iii) above be reported within two months.

H.B.T./152/FTOOrder accordingly.