NIZAMI WIRE INDUSTRIES (PVT) LTD., LAHORE VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2012 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 347 (2011)

Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----S.2(3)(ii)---Demurage---Customs Department issued delay and detention certificate for claiming refund of demurrage charges as delay was on account of dispute about quality of goods but Port Trust did not accept the refund application---Complainant contended that consignment of wire rods was not allowed clearance due to dispute in which he was not at fault and requested for directions to the Port Trust to refund the demurrage charges or Customs Department should compensate the loss as delay in clearance was on the part of department---Validity---Customs Department was responsible for delay in clearance and the department was to bear the burden of demurrage charges---Federal Tax Ombudsman recommended the Federal Board of Revenue to direct the concerned officials to refund the demurrage charges the complainant paid to the Port Trust within 15 days.

Saeed Akhtar, Advisor Dealing Officer.

Mian Ahmad Sethi-Authorized Representative.

M. Qasim Khokhar, D.C. Departmental Representative.

FINDINGS/RECOMMENDATIONS

DR. MUHAMMAD SHOAIB SUDDLE (FEDERAL TAX OMBUDSMAN).---This complaint has been filed alleging maladministration for illegal rejection of refund claim of demurrage charges filed by the complainant.

2.The complainant imported a consignment of 256 coils of prime quality low carbon wire rods from UAE, and filed GD No.KAPR-HC-61422 dated 17-3-2009 for customs clearance. At the time of examination, the Customs staff suspected that the goods were of secondary quality. The matter was referred to the Pakistan Steel Mills Karachi and the Peoples Steel Mills Karachi for expert opinion. The laboratory tests by both confirmed that the goods were of prime quality, as declared by the importer. The GD was filed on 17-3-2009 and completed on 22-4-2009. The Karachi Port Trust charged Rs.1,006,200 from the importer on account of demurrage charges due to delayed clearance of goods. The Customs House Karachi on the request of importer issued delay and detention certificate for claiming refund of demurrage charges as delay was on account of dispute about quality of goods. But Karachi Port Trust did not accept the refund application of the complainant. The complainant contended that consignment of wire rods was not allowed clearance due to dispute in which he was not at fault. He requested for directions to the KPT to refund the demurrage charges. Or ask the Customs Department Should compensate the loss as delay in clearance was on their part.

3.The complaint was sent to the Revenue Division for comments in termsofsection 10(4)oftheEstablishmentoftheOfficeoftheFTO Ordinance, 2000. Mr. Khalid Mobin Arshad, Secretary Karachi Port Trust in hiscommentsstatedthattheHon'blePresidentofPakistanon the representation of the KPT against the Recommendations oftheHon'ble FTOinComplaintNo. 940-Lof2006hadheldthatFTO Secretariat could not investigate matters relating to the KPT. He submitted that complaint was not maintainable for want of jurisdiction.

4.The Model Customs Collectorate, Karachi, in its comments received through the Revenue Division stated that quality of goods was not declared in the import documents. At the time of examination, most of the coils of wire rods were found rusty and these appeared to be of secondary quality. Further investigation about quality was made in good faith in the interest of government revenue. However, laboratory tests confirmed prime quality of goods as per declaration of the importer and delay and detention certificate was issued for waiver of demurrage charges to mitigate the hardship faced by the importer. The KPT authorities were bound to accept the delay and detention certificate to provide relief to the importer. The grievance of the complainant was against the KPT authorities who were not allowing relief to him.

5.During the course of hearing, the AR submitted that the decision of the Hon'ble President of Pakistan on the representation of the KPT in Complaint No.940-L of 2006 was challenged by the complainant in the Islamabad High Court Islamabad. The High Court held the Customs Department responsible for delay in clearance and directed it to bear the burden of demurrage charges. The Customs appeal filed in the Supreme Court of Pakistan against the decision of the Islamabad High Court was dismissed, and leave refused. The AR requested for directions to Customs Department to implement the orders of the Islamabad High Court. The DR reiterated the arguments as contained in the comments received from the Revenue Division.

Findings:

6.Prompt implementation of orders of the superior judiciary is a constitutional responsibility of every State functionary. Neglect, inattention and delay on the part of Customs in implementing the order of the High Court, after it has been confirmed by the apex court, is tantamount to maladministration in terms of section 2(3)(ii) of the FTO Ordinance, 2000.

Recommendations:

7.F.B.R. to direct the concerned officials to-

(i)refund the demurrage charges the complainant paid to the KPT within 15 days; and

(iv)report compliance within 7 days thereafter.

C.M.A./292/Tax(Trib.)Order accordingly.