AFSAR KHAN VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2012 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 416 (2012)

Customs Act (IV of 1969)---

----S.30---S.R.O. 574(I)/2005 dated 6-6-2005---Complaint against inordinate delay in verification of customs "no objection certificate"---Complainant had alleged maladministration on the part of Customs Officials for inordinate delay in verification of customs N.O.C. for registration of his vehicle; and for consequent cancellation of the deal to sell the vehicle causing the complainant a loss---Complainant furnished an undertaking to pay any short-levied amount of duty and other taxes---Customs department instead of finalizing the demand in accordance with the fourth proviso to S.30 of the Customs Act, 1969, erroneously applied the Federal Board of Revenue's Guidelines for the implementation of amendmentsmadeinS.R.O. 574(I)/2005dated6-6-2005---Departmental Representative had contended that the duty, taxes and redemption fine paid by the complainant were erroneously calculated by the Customs on the basis of Federal Board of Revenue's Guidelines, which were actually not in conformity with the fourth proviso to S.30 of the Customs Act, 1969---Resultant corrective action, in circumstances, would need to be taken uniformly in all cases where the benefit of the Guidelines was availed in the past---Those in the Federal Board of Revenue, who issued the unlawful Guidelines, also needed to be effectively disciplined---Arbitrary withholding of verification of N.O.C., already issued to the complainant by the Customs and non-response to the complainant's letters, had constituted maladministration---Coercing recovery in any manner other than provided under the law involved maladministration---Federal Board of Revenue was recommended to direct the Collector of Customs to confirm the genuineness of N.O.C.; to direct all Collectors in Pakistan to recover the short levied amount of duty and taxes etc., where the benefit of Federal Board of Revenue's unlawful Guidelines was unduly granted in the past; to submit vehicle-wise and year-wise details of recoveries made as per law; to proceed against those found responsible for issuing the Guidelines which were contrary to law and to report compliance within 30 days.

Yasin Tahir, Senior, Advisor Dealing Officer

Irshad Ahmad Durrani Authorized Representative.

Dr. Nauman Khan, Deputy Collector Departmental Representative.

FINDINGS/RECOMMENDATIONS

DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN.---This complaint is filed alleging maladministration on the part of Customs officials, Peshawar, for inordinate delay in verification of Customs NOC No. Cus/Car Cell/3034(2007)10420 dated 17-11-2009 for registration of his Toyota Land Cruiser, and for consequent cancellation of the deal to sell the vehicle, causing the complainant a loss of Rs.500,000.

2.The complaint was referred for comments to the Secretary Revenue Division in terms of section 10(4) of the FTO Ordinance, 2000. In response, the Collector of Customs, Peshawar, filed parawise comments stating that while applying for adjudication, the complainant, vide application dated 28-11-2006, addressed to the Additional Collector (Adjudication), indicated his readiness to pay the applicable duty, taxes and redemption fine. However, when the adjudicating officer allowed the release of the vehicle, the complainant instead filed appeal against the order-in-original (Order-in-Original) No.672 dated 20-12-2006. It was only when the appeal failed at the level of both the Collector (Appeals) and the Appellate Tribunal that the complainant applied for the release of the vehicle. Thecomplainantalsofurnishedanundertakingdated17-11-2009 to pay any short-levied amount of duty and other taxes. The Customs instead of finalizing the demand in accordance with the fourth proviso to section 30 of the Customs Act, 1969 (the Act), which required assessment either at the rate prevalent on the date of seizure or that on the date of payment of duty and taxes, whichever was higher, erroneously applied the F.B.R's. "Guidelines for the implementation of amendments made in S.R.O. 574(I)/2005 dated 6-6-2005" issued vide C.No.10(17)L&P/05 dated 8-3-2006 and determined the amount of duty, taxes and fine at Rs.1,177,615 on the basis of the date of seizure, which resulted in short levy of duty and taxes amounting to Rs.2,071,890. The Department contended that verification of NOC was to be done only after the complainant had fulfilled his undertaking and deposited the short-levied amount for which a demand notice No. Cus-Car Cell/3034/2007 dated 21-3-2011 was issued.

3.During the hearing, the parties reiterated the averments of their written pleadings. The complainant stated that the Customs staff had required him to furnish an undertaking to cover the eventuality of audit objection, if any. He furnished the required undertaking and accordingly the vehicle was released by the Customs under NOC No.Cus/Car Cell/3034(2007)10420 dated 17-11-2009. The vehicle was provisionally registered by the Motor Registration Authority, Islamabad (MRA), under No.ICT SE-763, Islamabad, subject to confirmation of the NOC by the Customs at Peshawar. The MRA referred the NOC to Deputy Collector Customs, Car Cell, Peshawar, for verification of its genuineness vide Letter No.SE-763/ETO-MRA/ICT/2010 dated 28-10-2010. In the meanwhile, the complainant sold the vehicle to one Mian Azhar of Jhang. As the Customs neither confirmed the NOC nor made any reply to MRA, the complainant addressed an application dated 29-11-2010 to the Chairman F.B.R., under section 7 of the F.B.R. Act, 2007, followed by a reminder dated 2-3-2011 and several personal visits and meetings with concerned officials of F.B.R. The F.B.R. belatedly forwarded the application, vide Letter No.2(1)Cus.Jud/2011 dated 1-2-2011, to Collector Customs, Peshawar, for furnishing report in the matter. As the Collector did not respond, a reminder was issued by the FBR vide letter dated 24-2-2011. Despite the F.B.R's reminder, the requisite report was not furnished, as is evident from the F.B.R's. U.O.No.2(1)Cus.Jud/2011 dated 12-4-2011. Due to inordinate delay in confirmation of NOC by the Customs, Mian Azhar cancelled the deal to purchase the vehicle. According to the complainant, he suffered a loss of Rs.500,000 due to cancellation of the deal.

4.The DR, however, contended that the duty, taxes and redemption fine paid by the complainant were erroneously calculated by the Customs on the basis of F.B.R's. Guidelines which were actually not in conformity with the fourth proviso of section 30 of the Act. Besides, the option to redeem the vehicle on payment of duty, taxes and fine was not exercised by the complainant within 30 days allowed by the adjudicating authority vide Order-in-Original No. 672 dated 20-12-2006. The duty and other faxes were, therefore, re-calculated, and demand dated 21-3-2011 for differential amount of Rs.2,071,890 issued to the complainant. The DR contended that verification of NOC was contingent on payment of short-levied amount of duty, taxes and fine by the complainant.

5.The complaint has been examined in the light of written, and oral submissions of the parties.

6.As regards the Guideline No.(v) of F.B.R. Letter C.No.10(17)L&P/05 dated 8-3-2006, by failing to mention "or date of payment of duty and taxes, whichever is higher", it is violative of Section 30 of the Act. The resultant corrective action therefore will need to be taken uniformly in all cases where the benefit of the Guideline was availed in the past. Those in the F.B.R. who issued the unlawful Guideline also need to be effectively disciplined.

Findings:

7.Arbitrary withholding of verification of NOC already issued to the complainant by the Customs at Peshawar and non-response to the complainant's letters as well as of MRA's letter constitute maladministration. The Guideline No.(v) contained in F.B.R. Letter C.No.10(17)L&P/05 dated 8-3-2006 being patently violative of the explicit provisions of section 30 of the Customs Act, 1969, its issuance is void ab initio. Moreover, coercing recovery in any manner other than that provided under the law involves maladministration under the FTO Ordinance, 2000.

Recommendations:

8.F.B.R. to-

(i)direct the Collector of Customs, Peshawar, to confirm the genuineness of NOC No.Cus/Car Cell/3034/2007/10420 dated 17-11-2009 to MRA, Islamabad;

(ii)direct all Collectors in Pakistan to recover the short levied amount of duty and taxes etc. where the benefit of the F.B.R's. unlawful Guideline was unduly granted in the past;

(iii)submit vehicle-wise and year-wise details of recoveries made, as per law, under (ii) above;

(iv)proceed against those found responsible for issuing the Guideline which was contrary to law; and

(v)report compliance within 30 days.

H.B.T./19/FTOOrder accordingly.