Written by Advocate Muhammad Idrees Yahya
Over time, FBR has done a remarkable job in getting the Customs Act and Laws in line with the international requirements laid down in various treaties. Be it trade facilitation, checks and balances, concessionary regimes, etc. It is also the reason Pakistan Single Window is termed a game changer as this interface has also laid a strong backbone for the future of Customs Clearance. The PSW system has no doubt been influential in bringing about changes in other government agencies to bring their laws and systems to the level at which the Customs Computerized System works.
However, not everything is gold and glitter, and such an understanding of laws has also led lawmakers to realize the reliefs that have been granted to the traders in the same very rules. But, instead of making them work, the FBR has overtime made amendments that only protect the interest of the Customs in the collection of revenues and despite having a Collectorate of Adjudication, most traders are left with no other choice but to claim relief from Superior Court which increases the cost as well as incur heavy demurrage and detentions costs to the shipment. Prima facie it seems as if the Customs linger on these things so that demurrage detention cost exceeds the difference of duty. As a result, the importer gives-up the fight for his right in order to save his cost and production losses. The customs, in the end, add their share to the revenue and then publish a report.
I’ll make this article simplified by making two subheadings; one showing laws implemented in which customs is the beneficiary and laws not being implemented due to Trade being the beneficiary.
Laws not being Implemented:
Relevant cases can be made out when the customs or the importers cannot reach a decision regarding an assessment of a product, but despite having the provision of Section 81 of the Customs Act, the Pakistan Customs, forces the importer to get the provisional assessment order from the Honorable Sindh High Court which not only increase the cost of doing business but delays are also imminent. Similarly, Section 83 of the Customs Act also allows the Adjudicating authority to secure the fine and penalty of a showcause and release the goods to the importer for which the decision is pending, however the same does not get implemented in its true essence.
Secondly, demurrage and detention, are the charges which the shipping lines and port charges, respectively for keeping the goods in the container and for keeping the container in the port area. the Tribunal and Courts do order that Customs should issue delay and detention certificates, which are obliged by the Customs too under Section 14A(2) of the Customs Act 1969, however, the shipping lines and ports have implemented and granted relief on them rarely. Despite being a direct contempt of such an order and liable to be penalized under Sr.7A of Section 156(1) of the Customs Act 1969 no major actions against the Port Authorities or the shipping line are taken by the Customs. Despite being a license holder of the same Customs which grants license to Customs Agent, we are still waiting to see strict action just as the cases are with Customs Agent.
Now let’s get to trade facilitation and the much-appreciated PSW. An amendment in the Rule 433 of the Customs Rules, states that
“Provided further that the conditions of upfront payment of duty and taxes shall not be applicable if the declaration is filed through the Pakistan Single Window system where declaration shall be deemed to have been filed upon submission through the system
however implementation in this rule is still pending since 2022 because then the traders could easily fight back against unjust assessment because there is upfront submitted duty and taxes and at least the traders are relaxed in that sense. It’s not something that will require a major overhaul of the system or upgrade. The customs recently implemented the the faceless assessment system and the Customs Agent point system in less than six(6) months time so we can confirm that its possible. But the question is why isn’t it been done yet.
Similarly, as per the Section 195C of the Customs Act 1969, an Alternative Dispute Resolution (ADR) is to formed, such was notified in 2007 through SRO 110(I)/2007, since then the list has not been updated and ADR has not been implemented. ADR can lead to problem solving at fast pace and it will also help save litigations process for not only the trader but also the Customs. However, the why the customs is reluctant to implement ADR is beyond understanding.
Laws being Implemented:
Getting to Customs Agents, Pakistan Customs, recently issued an SRO 2071(I)/2024 which had some drastic changes when it comes to getting a License as a Customs Agent, getting an examination is one of them, which is wholeheartedly accepted whereas in the same there is a new rule which introduces a point scoring mechanism such as the case is with the First World Countries. The Chairman FBR was also keen to emphasize that he wants traders to get out of the Customs Agents’ grasp. How the right to conduct business in this statement was violated is to be understood by the lawmakers, fighting corruption can be done by having transparency but when your laws are so complicated getting the system faceless leaves the traders no choice to get their concerns and voices heard regarding their reservations.
The faceless assessment as told by many alienates the assessing officer from the name of the importer is a MYTH. (the same was also Highlighted by the Prime Minister of Pakistan on his recent visit to the Central Appraising Unit at SAPT). The only thing hidden is the name of the Customs Agent. The importer name be it how much hidden is always on the import documents which needs to be uploaded as per rule 433. Further, the number of assessing officers in the CAU may have increased significantly, but the Principal Appraisers remain less than 10 which often leads to 4-5 days of delay if GD is marked to them. What it has done is also raised a question mark to Aos who have to rely on pure instincts if they want to send a GD to examination which has been marked to them after a day or two. The backlash can be severe in either way.
Getting back to the selected implementations, certain amendments are incorporated without considering the impact they can make on other orders; such as the case was in 2023 when an was amendment made where the minimum penalty against a contravention was increased to ‘not less than the value of the goods’. The objective was to discourage gross misdeclaration and smuggling, which in essence was correct, but, it impacted the business of old and used auto scrap imported, which though banned through Import Policy Order but through Customs General Order (CGO 11/2006) was allowed after adopting the procedure. The amendment was implemented after the whole fiscal year and then various petitions were filed and eventually it was reversed in 2024.
I can go on and on with multiple things in this never-ending discrimination of rules implemented by the officials but when will this end is the question. The officials should also look into it and make laws not to make themselves invincible but to facilitate trade. If Customs is trying to achieve something else other than invincibility then they should come forward and explain themselves to the stakeholders. Give an objective explanation to the changes and also share long-term goals.
Written by Advocate Muhammad Idrees Yahya
The writer is a lawyer as well as a Customs Consultant and writes related topics.
