KARACHI: Customs Adjudication-II, Karachi has given his decision in the favour of Appraisement-East on a contravention report on a case of evasion of taxes/duties by ICI Pakistan and its Clearing Agent Mehran Corporation.
The case was detected by the Model Customs Collectorate of Appraisement-East’s R&D Section.
The case was prepared against the offence of evasion of duty and taxes through mis-declaration of the imported goods in terms of description and classification.
The evaded amount claimed in the contravention report is to the tune of Rs.33.94 million.
The importers and its clearing agents has caused colossal loss to the national exchequer to the tune of Rs 33.94 million involving customs duty Rs 7.99 million, sales tax amounting to Rs 22.58 million, additional sales tax amounting to Rs. 2.55 million and income tax Rs 797,329, while the value of the offending goods have been calculated as $159.93 million, the report stated.
The importers ICI Pakistan and their authorized Clearing Agent Mehran Corporation, (CHAL No.366), Karachi, have been contravened the following provisions of law:-
The Customs Act, 1969 sections 19,32,32(A),79&192 punishable under Clause 10A14, 14A,45,46&86 of the Section 156(I) of the Customs Act, 1969.
The Sales Tax Act, 1990 section 33 punishable under Clause II(c) of Section33 and The Income Tax Ordinance Section 148 punishable under Section 148.
According to the details, ICI Pakistan imported 34 consignments of “WANNATE 8019” from China and filed Goods Declarations as detailed mentioned as above under PCT Heading 3909.5000 for clearance thereof at the total declared CIF value of $159.93 million mentioned as above through their authorized clearing agent.
The importers ICI Pakistan Limited (NTN No-0710672), Karachi determined their liability of payment of applicable duties and taxes amounting to Rs. 9.49 million (customs duty Rs. Nil, sales tax amounting to Rs. 3.24 million, additional sales tax amounting to Rs 2.24 million and income tax amounting to Rs. 4 million) paid the same and sought clearance under Section 79(I) of the Customs Act, 1969 also claiming benefit of custom duty exemption against FTA certificate in terms of SRO-659(I)2007 dated 30-06-2007 besides exemption of sales tax & additional sales tax in the terms of SRO- 1125(I)2011 dated 31-12-2011, The consignment s were released as per importers’ declaration on payment of customs duty 0 percent, sales tax @ 2 percent, additional sales tax @2 percent and income tax @ 3 percent.
Whereas, the MCC-Appraisement-East received credible information regarding evasion of duties/taxes by ICI Pakistan Limited (NTN No-0710672) and it clearing agent Mehran Corporation (CHAL No.366). After thorough scrutiny of the relevant database/record of the Customs WeBOC and PaCCS systems as well as relevant literature/Material Safety Data Sheet and laboratory test report revealed that the above mentioned importer succeeded in getting clearance of the impugned goods by deliberately mis-declaring description as “WANNATE 8019 Polyurethane” instead of actual description “WANNATE 8019” and wrong PCT Heading 3909.5000 instead of correct PCT Heading 3824,9091 with the active connivance of their clearing agent Mehran Corporation and availed undue benefit of sales tax & additional sales tax exemption in terms of SRO-1125(I)2011 dated 31-12-2011.
On the basis of the reports of laboratory test, competent authority finalized the assessment under correct PCT Heading 3824.9091 attracting inter alia, Sales Tax@17% & Additional Sales Tax@3% which resulted into the demand of Rs. 1,012,349/- towards short paid taxes.
In his order, The collector of Adjudication-II stated that “he is convinced that the charges levelled in the show cause notice stand established in terms of Sections 19,32, 32(A),79&192 of the Customs Act, 1969 Section 33 of the Sales Tax Act 1990 and Section 148 of the Income Tax Ordinance, 2001. In exercise e of powers conferred upon me under Section 32(2) of the Customs Act, 1969. I, therefore, order ICI Pakistan Limited (NTN No-0710672), to deposit the short paid amount of Rs. 25.94 million into the government treasury.”
Meanwhile, Collector Appraisement-East, Manzoor Memon commended the efficiency and hard work of the collectorate in general and team of R&D Section in particular.
The collector also imposed a penalty of Rs.3 million under clause (14) of Section 156(I) of the Customs Act, 1969 for violation of Section 32(I) ibid, on the respondent, ICI Pakistan Limited and also imposed a penalty of Rs. 500,000 on Mehran Corporation, clearing agent (CHAL No. 366) Karachi under the licensing rules for their dubious role in the case.
