KARACHI: The Collectorate of Customs Adjudication-I has issued an Order-in-Original against Karachi International Container Terminal (KICT) Limited for tax evasion to the tune of Rs 23.80 million on import of super brand used quay cranes.
The Order-in-Original (ONO), issued by the office of the Collectorate of Customs Adjudication-I, stated that the Directorate General of Post Clearance Audit (Customs) Karachi vide its contravention report No PCA/3005/2015/Audit/10656 dated 6.3.2015 reported that M/s Karachi International Container Terminal Limited Karachi cleared two units of imported super brand used quay cranes complete with spreader, standard accessories, fittings and spare etc through their clearing agent M/s Ports Connection (Pvt) Limited from Model Customs Collectorate (Appraisement-West) Karachi by availing benefits of Serial No 16 of SRO 575(1)/2006 dated 5.6.2006 without fulfilling the mandatory requirement of valid approval issued by the Board of Investment for availing the said exemption.
The Board of Investment examined the case in the light of the input sought from Engineering Development Board and conveyed to the Federal Board of Revenue vide BOI U.O No I (254)/2013-PP dated 24.7.2013 that import of used machinery such as quay crane do not fall within the scope of SRO 575(I)/2006 dated 5.6.2006 for availing the concessionary rate of duty, according to the ONO.
The ONO further states that the BOI refused issuance of mandatory permission/ certificate required for availing the exemption of taxes under the said SRO to M/s KICT on import of super brand used quay cranes complete with spreader, standard accessories, fittings and spares etc.
M/s KICT and the clearing agent were held to have intentionally and willfully caused loss to the government exchequer amounting to Rs 23.8 million in respect of imports effected under goods declaration No KAPW-HC-13351 dated 2.8.2013 which appear to have been processed in a perfunctory manner. KICT was unable to provide any lawful justification except reliance on FBR’s OM dated 22.8.2015. It is apparent that this plea is not tenable as except reliance on FBR’s OM (addressed to Board of Investment), did not waive the mandatory condition of submitting Annex B from the BoI for availing the concession of duty/taxes against serial no 16 of SRO 575(I)/2006 dated 5.6.2006.
Needless to mention that mere application for concession does not qualify/entitle an importer for availing exemption/concession without the fulfillment of mandatory conditions of the SRO which is an essential and unavoidable pre-requisite for claiming such benefit. In the instant case it is determined that M/s KICT has availed inadmissible benefit in terms of serial no 16 of SRO 575(I)/2006 dated 5.6.2006 without fulfillment of mandatory condition of submission of duly authorized certificate/permission duly issued by the Board of Investment. The importer, however, failed to come up with any tangible reasons/evidence and were unable to rebut the charges leveled against them by the department, the ONO added.
In the light of foregoing deliberations, the charges as enumerated in the show cause notice stand established. The liability of evaded amount of taxes against M/s KICT has been calculated to Rs 23.8 million.
Accordingly the importers M/s KICT are directed to immediately deposit the aforesaid amount in the government treasury failing which action may be initiated against them under Section 202 of the Customs Act, 1969 read with Chapter XI (Recovery Rules) of the Customs Rules, 2001 notified vide SRO NO.450(I)/2001 dated 18.6.2001.
