KARACHI, March 10: While disposing of various petitions the Federal Tax Ombudsman has recommended that the CBR should implement the directive of the Chief Executive with regard to release of consignments under the Afghan Transit Trade agreement within three weeks from the date of the decision.

Justice Saleem Akhtar held this in his decision while disposing of petitions of common and identical questions of facts and law.

The petitioners were Afghan nationals who imported consignments through the Karachi Port for transit to Afghanistan under the Afghan Transit Trade agreement of 1965 between Pakistan and Afghanistan.

Consignments arrived at the Karachi Port and Afghanistan Transit Documents were filed with the customs authorities to facilitate clearance of the consignments for onward dispatch to Afghanistan. However, the facilities were denied in view of CBR notification No SRO 1162 (I)/94 dated 2I/1/l994 and SRO 109(I)/95 dated December 13, 1995, banning transit and import of 15 items including auto parts, electrical equipment and chemical & dyes.

The FTO in his order noted that although these documents for clearance were filed before the issuance of the said notifications, the customs authorities refused to clear them. The customs authorities pressed into service SRO 368 (I)/95 dated 02-5-1995 and demand duties and taxes in Pakistan on these detained consignments.

The importers filed petitions in the Sindh High Court challenging actions of the customs and KPT authorities in detaining goods and imposing demurrage charges.

The SHC allowed the petitions and declared the order of the customs authorities null and void. It was observed that the Transit Agreement was enforceable and the CBR had no valid justification or authority to issue notification banning transit of trade goods to Afghanistan. It was held that jurisdiction for issuing such notification vested with the ministry of commerce.

The CBR and the KPT filed appeals in the Supreme Court, which were dismissed by a judgment dated July 12, 1995. After the judgment of the SHC dated December 17, 1992 and during the pendency of appeals before the Supreme Court, the CBR issued SRO 368(I)/95 dated 02. 5.1995 in exercise of powers conferred under section 19 of the Customs Act of 1969 and subsection (I) of section 13 of the Sales Tax Act of 1990 stating that the federal government was pleased to direct that the goods imported under the Afghan Transit Trade Agreements of 1965, which were mentioned in the table for clearance and home consumption, should be subjected to conditions specified therein on payment of concessional rate of customs duty and sales tax.

The petitioners applied for conversion of bill of entry into home consumption bill of entry, but when duty and tax were assessed, they refused to pay and the goods were still lying at the port area.

The Supreme Court, upholding the judgment of the SHC, observed that the customs authorities had no justification in the matter at all. They could neither ban the import of goods nor refuse to allow them to be transited to their destination. Under the Rules of Business of 1973 made in exercise of the powers conferred by the constitution, the business regarding the import and export across Customs Frontiers including treaties, agreements, protocols and conventions with other countries and international agencies bearing on trade and commerce and the transit trade had been allocated to the ministry of commerce, which had exclusive jurisdiction in such matters.

It was further observed that the learned judges of the High Court were perfectly justified in quashing letters and orders impugned in the constitutional petitions, directing the appellants to perform their functions in respect of Afghan Transit goods in terms of transit agreement and protocol.

The petitioners applied for transit of goods to Afghanistan, but the customs authorities refused on the ground that the bill of entry had been converted into home consumption bill of entry which could not be reversed and, therefore, the goods could not be allowed to be transported to Afghanistan.

The Afghan traders filed a representation before the Chief Executive who ordered release of 371 consignments for transit to Afghanistan in terms of the Agreement without charging any duty. In spite of this order the petitioners’ consignments were not released. The petitioners then filed these petitions. The customs department submitted their reply that the transit facility was in terms of SRO 1162(I)/94, dated 21. 11. 1994 and SRO 109(I)/95 dated 13. 2. 1995 and the subject consignment was imported under the bill of lading but the importers did not provide the bill of entry. SRO 368(I)/95 dated 02. 5.1995 was issued to facilitate the Afghan importers so that they could take delivery of banned items after payment of duties and taxes. On the basis of the judgment of SHC, the CBR ordered clearance of the stock involved for immediate transit to Afghanistan.

Another significant development in the case was that on representation made to the Chief Executive, a directive, dated 15. 1. 2000 was issued to release all the 371 consignments of Afghan transit goods detained at Karachi without payment of demurrage charges.

In spite of the directive, the department is adamant not to release the consignments.