KARACHI, March 25: A large number of containers have piled up at the ports because of confusion prevailing over the net impact of special federal excise duty (SFED) recently imposed through the presidential order.

The levy was rejected by the commercial importers who had demanded of the government to continue their zero- rated status at import stage.

The government increased FED rate from 1 per cent to 2.5 per cent on imports and also removed sales tax exemption given to the commercial importers by making amendment through SRO 231 on March 15, 2011. The customs agents as a mark of protest against high rate of duty and taxes stopped clearing boxes from the container terminals at the Karachi Port and Port Qasim.

A spokesman of Karachi Customs Agents Association (KCAA) told Dawn that the staff at the Pakistan Automated Customs Clearance System (PaCCS) besides, special FED is also charging income tax and sales tax on import value of goods.

He said that under the SRO 655 many goods are exempted from FED at import stage but customs are collecting the same resulting in payment of extra duty per container.

Customs Agents Association general secretary Wasiq Hussain said that some technical mistake might have taken place while feeding revised rates of taxes and duties in the PaCCS computer.

However, customs officials admitted that there could be some mistake in the programming of the PaCCS system which is applying income tax (withholding tax) at customs stage at one single rate, which results in higher incidents of taxes.

They further said that the rate of income tax or withholding tax at customs stage varies from 1 per cent to 6 per cent on imported goods and if the PaCCS is calculating the revised FED at the highest rate it will cause higher impact on overall taxes and duties of imported goods. The customs officials also stated that since the status of commercial importers under SRO 231 has been changed and exemption from sales tax had been withdrawn clearance of goods by customs agents have been stopped.

The officials said that the Karachi Chamber of Commerce and Industry (KCCI) also took up the matter with the FBR chairman for maintaining zero-rated status of commercial importers at customs stage.

There was a suggestion that till such time a final decision is not reached the commercial importers should pay sales tax at customs stage, which could be adjusted or refunded at a later stage.

However, the commercial importers are reluctant to take any risk and even those who have filed their Goods Declarations (GDs) are not paying taxes and duties to clear their containers. There are many who are not even filing their GDs, customs officials said.

The customs official said that on an average PaCCS received around 700 GDs for imports per day which means that around 2,000 Teus and a similar number are recorded on export trade.

The customs agents want the FBR to issue clarification at the earliest so that ports are not congested with containers and the industry gets the required raw material.