ISLAMABAD: The Federal Tax Ombud­­sman (FTO) has detected irregularities in seizure and auction of non-customs paid (NCP) vehicles across the country.

The ombudsman has taken a suo motu case against irregularities of the Federal Board of Revenue (FBR) field formations in making seizure of smuggled NCP vehicles, determination of assessable value and conduction of auction of the seized vehicles.

During investigation, the FTO found that Custom collectorates while seizing the vehicles did not nominate or apprehend even a single unlawful owner or culprit. The criminal proceedings including the lodging of FIRs have, invariably, not been initiated during the last 10 years and most of the seizures had been effected against unknown persons.

The FBR’s report regarding seizures of vehicles by all the collectorates between July 2013 and January 2019, submitted to the FTO office, shows the number of vehicles has increased every year.

During this period, a total of 3,299 vehicles have been seized.

According to the FTO report, 1,662 vehicles have been auctioned including 1,004 in the last five years auctioned by MCC (Preventive), Quetta, of which 538 were disposed of in the first auction – some below the reserve price. This was contrary to the instructions contained the Customs General Order (CGO) 12 of 2002.

26 vehicles confiscated vide single Order-in-Original (O-in-O) were disposed of just in the first auction on 75-80 per cent of the reserve price before three months of the issuance of confiscation order. Names of owner/persons from whom the vehicles were seized were not indicated.

Dates of seizure of 621 vehicles were not mentioned and despite prior information, not in a single case could the offender be rounded up by the collectorate staff. No action was initiated against the persons involved in violation of Section 2(s) of the Customs Act, 1969 and CNICs of successful bidders were not available in all 621 cases.

As per the FTO report, the tax functionaries used discretionary powers by exploiting conflicting provisions, regarding acceptance of bids in first auction of vehicles, in Chapter-V of Customs Rules 2001 and instructions issued by CGO 12 of 2001 in an arbitrary manner.

The FTO report states the influx of NCP vehicles and their seizures had increased, which belies the plea of the FBR asserting highest level of efficiency to curb the menace of smuggling.

If anti-smuggling activities were conducted seriously with a view to discourage illegal flow vehicles, their influx should have been decreased, reducing number of seizures.

The FTO has recommended to the FBR to review conflicting provisions regarding the acceptance of bid in first auction in CGO and make necessary amendments to ensure uniform application of law.

The tax body should follow Model Auction rules for goods through electronic means as provided under sub-Section 1A of Section 201 of the Act and prepare and operationalise auction module in the WeBOC system to bring transparency and efficiency.

It should also make mandatory for authorities concerned to put all auction schedules, complete in every respect, showing detailed specification of goods to be sold in accordance with the rules on the official website of the FBR.

Further, the FBR has to direct the Directorate General of Internal Audit (Customs) to carry out a detail audit of auctions conducted by field formations during last the three fiscal years to identify weaknesses in the rules, procedures and processes while making recommendations to improve law, internal control and compliance.

Published in Dawn, January 7th, 2020

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