KARACHI, March 24: Revenue collection through customs duty recorded a sharp fall of 7.76 per cent during first eight months (July-Feb) of the current fiscal. All the three customs collectorates -- Port Qasim, Appraisement and Model Customs — netted Rs58.262 billion as against Rs62.786 billion collected in the same period last year.
Despite the fact that the overall revenue collection by these collectorates may have risen owing to higher volume of imports but collection on account of customs duty had been dismal because of heavy leakages and mis-declarations.
Generally, four categories of taxes, including sales tax, income tax (withholding tax) and federal excise duty (FED) are collected at import stage along with customs duty.
The component of customs duty in revenue collection is the highest amongst all the taxes collected at customs stage. However, during the period under review there had been drastic shortfall of Rs4.523 billion in revenue from customs.During this period the monthly collection of customs duty remained in negative except for two months - July and November – when a nominal increase was recorded over the corresponding period last year. According to official figures customs duty collections in July rose by 8.69 per cent at Rs6.798 billion as against Rs6.254 billion last year (2005-06). Similarly, duty collection in November was up by Rs860 million or 12 per cent at Rs7.995 billion compared to Rs7.134 billion in the same month last year.
Against this all the remaining six months recorded shortfall in customs duty collections, which resulted in overall decline in revenue on account of customs duty by Rs4.523 billion or 7.76 per cent.
Some observers and customs agents are of firm opinion that the free hand given under Customs Administrative Reforms (CARe) working under Model Customs Collectorate (MCC) had been a major cause, where large scale mis-declarations are going on owing to auto clearance by computers of imported consignments.
Above all auto-clearance of imports is being made on declared value (DV), which allows and encourages under-invoicing at large scale and had become a major source of huge revenue leakages and loss of customs duty. Thirdly, these observers and a section of customs agents are of the firm believe that system operators (computers) also play a major role in making colossal revenue loss to the national kitty.
The most astonishing fact is that as there had been a big growth in volume of imports but this does not reflect in collection of customs duty, which recorded decline during first eight months of current fiscal.
Insiders told Dawn that the director general of Intelligence (Customs) had been asking for monthly records and details of imports and duty collection but customs authorities after a long delay only gave three months records (Sept to Dec). Furthermore, officials taking keen interest in such leakages are reported to have been removed from their posts for reasons known to the high-ups of the CBR.
An additional collector of MCC was recently transferred from this post on showing resentment on such malpractices and revenue leakages. However, instead of following the orders the customs official preferred to resign from the job. The CBR realising its mistake immediately cancelled the transfer orders upon which the official withdrew his resignation.
Undoubtedly, the CARe has immensely facilitated import trade by allowing quick clearance of goods but there is a need to put cross check and safety valves, which could help stop leakages through mis-declarations and under-invoicing.
The officials, resisted changes in clearance system, had been removed by the CBR and one such example is of Member Customs who was posted to the appellate tribunal.
Customs agents have expressed strong resentment over long delays in clearance of those goods, which are at random thrown out of the auto-clearance for physical inspection. This causes huge loss to agents and importers who have to pay demurrage and other port charges.