KARACHI, March 4: The Federal Tax Ombudsman, Justice Saleem Akhtar, has recommended that the order of Jan 7 passed by the Deputy Collector of Customs (Appraisement) Group 8 be cancelled, refund be allowed to the complainant after examining the certificate, and the deputy collector be reprimanded for the manner in which he dealt with the case and decided it.
The recommendations are incorporated in the order passed by the federal tax ombudsman on the complaint of M/s Thal Jute Mills Ltd.
It is the case of the complainant that in 1996 the CBR introduced the system of pre-shipment inspection of the goods specified in Schedule-I to the Customs Act of 1969 and levied a service charge of 2 per cent on all such goods as specified in the said schedule. M/s Cotecna and SGS were appointed the authorized agents.
The levy of pre-shipment inspection fee (PSI) was subsequently declared unlawful by the Supreme Court in its judgment dated February 24, 1999. The complainant company paid pre-shipment inspection fee (2 per cent amounting to Rs2,175,399 and Rs927,612/ on imports for jute and engineering division, respectively, during the period from 27-10-1996 to 14-04-1997.
In the light of the decision of the Supreme Court referred above, the complainant made an application to the Assistant Collector of Customs, Group- IV on August 24, 1999, requesting for the refund of Rs2,175,399, and a similar application was also made to the AC Customs Group IX on the same date for issuing refund of Rs927,612.
It was alleged that the custom authorities, despite reminders, did not respond. After a long gap of about two years, the Assistant Collector of Customs Appraisement Group IX responded for the first time on July 4, 2001 and informed the complainant that only those importers were entitled to refund who had not passed on the incidence of 2 per cent service charge to their clients.
The company, in its reply, contended that the judgment of the Supreme Court was unconditional and it was entitled to the refund.
From the facts placed before him, the Federal Tax Ombudsman observed that the complainant’s claim of refund had been processed and dealt with in a very casual and irresponsible manner by the officers of Group VIII. “This amounts to maladministration, and the delinquent officials deserve to be reprimanded,” he said.
The reliance of the departmental representative in the aforesaid complaint was quite misplaced as in that case the complainant neither produced accounts books maintained for sale tax purposes nor furnished certificate from the chartered accountant stating that the burden of 2 per cent was not passed on to the customers.
From the perusal of facts, the Federal Tax Ombudsman observed that the manner in which the case had been dealt with by the relevant officer showed that no serious application of mind had been made and pretext was sought to delay and ultimately to reject the claim.
The most amazing part was that the department, time and again, stated that the claimant had failed to provide any proof, but the claimant’s assertion was otherwise which was borne out from the record. On October 27, 2001 notice was issued to the respondent and by that time no decision had been made by the deputy collector of customs. After arguments had been completed in this complaint the officer representing the department had promised to furnish documents but nothing was supplied instead the order was passed in haste, ignoring the documents which had been received by the department on January 1, 2002. The document was a certificate from Haider Bheemjee and Co. Chartered Accountant certifying that 2 per cent PSI charges had not been passed on to its customers or anybody else.
“The officer responsible for deciding cases where rights of the parties are adjudicated is expected to be fair, just and free from mala fide and bias. The delay in deciding the case is not based on any reasonable or just ground. Such delay cause complaints of serious nature and motives are attributed which in many cases turn out to be correct. If the customs department has to build the image of a credible institution on which persons dealing with it should have faith, then they must work hard to show their honesty and integrity even in small and routine matters, not to talk of huge claims,” the order said.
The Federal Tax Ombudsman recommended:
i) The order dated 7-1-2002 passed by the Deputy Collector of Customs (Appraisement) Group 8 be cancelled.
ii) Refund be allowed to the complainant after examining the certificate issued by Haider Bheemjee & Co. Chartered Accountant.
iii) Imran Khan, Deputy Collector of Customs (Appraisement) Group VIII, be reprimanded for the manner in which the case was dealt with and decided by him.
iv) Compliance be reported within 30 days.