Dr. S. Faisal Bukhari, Chief (Exports & Exemptions) Revenue Division, Federal Board of Revenue, Islamabad has directed the Chief Collector Customs (Appraisement South), Custom House, Karachi to stop massive Mis-Declaration and Under-Invoicing in import of Spark Plugs and Bearings and Parts thereof with immediate effect.
Bukhari ordered to identify the delinquent importers, clearing agents and the Customs staff and initiate criminal/ disciplinary proceedings against them under section 32-A; and other laws applicable forthwith. Initiate proceedings against the delinquents under Section 32 C of the Customs Act, 1969 and refer the matter to Directorate General of I&I for ascertaining Anti-money laundering aspects.
He further ordered to initiate recovery proceedings against defaulters and defrauders. Conduct comprehensive audit of the clearances in the past three years by DG PCA. Identify and initiate disciplinary action against those responsible who did not contest the stay orders. The matter may be treated as most urgent, the official said in his letter dated 1st October.
According to information it was brought to notice of the FBR that massive mis-declaration and under-invoicing had been committed in the imports of certain goods namely Spark Plugs of Motor Cars and Motorcycles and Bearing/ Bearing Parts in collusion with Customs staff.
Valuation Ruling No. 1401/2019 dated 30.10.2019 has determined the valuation of Spark Plugs for Cars into two Categories i.e. Iridium Tipped Spark Plugs and Non-Iridium Carbon Tipped Spark Plugs. The Value of Iridium Tipped Spark Plugs has been determined in the subject Valuation Ruling at US$ 6.14 per piece whereas the Valuation of Non Iridium Spark Plugs has been determined at US $ 0.59 per piece.
It had come to the notice of FBR that Iridium Tipped Plugs were being cleared under the garb of Non Iridium Tipped Plugs causing a colossal loss to the exchequer. Customs data of the past years shows that majority of the declarations and assessments of these products are those of Non-Iridium Tipped Spark Plugs despite of the fact that Car Manufacturers use Iridium Tipped Spark Plugs in cars.
Similarly, Valuation Ruling No. 967/2016 dated 16.11.2016 has determined the values of Motorcycle Spark Plugs of Japan and Chinese Origin as US$ 0.5 and US$ 0.15 per piece respectively. Board had been informed that Japan origin motorcycle spark plugs were being cleared as of China origin with the collusion of the Customs staff at the detriment of the exchequer and in many instances, the values determined under the Valuation Ruling had not been applied.
Valuation Ruling No. 1408/2019 fixed values for various types of bearings/ parts from US$ 2.3 to US$ 4.8 per KG for bearings parts imported in Kit/ Packet or SKD form and US$ 1.80 to US$ 3.80 for hearing parts imported in bulk packing. Similarly, the Ruling also fixed values for whole bearings of various origins and make/ models per piece. It has come to the notice of the Board that unscrupulous elements with active collusion of Customs officials were heavily indulged in under-invoicing and mis-declarations by clearing whole bearings in the garb of parts and components. Furthermore the revised Valuation Ruling is misused through import of high weight bearing; and declaring the bearing numbers have been noticed where even the values determined by the Ruling have not been applied. On some occasions mis-declaration of origin had been observed.
The sources said that one M/s Asghar Enterprises had been clearing bearings against a simple undertaking on very less value without providing any financial security due to a stay order granted by Sindh High Court. The importer is still enjoying benefit of Valuation Ruling No. 1386/2019 dated 24.07.2019 against a simple undertaking on much lesser value. The department had failed to contest the stay order in the Sindh High Court.
Bukhari said the Board has taken a very serious view of the matter that despite repeated directions to clamp down on under-invoicing and mis-declaration, no action has been taken, even though strong powers have been given to the administration under the recent amendments in the Customs Act, 1969. In this regard Chief Collectors and Collectors have been tasked to initiate action and report to the Board vide letter C.No.4 (15) E&C/2020 dated 24.08.2020. But the Board had not received a single report of any action taken under the law.