Collectors of Customs: FBR decides to withdraw key import-, export-related powers

SOHAIL SARFRAZ

ISLAMABAD: The Federal Board of Revenue (FBR) has decided to take away all key imports/exports related powers of Collectors of Customs like export authorisations, approvals, reduced duty rate notifications and regulating/monitoring of all concessionary and duty remission export schemes from  all Model  Customs Collectorates (MCCs) to Input Output Coefficient Organization (IOCO) Karachi.

Sources closed to IOCO told Business Recorder here on Sunday that this major policy shift has been made in export regime without consultation of Model Customs Collectorates, Chief Collectors of Customs, export associations, trade bodies and other stakeholders, substantially enhancing IOCO powers. In case of issuance of notification, imports and exports related powers of the Collectors of Customs would be drastically curtailed giving extraordinary powers to the IOCO Karachi.

Exporters, who are aware of the development, are shocked over this major change in the customs policy regime where thousands of exporters across the country would be restricted to physically go to Karachi for taking all imports/exports related approval, Duty and Tax Remission for Export scheme and concessionary and duty remission export schemes. Instead of dealing with the relevant regulatory Collectors of Customs across Pakistan, the IOCO Karachi would be given exceptional powers to handle all imports and exports related functions. There is a panic like situation among the exporters who are not expecting that the customs authorities would take such an anti-export measure. The question arises whether the IOCO Karachi has sufficient workforce and infrastructure to deal with all imports/exports related schemes across the country? Moreover, how all exporters across the country would be able to regularly visit Karachi for processing of their cases at the level of the IOCO?, sources said.

It has been reliably learnt that the FBR Custom’s Wing is shifting powers and functions of all Customs Collectorates to the IOCO, Karachi of all concessionary facilities under DTRE, Manufacturing Bonded warehouse, reduced rate of duty on imports, fixation and revision of duty on import fall under SRO’s 450(I)/2001 dated 18.06.2001, SRO 565(I)/2006 dated 05.06.2006, SRO 567(I)/2006 dated June 5, 2006, SRO 327(I)/2007 dated April 18, 2007 and the notification for shift over of powers and functions has been prepared without taking any comments and recommendation from major stakeholders like Collectorates, Exporters Associations and other trade bodies. Exporters have requested Chairman FBR Ali Arshad Hakim to urgently take notice of the situation and examine all legal aspects and implications before issuance of notification.

Sources said that thee recommendations have not been submitted to any Collector Conference, Collectorates, exporter’s association, Chambers or other trade bodies for comments and suggestions. The FBR has proposed transferring of powers and functions from Regulatory Collectors to the IOCO under which all the concessionary facilities of DTRE, Manufacturing Bonded warehouse, reduced rate of duty on imports, fixation and revision of duty on import, export and other trade would be given to the said IOCO.

At present exporters and other business community avail the concessionary facilities of DTRE, Manufacturing Bonded Warehouse, reduced rate of duty on imports, fixation and revision of duty on import, export and other trade from their local Collectorates (Regulatory Collector fall in their jurisdiction) in their own cities. After this drastic changes and shift of powers and functions, the exporters and other business community will go to Karachi only to avail the concessionary facilities. In existing scenario the local Collectorates as Regulatory Collector granted provisionally approval after physical verification of industrial unit/factory premises  and all other documents and data of income tax, sales tax, account and production capacity, samples of the product, technical data and particular industrial data and other information required from time to time by the regulatory Collector. In many cases, exporters have to hire private firm for technical support. The Regulatory Collector may also have right to change or decrease or cancel the concessionary facility already approved. After given approval 25% of the applied quantity in DTRE scheme or other approvals like bonded warehouse, EOU and reduction of duty in SRO 565, the Regulatory Collector refer the case to IOCO Karachi to determine the input output ratio and wastage of the consumer items for technical support and helping hand, they said.

The Input Output Coefficients Organisation (IOCO) is part of Custom Wing of the FBR already having various functions like estimate and update the actual Input Output Coefficients, determine Input Output Ratios and wastages in DTRE and facility of reduction of duty under SRO 450(I)/2001 approvals, in Form ‘S’ applications, Export Oriented Units (EOUs) of goods to be manufactured of consumer items. The determination of Input Output Ratios and wastages of consumer items purely related to technical skills that have technical knowledge of product, particular machines, and methods use in particular science and industry but IOCO have limited customs officials having full technical skilled or relate knowledge and methods of a particular subject or job knowledge of any item and industry.

When contacted, exporters opined that at present the IOCO has only 10-12 persons in total staff including junior custom officers, sales tax auditors and staff known as Sector Specialist of the industry. The organisation has been headed by a senior customs official. The IOCO have only one office in Pakistan located in Karachi, and these 10-12 persons including sector specialist determine the input output and wastage of the all export and import consumer items with limited technical method and particular industrial knowledge and international standards. On application of the local Collectorate the sector specialist staff of IOCO go to industrial unit to visit them to determine the input and output ratio and wastage of input goods and consumer items and issue the report according to their own standards, they added.

As far as impact of the proposed decision is concerned, sources said the snatching powers from all Collectorates to the said office would have direct negative impact on exporters as well as on local business which ultimately reduced important part of the national export/foreign proceeds. Due to unjustified policy shift, exporters will face problems and burdens in processing of their DTRE related approvals and all other imports and exports schemes. The exporters are already very much disturbed due to various crises existing in the current situation like delay in production due to power and gas load shedding etc. After these drastic changes of shift of powers and functions, the exporters would be bound to compliance the one office. The exporters belonging to any city like Islamabad, Rawalpindi, Peshawar, Lahore, Multan, Faisalabad, Sialkot or any other city would be bound to approach IOCO in Karachi for getting approvals and processing of their cases. The exporters across Pakistan would have to physically go Karachi which is almost impossible to spare time and money as compared to existing scheme where concerned Collectors of Customs are dealing with the issues of the exporters.

The exporters are already facing difficulties to timely import raw materials, accessories, packing materials for short-orders which ultimately increase cost of purchase, increase cost of sales in shape of delays in preparation of export consignment, shipment sent through air or some shipments prepared under various undo duties and taxes despite the concessionaries facility available in laws, and some exporters are losing buyers.

Source said that if the notification in question has been issued, it would have serious implications on all major export as well as local industries. Keeping in view the seriousness of the issue, even the field offices of all Collectorates are not aware about this development.

Exporters have asked the FBR Chairman to intervene to stop the transfer of powers and functions from all Collectorate to one person only and structure the new proposal in line with objectives of practicality, expansion of business and economy, enhancing exports and reduction of trade barriers. Exporters also stressed the need for increasing momentum of confidence level and facilities to be availed in easy way for onward reconciliation of exports and consumption of the goods to achieve the revenue target. Exporters were confidence that Chairman FBR will take action to check this anti-export measure.