Curbing misuse of scheme: Customs asks FBR to introduce new baggage rules for expats

ISLAMABAD: Customs authorities of Karachi have strongly recommended the Federal Board of Revenue (FBR) to amend the baggage rules to control the massive misuse of baggage scheme and introduce a new “Overseas Pakistanis Door to Door Service Rules 2024” to facilitate overseas Pakistanis.

In this connection, the Federal Tax Ombudsman (FTO) has also directed the FBR to amend the baggage rules to control bringing of commercial quantities of high-value luxury goods in connivance of the customs authorities.

In line with the recommendations of the customs authorities, the FBR should introduce “Overseas Pakistanis Door to Door Service Rules 2024,” amend SRO666(I)/2006 and change the definition of the commercial quantity to streamline and facilitate bona fide passengers who bring in personal and household effects, the FTO directed the FBR. The FTO on Tuesday issued directions to the FBR Member Customs (Policy) for checking loopholes in the baggage rules through appropriate amendments in the scheme.

According to the FTO’s own motion investigation against misuse of the baggage scheme, the FTO has investigated irregularities that high-value luxury goods under the garb of baggage being cleared from the port against payment of minimal amount of duty and taxes in collusion with the customs authorities.

Moreover, the goods being cleared by misusing the passport of overseas Pakistanis who have meager incomes and cannot afford to buy such high-valued items. Such cleared goods are then supplied throughout Pakistan causing a huge loss to the economy.

The unaccompanied Baggage of overseas Pakistani passengers is governed by SRO 666(1)/2006 which defines unaccompanied baggage as baggage including personal apparel, and other personal, professional and household effects of a passenger. The baggage clearance significantly differs from the regular imports as it primarily deals with the belongings of overseas citizens. The Pakistanis bringing in unaccompanied baggage can be into two broader categories: the ones availing transfer of facility and those not availing the transfer of residence.

The Director Customs Intelligence informed that due to restrictions on imports and the non-availability of foreign exchange unscrupulous elements may engage in mis-declaration through import baggage containers.

Accordingly, the definition of commercial quantity in Rule 2(c) of the same SRO 868(1)/2006 has also been recommended to be changed. Similar proposals have been made by the Directorate General, Intelligence and Investigation. Customs, Karachi, in their submissions before this office. Evidently, in response to the own motion investigation initiated by this office, the Collectorate of Customs Enforcement (Ports), on the suggestion of this Forum, has made concerted efforts to streamline the clearance of baggage to prevent the misuse of the baggage facility scheme. This is evidenced by the fact that practically no meaningful complaints of malpractice regarding the import of goods brought in commercial quantity have been received in the last six months, due in part to the lodging of several FIRs by the Collectorate of Customs Enforcement (Ports), Karachi, against individuals bringing in goods in commercial quantity through the misuse of the baggage scheme.

From the response submitted by the respondent Collectorate of Customs (Ports) it is obvious that the clearance of goods brought in commercial quantity under the baggage facility cannot be denied by the Collectorate based on Rule 17 of Baggage Rules, in conjunction with Rule 2(c) and SRO 499(1)/2009 dated 13.06 2009. Regarding the misuse of passports, the respondent Collectorate has clarified that, as a clearance formation, they cannot refuse clearance of such goods imported in commercial quantity solely based on the passport owners’ income status.

In view of the foregoing, the FBR is directed to instruct Member (Customs Policy) to examine the aforementioned proposals forwarded by Collectorate of Enforcement (Ports), Karachi and the Directorate of Intelligence and Investigation, Karachi and incorporate the tenable changes in the relevant rules/procedures/SROs as per law, the FTO added.

Copyright Business Recorder, 2024