Packets without printed graphical health warnings: FBR decides to ban confiscated cigarettes' auction

ISLAMABAD: The Federal Board of Revenue (FBR) has decided to include cigarettes packing, without printed graphical health warning, in the list of items, which cannot be auctioned by the Customs Department.

The FBR has proposed amendments to the Customs Rules, 2001, through a notification, here on Tuesday.

According to the notification, cigarettes packing, whereof does not bear printed graphical health warning in accordance with Section 3 of the Cigarette (Printing of Warning) Ordinance, 1979, has been specified in the list of items not to be auctioned.

Presently, the following goods shall not be put to auction and be sold or disposed of in the manner as prescribed by the board, namely:- (i) arms and ammunition; (ii) liquor/narcotics and like goods; (iii) confiscated books, written material, which is obscene, subversive, anti-state or anti-religion; (iv) transit goods excluding confiscated goods; and (v) diplomatic cargo excluding confiscated goods.

The FBR has proposed amendment in Rule 58 (Approval of goods for auction) of the Customs Rules 2001.

A tax expert said that the government also needed to remove a major distortion in the customs laws by amending a Customs General Order (CGO) 12 of 2002, which allows confiscated/seized smuggled cigarettes to be offered to the PIA/Duty Free Shops on appraised value with 25 percent discount.

The auction of the non-duty paid smuggled cigarettes by the customs is a very serious issue being faced by the documented cigarette manufacturers.

This basically encourages consumption of counterfeit and duty-not-paid (DNP) cigarettes in the country, which needs to be checked in the coming budget through amendment to the relevant law.

Sources said that the amendment would enable the customs authorities to destroy the confiscated/seized cigarettes under the procedure for disposal of seized/confiscated goods by the agencies.

It is however observed that the phenomenon of auctioning confiscated/seized cigarettes leads to the following negative consequences: The cigarettes being put up for auction do not carry the mandated health warnings of the Government of Pakistan, and are in violation of the Cigarettes (Printing of Warning) Ordinance, 1979.

The auctioned cigarettes create a lot of nuisance for the legit industry because the invoice or release order issued by the customs authorities pertaining to the auctioned lot is used multiple times by dealers of smuggled cigarettes to show that they have been obtained through a legal process, whereas the truth is to the contrary.