Guarantees on Afghan transit goods: FBR chief issues warning to insurance companies

Chairman Federal Board of Revenue (FBR) Shabbar Zaidi has warned insurance companies to correct their systems, as some insurance companies are not properly complying with the requirements including fee condition with respect to guarantees on Afghan transit goods. According to a tweet of the FBR chairman on Monday, "FBR has observed that some insurance companies are not properly complying with the requirements and fee condition with respect to guarantees on Afghan transit goods. Such entities are warned to correct their mechanism and immediately correct their system."

The customs has found that billions of rupees will be stuck up on account of guarantees encashment against insurance companies in case the goods under Afghan Transit Trade (ATT) are not transported safely to Afghanistan, sources said. Sources said that insurance companies were not charging average fee as instructed by the FBR so they were given warning to comply with the instructions of the FBR immediately.

Under the Afghan Transit Trade Agreement (ATTA), Pakistan placed condition of providing guarantee to ensure safe transportation of goods up to Afghanistan. But the FBR found that the issued guarantees worth billions of rupees were not en-cashed so the FBR issued instructions to avoid such practices and comply with the instructions fully in order to avoid any punitive actions. These guarantees could not be en-cashed from banks and the stuck-up amount has increased to the tune of billions of rupees, they added.

Under the customs transit trade rules, the Afghan importer of goods or his authorized customs clearing agents, brokers or transport operator in Pakistan shall furnish customs security in the form of insurance guarantee from an insurance company of repute, acceptable to customs, in the prescribed form or in any other form prescribed by the Board, which shall be valid for at least one year and shall be en-cashable in Pakistan, for ensuring the fulfillment of any obligation arising out of customs transit operation between Pakistan and Afghanistan.

The amount of customs security for transit operation shall be determined by the AO and principal appraiser of the office of departure (Customs port of entry) so that it covers all import levies.

In case of transport units registered in Afghanistan, carrying transit goods, the transport operator or his authorized customs clearing agents, or the concerned chamber of commerce or the concerned government department shall lodge a bank guarantee (Appendix-III) or revolving bank guarantee from a scheduled bank, acceptable to customs equivalent to twenty per cent of the amount of duty and taxes leviable thereon, which shall be valid for at least one year and shall be en-cashable in Pakistan.

Provided that in case a transport operator desires to operate less than four transport units, he shall provide a bank guarantee of hundred per cent of the amount of duty and taxes leviable on each transport unit: Provided further that if a transport unit does not return to Afghanistan as per the provisions of this chapter the bank guarantee shall be en-cashed for the full amount of duties and taxes leviable on that transport unit.

Provided also that the Afghan trucks carrying fresh or dry fruit up to Wagah shall be allowed entry in accordance with these rules, subject to the production of letter of guarantee, in each case, by the Ministry of Transport and Civil Aviation, government of Afghanistan, to the effect that the vehicles would return to Afghanistan within the stipulated time.

Copyright Business Recorder, 2019