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Show-cause notice against PTCL, contractor, clearing agent issued

Show-cause notice against PTCL, contractor, clearing agent issued

KARACHI: Customs Collectorate of Adjudication-I has issued show-cause notice against M/s Pakistan Telecommunication Limited (PTCL), its local contractor M/s Huawei Technologies Pakistan (Private) Ltd, and its clearing agent M/s Eastern Freighter Services (CHAL No.2442) on mis-declaration of import value through concealment of actual CFR value in Goods Declaration and invoice aimed at evasion of customs duty and other taxes amounting to Rs 116,228,110 on imported telecommunication equipments.

Directorate General of Intelligence and Investigation-Customs on credible information seized consignments of PTCL, its contractor and clearing agent and found that they were involved in massive evasion of customs duty and other taxes on import of telecommunication equipments and spare parts etc. under contract No.PRO 3-4/4/290413/0796 on 22 May, 2013.

Subsequently, the directorate was found that the equipments under aforesaid contract were being imported and cleared on meager declared values which were about 1.62 per cent of the actual CFR price of the items mentioned in the price lists and Bill of Quantities (BOQs) indicated in the aforesaid contract.

Sources informed Customs Today that the consignments were being cleared on heavily discounted prices up to 98 per cent of the actual CFR prices evading thereby huge amount of leviable duties and taxes, adding that majority of the consignments were cleared through “Green Channel” of the automated clearance system.

Sources further revealed that the contract No. PROC 3-4/4/290413/0796 in the perusal procured by M/s PTCL found that same has been executed among M/s PTCL, its off-shore suppliers M/s Huawei International Pvt Ltd, Singapore and its local contractor M/s Huawei Technologies Pakistan (Pvt) Ltd for supply, installation, up-gradation, testing and commissioning of 100 LTE BTSs (Huawei) Phase-I on turnkey basis.

“It was further laid down vide para 42.1 of the contract that the payment for the foreign portion (CFR) will be made in US dollars and for the local portion and services (DDP), payment will be in Pakistani rupees through the nominated banks, adding that the contract vide its para 27.2 further envisages that valued invoices and packing lists of equipments should be provided in the manner as laid down in para 27.3 and 27.4 of the contract,” they added.

Sources further informed that during the scrutiny of relevant records in July 2013, on the identical information, the Directorate General of Intelligence and Investigation also found that the equipments imported by M/s PTCL under the same contract whereby the equipments were cleared on self-assessment basis at about 98 per cent discounted price of such equipments evading thereby huge amount of customs duty and income tax to the tune of Rs 261.815 millions. The consignments which were cleared against goods declaration no. KAPW-HC-998 on July 8, 2013 was seized by the directorate and seizure report forwarded to Collector of Adjudication-I for adjudication.

“In the referred case, the concealed amount of suppressed value of seized equipments worked out to $ 23.847 million. However, on intervention by the High Court by way of constitutional petition filed by M/s PTCL, the seized consignments were released on submission of bank guarantees covering the differential amount of taxes and anticipated penalties. The case was adjudicated vide Order-in Original (ONO) No. 208/2013-14 on 14 October, 2013,” they added.

They further informed that since the charges of actual import value established beyond any doubt, the adjudication authority upheld the seizure case and ordered for recovery of leviable duty amounting to Rs 261.815 million besides in position of penalty of Rs 1 million on M/s PTCL.

Furthermore, on investigation it was revealed that further two consignments of telecommunication equipments imported and cleared by M/s PTCL through “Green Channel” vide GD no.s KCSI-HC-1973-05-07-2013 and KCSI-HC-1449-03-07-2013 adopting the same modus operandi.

In the aforesaid cases, import value of goods indicated in the invoices was $ 8,654 and $ 92,800 respectively, whereas, the actual CFR value of under-reference equipments as per prices specified in the price lists and BOQs provided in the contract worked out to $ 2,000,340 and $ 8,947,020. Thus, the concealed dutiable CFR values of equipments cleared vide aforementioned GDs come to $ 10,845,904 equivalent to Rs 1,078,640,674, involving evasion of Rs 116,228,110.

Thus it was apparent that the M/s PTCL in collusion with its local contractor and authorized clearing agent managed to import and clear under-reference consignments of telecommunication equipments on grossly suppressed value of Rs 10,151,947 against the actual CFR value of Rs 1,088,792,621 by concealing the same through submission of vague invoices and declarations in GDs, evading customs duty and taxes of Rs 116,228,110 have committed offence of mis-declaration in term of Sections 32(1)&(2) read with the Section 79 and 80 of the Customs Act, 1969.

The sources further informed that the final hearing of the case would be held on April 10, 2014 at 11:30 am, in which the respondents should appear in person or through their duly authorized representative. However, in case of no reply to the show-cause notice, it shall be presumed that the parties are not interested in contesting the charges and the case shall, therefore, be decided ex-parte in the light of available record.