Illegal confiscation of vehicles: Customs collectorates haven’t apprehended even a single owner, says FTO

ISLAMABAD: The Federal Tax Ombudsman (FTO) has decided a suo motu case over irregularities of the FBR field formations in confiscation of smuggled non-customs paid (NCP) vehicles, determination of assessable value and auction of the seized vehicles.

During investigation, the FTO found that Customs collectorates while seizing the vehicles did not nominate or apprehend even a single unlawful owner or culprit. The criminal proceedings including lodging of FIRs have, invariably, not been initiated during the last 10 years and most of the confiscation had been effected against unknown persons.

The FBR’s report, regarding confiscation of vehicles by all the collectorates from July 2013 to January, 2019, submitted to FTO office shows that the number of vehicles seized has increased every year. In this period, total 3,299 vehicles were seized. The FTO report states that the influx of non-custom paid vehicles and their increased confiscation belies the FBR's efficiency in overcoming the smuggling of NCP vehicles.

If anti-smuggling activities were conducted seriously influx of such vehicles could have been dropped, reducing the number of confiscations.

According to the FTO report, in the last five years, 1,662 vehicles were auctioned including 1,004 vehicles auctioned by MCC (Preventive), Quetta, out of which 538 vehicles were disposed of in first auction, some below the reserve price. This was contrary to the instructions contained in para-7 of the Customs General Order (CGO) 12 of 2002.

Twenty-six vehicles confiscated vide single order-in-original (O-in-O) were disposed of just in first auction on 75-80 percent of the reserve price, before three months of issuance of confiscation order. Names of owner/persons from whom the vehicles were seized were not indicated.

Dates of confiscation of 621 vehicles were not mentioned and despite prior information, not in a single case offender could be rounded up by the staff of the Collectorate.

No action was initiated against the persons involved in violation of Section 2(s) of the Customs Act, 1969 (the Act) and CNICs of successful bidders were not available in all the 621 cases.

According to the FTO report, the tax functionaries used discretionary powers by exploiting conflicting provisions of acceptance of bids in first auction of vehicles, in Chapter-V of Customs Rule 2001 and instructions issued by FBR vide Para-7 of Chapter-IV of CGO 12 of 2001 arbitrarily.

The last 10 years data shows that the discretion vested in the office of the collector was exploited on the plea of ensuring efficient and speedy disposal in view of revenue target, weather conditions, space constraints, security situation, among other extenuating circumstances warranting quick disposal of goods.

The FTO has recommended to the FBR to review conflicting provisions regarding acceptance of bid in first auction, in Chapter-V of the Rules and Chapter-VII of the CGO and make necessary amendments to ensure uniform application of law. The FBR must prescribe model auction rules for goods electronically as provided under sub-Section 1A of Section 201 of the Act and prepare and operationalise auction module in the WeBOC system to bring transparency and efficiency. The FBR must make it mandatory for authorities to put all auction schedule, with detailed specification of goods to be auctioned, on the official website of the FBR.

The FBR has directed the Directorate General of Internal Audit (Customs) to carry out a detail audit of auctions conducted by the field formations during last three financial years to identify weaknesses in the rules, procedures and processes and make recommendations to improve law and procedures, internal control and compliance.