FTO directs to enforce certificate of origin to prevent under invoicing

FTO directs to enforce certificate of origin to prevent under invoicing

ISLAMABAD: Federal Tax Ombudsman (FTO) has directed tax authorities to enforce certificate of origin from respective country of manufacture.

The FTO recommended that the commerce ministry to frame and enforce rules of origin in respect of goods suspected of circumvention and import from free ports, which are not covered under preferential trade agreement (PTA).

The FTO made these recommendations in an order dated October 01, 2020 issued in the case of M/s Poplon Pakistan (Pvt) limited, which filed complaint against the Collector, Model Customs Collectorate (MCC) Appraisement & Facilitation – East and MCC Appraisement & Facilitation – West, Karachi for failing to detect import of inorganic chrome pigments against fake certificate of origin through circumvention of origin of goods and under invoicing by various importers in respect of goods imported and cleared through Karachi Port.

The complainant is a manufacturer of inorganic chrome pigments for use in paint, plastic and leather industries in Pakistan. The complainant alleged that after suspension of trade with India, pigment of Indian origin goods were imported through trade proxies such as M/s. Galaxy International FZC, UAE by using fake documents.

After hearing both the parties, the FTO issued the following recommendation, that the FBR:

To seek information from the Director General, UAE Customs under mutual legal assistance agreements for verification of origin of goods;

To direct the Directorate General of Post Clearance Audit (PCA) to carry out post-import transaction verification of all relevant GDs so as to satisfy the accuracy and authenticity of declared import values on the basis of export documents/information obtained through commercial counselors posted in South Korea and UAE;

To direct the Director of Customs Valuation to check accuracy of values declared by the importers and determine custom value for assessment of inorganic chrome pigments in terms of Section 25A of the Act, and

To direct the Chief Collector (Appraisement-South), to ensure finalization of investigation expeditiously and take appropriate action in cases where mis-declaration is established; and

To recommend to the ministry of commerce to frame and enforce rules of origin in respect of goods suspected of circumvention and import from free ports which are not covered under PTA. Also make it mandatory to furnish certificate of origin from respective country of manufacture duly verified by the respective government.

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