Importer to pay KIBOR+3pc on timely payment failure

KARACHI: An importer in case of failure to pay import duty or other taxes within specified time then the importer shall be liable to pay surcharge at the rate of KIBOR + 3 percent on the due charges.

According to Customs Act, 1969 updated June 30, 2019 issued by Federal Board of Revenue (FBR), the KIBOR means Karachi Inter Bank Offered Rate prevalent on the first day of each quarter of the financial year.

According to the Customs Act, 1969, under Section 21A the FBR is allowed to defer collection of customs duty. However, where deferment of customs duties is allowed by the FBR, a surcharge not exceeding KIBOR plus three percent per annum shall also be payable on the deferred amount from such date and in the manner as the FBR may be rules prescribed.

Similarly, under Section 80 related to clearance of goods for home consumption, the act explained that where the owner fails to pay import duty and other charges within 10 days from the date on which the time same has been assessed under Section 80 or 80, he shall be liable to pay surcharge at the rate of KIBOR plus three percent on import duty and other charges payable on suchg goods.

Section 86 related to submission of post-dated cheque and indemnity bond, the FBR said:

When any such application has been made in respect of any goods, the owner of the goods to which it relates shall furnish an indemnity bond and post-dated cheque equivalent to the duty assessed under section 80 or section 81 or reassessed under section 109 on such goods,-

(a) to observe all the provisions of this Act and the rules in respect of such goods;

(b) to pay on or before a date specified in a notice of demand all duties, taxes, rent and charges payable in respect of such goods together with surcharge on the same from the date so specified at the rate of KIBOR plus three per cent per annum or such other rate as is for the time being fixed by the Board; and

(c) to discharge all penalties incurred for violation of the provisions of this Act and the rules in respect of such goods.

The Section 202A related to levy of surcharge, explained that notwithstanding anything contained in this Act and without prejudice to any other action that may be taken thereunder, if any person fails to pay the arrears within the prescribed time, he shall, in addition to the arrears, be liable to pay surcharge at the rate of KIBOR plus three per cent per annum, of the total amount of arrears.

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