ISLAMABAD: The Federal Board of Revenue (FBR) cut a sorry figure before the Supreme Court on Monday when it conceded its helplessness in the recovery of customs duties and taxes from importers, clearing and forwarding agents and bonded carriers for over a year in the missing Nato containers scam.

However, stay orders and pending appeals in courts were termed the major hurdle in recovering the cess.

The pending litigation restricted the FBR to collecting a paltry Rs5.06 million, while a Jan 19, 2011, report by Federal Tax Ombudsman Dr Shoaib Suddle had put the recoverable amount at Rs54.73 billion accumulated over four years due to pilferage of containers that entered the country in the garb of Afghan Transit Trade (ATT).

The information was laid before a three-judge Supreme Court bench by Advocate Rana Shamim, representing the FBR. The bench comprising Chief Justice Iftikhar Mohammad Chaudhry, Justice Gulzar Ahmed and Justice Sheikh Azmat Saeed had resumed hearing on the scandal relating to the import of contrabands under the garb of food supplies for the International Security Assistance Force (Isaf) in Afghanistan.

At the last hearing on Feb 22, the court had asked the FBR to submit a comprehensive report, including details of the duties and levies recovered.

The revenue department was also asked to provide a complete picture of the status of adjudication in cases related to missing containers pending in the custom tribunals or courts.

The counsel said the FBR had issued 11,589 show cause notices to importers who were mainly Afghan nationals, Pakistani clearing and forwarding agents, border agents and bonded carriers since their cross-border certificates had been found to be fake. The bonded carrier in this case was the National Logistics Cell (NLC), a military transportation organisation, and 32,562 containers were involved in the scam.

While the importers and clearing and border agents had filed appeals in the Custom Appellate Tribunal against the notices, the NLC obtained a blanket stay order from the Sindh High Court against the FBR moving ahead to recover custom duties, without a prior notice to the revenue department, the lawyer said.

When the court asked about effective measures to get vacated the stay orders, the counsel said the next date of hearing of the case before the SHC was March 12. However, he sought two months to sort out the issue.

Irritated at the status of the case, the Supreme Court decided to hand down an appropriate verdict on the matter in a day or two. It is expected that the court may ask the FTO again to take the matter into his hands and devise an effective mechanism for speedy recovery of the duties.

Justice Gulzar observed that custom officers were involved ‘from head to toe’ in corruption by creating hindrance in the recovery. He asked about departmental action against such officers, adding: “They are all hand in glove with each other. They are preparing fake documents even today and the government is losing revenue.”

The judge said the Afghan transit was an eyewash since the containers were being opened in Pakistan, flooding the markets with foreign items.