KARACHI, Jan 30: Revenue collection through customs duty fell by 2.5 per cent at Rs45.357 billion during the first six months (July-December) of current fiscal compared to Rs46.520 bullion collected in the corresponding period last year.

The constant decline in the collection of customs duty is being seen due to lack of will on the part of Federal Board of Revenue (FBR) to check rampant leakages and mis-declarations going on under auto clearance of import consignments through Model Customs Collecltorate (MCC).

Similarly, customs duty collection during the first half of the current fiscal declined by 3.73 per cent over the collection achieved during July-December period of 2005.

Duty collection during the first six months of 2005 stood at Rs47.047.65 billion which is highest during the last three years.

The persistent fall in revenue collection on account of duty strongly indicates that some serious flaws are in the auto clearance system which is being run under Customs Administrative Reforms (CARe), according to sources.

Presently, 70 per cent of imports are being cleared through MCC and the remaining 30 per cent by the Collectorate of Appraisement and Port Qasim customs.

Undoubtedly rapid and auto clearance system for import cargo is the need of the hour, but it is equally important that such a system should not cause revenue loss for a poor country, like Pakistan, which badly needs funds for infrastructure and other developments, the sources added.

In its absence, one could easily imagine how much industrial and commercial importers would suffer due to delays resulting in demurrage and penalties, observed a customs agent.

Sources close to customs said CARe system was not being up-dated and its valuation advices and rulings do no commensurate with the latest valuation of goods.

Furthermore, SROs being issued from time to time are also not fed into the system to make them effective with changes.

The MCC is a pilot project after which the Federal Board of Revenue (FBR) will apply its success or failure to other customs posts of the country. However, the MCC at Karachi is yet to establish a perfect or fool-proof system, ensuring minimum leakages and zero mis-declaration.

Its failure could well be judged from the fact that whereas country’s imports for the last couple of years went up at the rate of 16 to 18 per cent, customs duty instead of registering an increase was on the decline.

The FBR each year had been fixing higher revenue collection targets on account of customs duty, but fails to achieve these targets.

When import consignments are cleared through appraisement collectorate, it leaves behind a lot of documentary evidence through which responsibility could also be pinpointed in case of any wrongdoing by customs officials. But as far as CARe system, it could hardly fix responsibility because it works on auto clearance carried out by the computer.

Customs insiders and agents told Dawn that even today tampering and re-routing of computers is being done for mis-declaration of goods which results in huge revenue loss to the national exchequer.

They even quoted a couple examples of misdeclarations.

Arshad Jamal, General Secretary, Karachi Customs Agents Association (KCAA), said that banned fabric of Indian origin is finding its way to the local market in a big way.

He said samples of imported fabric of Indian origin are changed before verification by experts committee.

Similarly, he said a lot of irregularities are going on for evading customs duty on iron and steel products. These products are misdeclared on the basis of primary and secondary products which allow importers to evade customs duty.

Mr Jamal said infected betel-nut is being cleared in large quantities without lab tests.

He also citied the example of clearance of banned lorries over ten years of age, and said dumper trucks were also being cleared although there was a ban on their import.

Upon this, some of the customs officials were suspended but the country suffered a huge revenue loss. Large-scale ‘political clearance’ of imported consignments had also taken place during the tenure of the previous government, he maintained.

In short, he said, irregularities are going on in the CARe and it was only because some people on both sides of the divide were bent upon abusing and misusing government facility of auto clearance.