Directorate General of Intelligence & Investigation, FBR

Business Recorder_Pakistan

FAZAL QADIR QALBANI
ARTICLE (January 26 2008): The Directorate of Customs Intelligence was created in Pakistan, on 12TH August, 1957 with its Hqrs at Karachi and was assigned Job of unearthing and detection of evasion of Customs duties. On 1st June, 1974, the Federal levy of Central Excise duty was included.

This Directorate General was upgraded and shifted to Islamabad, housed in a rented building at Embassy Road, Islamabad in the year 1984. Since, 2nd August, 2004, the Hqrs are located in Government owned building at Mauve Area, G-10/4, Islamabad. On 19th, December, 2005 in addition to the above assignment, it was also assigned the job of integrity management duties.

On 28th March, 2007, its name, previously Directorate of Intelligence, (Customs & Excise), was changed and renamed as Directorate General of Intelligence & Investigation-CBR. Subsequent change of the name of "Central Board of Revenue" as "Federal Board of Revenue", again the name of the organisation has been made as Directorate General of Intelligence & Investigation-FBR.

VISION:

THE VISION OF THE DIRECTORATE GENERAL IS:

"To change the directorate general into a proactive, intelligence driven & technology based organisation so as to optimise support to the FBR in achieving its objectives".

ORGANOGRAM:

The present organogram of the Directorate General is as below: Previously the Regional office, Quetta which comprises jurisdiction of Balochistan Province, which is headed by a Deputy Director, was directly reporting to the Hqrs but since 10, September, 2007, the Regional office, Quetta has been placed under the administrative control of the Directorate Intelligence & Investigation-FBR, Karachi.

INFORMATION GATHERING: At present all main Federal levies ie Custom duties, Federal Excise duties, Sales Tax and Income Tax or in the domain of the organisation.

THE MAIN SOURCES OF INFORMATION GATHERING ARE AS BELOW:

-- Surveillance of targets

-- Proxy presence at FBR Offices

-- Business rivalries

-- Written complaints

-- Press reports

-- Professional informers

-- RILO Network

EXISTING CHARTER OF FUNCTION:

The Existing Charter of Functions of the Directorate General is:

GENERAL:

-- Preparation of monthly intelligence reports, periodical reports and issuance of alerts to various departments of FBR.

-- Maintenance of data base of tax evaders, smugglers for risk assessment / management.

-- To identify and recommend measures in new areas which are threat to national economy and international trading system / treaties.

-- To analyse monthly revenue statements received from field formations of both direct / indirect taxes and suggest improvements and highlight risk areas.

-- Consolidation of reports of significant cases of tax fraud, seizures of smuggled goods including narcotics, made by law enforcement agencies in Pakistan for publication in directorate general / RILO / WCO bulletins.

-- To co-ordinate with Pakistani missions abroad, foreign mission in Pakistan, counterpart organisations of member countries of the world customs organisation and signatories to international conventions, treaties, etc.

-- Any other function assigned by the chairman / finance minister.

INTELLIGENCE & INVESTIGATION:

-- To cover all federal taxes administered by federal board of revenue.

-- Identification, collection, proceeding of information on evasion of taxes and smuggling, dissemination to chairman FBR, minister for finance and other enforcement agencies.

-- Sharing of information collected from credible intelligence sources on trafficking of narcotics with FBR and other law enforcement agencies in Pakistan and abroad.

ENFORCEMENT:

-- to conduct information based enforcement operations.

VIGILANCE:

-- to inquire and investigate cases of corruption and malpractices involving employees of FBR and its field formations. Performance of Directorate of Intelligence & Investigation-FBR, regional office, Karachi during the period : 01-01-2007 to 22-01-2008.

01) Customs Cases:

a) Valuation issues:

i) Revenue loss amounting to Rs 741.597 million due to non-implementation of Valuation Rulings and Board's Notifications of fixed values for sales tax purpose:

Investigation / scrutiny of relevant import data of imports / exports carried out revealed that a huge loss of revenues occurred due to non implementation of Valuation Rulings and values fixed by the Board for sales tax purpose. Relevant Valuation Rulings issued by the Valuation Directorate in respect of RBD Palm Olien, motor cycle parts, electric motors, coated Calcium Carbonate, DVD players, paper and paper board, and reclaimed / re-melted lead ingots for export resulted into short levy of Rs 589.637 million.

Similarly, non implementation of values of re-rollable scrap and energy savers lamps fixed vide SRO-678(I)/2007 dated 06.07.2007 and SRO-732(I)/2006 dated 13.07.2006 resulted into short levy of Rs 151.96 million. The goods were cleared from Appraisement, Port Qasim, Preventive, Lahore, Peshawar, Quetta and PaCCS.

ii) Evasion of Rs 25.17 million. due to non-inclusion of Royalty / Technical Assistance Fee in custom value of imports by local manufacturers:

Investigations have revealed that two local manufacturers of batteries and medicines remitted Royalties / Technical Assistance Fees amounting to Rs 79.40 million and Rs 95.84 millions respectively to their foreign principals upto 2006 was not included in the Customs value of their imports under Section 25 (2) (d) (e) of the Customs Act, 1969. The short levy comes to Rs 25.17 million.

B) Misuse / violation of sros: Scrutiny of relevant import data of Appraisement, Port Qasim, Preventive Collectorate and PaCCS revealed that in many cases goods were cleared without levy of additional duty as per SRO-693(I)/2006 dated 01.07.2006, resulting short levy of Rs 170 million. Similarly, certain goods not being admissible to exemption were unduly released under SRO-567(I)/2006 dated 05.06.2006 and SRO-530(I)/2005 dated 06.06.2005 causing loss of public exchequer to the tune of Rs 30.74 million. In yet another case, spare parts of Belarus tractors were unduly released under SRO-453(I)/2004 dated 16.06.2004 as CKD kits for Tractors evading thereby taxes to the tune of Rs 14.18 million.

C) Seizures and Contraventions on account of misdeclarations / fiscal frauds involving amount of Rs 150.274 million:

Three contravention cases of mis-classification of Natural Calcium Phosphate and Optical Transmission Equipments for unduly claiming exemption under PCT heading 9934 and 9935 were made involving loss of revenue amounting to Rs 124.39 million. Two contravention cases involving evasion of Rs 13.38 million were made out against Bawan Shah Group of Companies for misuse of DTRE Scheme whereby the imported fabric was not used in their export consignments.

Another six seizure cases involving revenue to the tune of Rs 10.354 million were made on account of misdeclaration of description, quantity, PCT, value, etc. The seized goods included photographic paper, machinery items, generators, stationery, PVC scrap, circuit breakers, etc, cleared through MCC (PaCCS). Yet in two other cases used cooking oil and Palm Sterein unfit for human consumption were seized.

d) Misdeclaration in Transshipment consignments destined for up-country dry ports:

During July, 2007, Regional Office, Karachi intercepted / detained a number of consignments meant / cleared for Transshipment to up-country dry ports in pursuance of information regarding import of various dutiable items under the garb of used machinery. The containers were being transshipped through PaCCS. On physical examination each of such containers was found to contain grossly misdeclared dutiable items imported under declaration of used machinery. Since consignments were meant for up-country dry ports, after joint examination by staff of Directorate and MCC the consignments were released for transshipment and gross discrepancies were pointed out to concern Collectorates to initiate appropriate action at their end.

e) Investigations into 122 missing containers : This Regional office has identified as much as 122 containers of miscellaneous goods purportedly removed from the port without payment of duties against fake and forged Goods Declaration, etc. In this regard, a case has been registered in respect of 11 such containers while investigation and procurement of necessary information from various quarters is still under way.

f) Anti smuggling activities / seizure cases:

Regional Office, Karachi:

During anti smuggling campaign in Karachi and Sukkur, eighty seizure cases of smuggled goods worth Rs 66.42 million were made. The seized goods include 19 smuggled vehicles worth Rs 21.45 million, and POL products / miscellaneous goods worth Rs 44.97 million.

REGIONAL OFFICE, QUETTA: Since September, 2007 onwards, after placing of Regional Office, Quetta under the administrative control of Directorate General of Intelligence & Investigation-FBR, Karachi, two seizure cases of contraband high quality Charas have been effected. In one case 320 kgs Charas was recovered from a bus while in other case 170 kgs was recovered from Toyota Hi-Lux pick-up intercepted at Quetta-Chaman Road. The value of seized Charas comes to Rs 3.3 million. Besides, smuggled miscellaneous items (including Falcons) worth Rs 11.580 million have also been seized in addition to six units smuggled vehicles of CIF value Rs 3.2 million during anti smuggling drive.

02) Sales Tax and Federal Excise:

a) Sales Tax Contravention

CASES INVOLVING RS 560.455 MILLION: A total number of 27 contravention cases involving recoverable amount of sales tax to the tune of Rs 560.455 million were made during January, 2007 todate. In eighteen such cases sales tax refund of Rs 516.180 million has been claimed on the basis of fake / forged invoices.

In three cases unregistered units were found to make taxable supplies involving sales tax of Rs 7.541 million. Yet in other six cases registered units were making taxable supplies without paying sales tax on their supplies. The evasion comes to Rs 36.734 million in this regard.

B) FEDERAL EXCISE DUTY CASES / RECOVERIES OF RS 22.912 MILLION: On pointation of Directorate General (I&I), Karachi, Federal Excise Duty amounting to Rs 22.912 million was realised / recovered against Franchise / Technical Fee / Royalty, etc in four cases.

03) REVENUE REALISATION OF RS 47.40 MILLION THROUGH AUCTION / DISPOSAL OF SEIZED/CONFISCATED GOODS: During the last calendar year, confiscated goods including 32 smuggled vehicles were disposed of through public auction / released on payment of taxes. Total revenue amounting to Rs 47.40 million was realised in this regard.

a) Destruction of liquor / confiscated goods:

Destruction of 26465 bottles of liquor was carried out on 07.02.2007 in which of liquor were destroyed at Karachi. Besides, destruction of miscellaneous confiscated goods at Sukkur was carried out on 03.08.2007.

b) Recovery in pending deletion cases:

The Directorate General has been vehemently pursuing respective Collectorates for recovery of out-standing amounts of taxes on account of short falls in deletion targets of local assemblers of vehicles pending since 2003-04. During the year 2007, an amount of Rs 108.059 million was recovered only from auto mobile assemblers.