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CBR unhappy over sketchy report on over-invoicing

ISLAMABAD (January 14 2004): The Central Board of Revenue (CBR) has expressed serious concern over the sketchy report submitted by Collector of Customs, (Exports), Karachi, on the over-invoicing of bed sheets and other textile products consignments exported to UAE, Saudi Arabia and South Africa during 2002-03.

The CBR has to fix responsibility on the persons involved in over-invoicing of goods in the light of final report to be submitted by the concerned collectorate.

Sources told Business Recorder here on Tuesday that CBR had sought a comprehensive report on the issue of over-invoicing from Collector, Exports, Karachi, to ascertain the factual status of the case. Moreover, the CBR has raised several objections on the report, asking the collectorate to clarify them.

Recently, the tax authorities found that bed-sheets and 'chaddars' exported to South Africa and UAE were being over-invoiced as compared to identical goods exported to the European Union (EU) and the United States of America (USA).

The CBR has contested that the Collector, Exports, Karachi, instead of focusing on the issue of over-invoicing and misdeclaration of value and weight, started investigation on bogus sales tax refund.

The CBR has directed Collector, Exports, Karachi, that the issue of fraudulent sales tax refund is being separately examined by the Sales Tax Wing; therefore, the regional authorities should leave that aside and only focus on the issue of over-invoicing.

Moreover, CBR said, the collectorate of customs was putting all blame on the Sales Tax Collectorate, which seemed unjustified. CBR observed that the refund of sales tax is governed by Rule 5, sub-rule 3 of the Sales Tax Refund Rules 2002.

The FOB value has little impact on sales tax refund, which is basically paid on purchase cost.

Therefore, the collector should not put major blame on the sales tax department.

The CBR has expressed concern on how the samples of the exported consignments were misplaced.

The absence of samples was not understandable as the impugned Standing Order does not exempt drawing of PSF material. The motive behind misplacement of the samples is to remove evidence, it said.

Furthermore, the CBR has also told Collector, Exports, Karachi, that the prevention of over-invoicing is the responsibility of the Export Collectorate.

The reduction in duty drawback rates does not justify removal of all curbs on the over-invoiced goods.

The collectorate should submit a conclusive report covering all relevant aspects of the issue in question, the CBR added.

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