Home » News » Finance » FBR Abolishes Bank Endorsement Condition on Good for Payment

FBR Abolishes Bank Endorsement Condition on Good for Payment

ISLAMABAD (February 28 2008): The Federal Board of Revenue (FBR) has abolished condition of bank's endorsement (good for payment) on post-dated cheques for the consignments being released for public and private bonded warehouses, expediting clearance of industrial/commercial consignments at Karachi.

Mohammad Abdullah, information secretary, All Pakistan Customs Agents Association (APCAA) told Business Recorder on Wednesday the FBR has issued instructions to the collectors of customs and chief customs, North and South, to amend the decision of the last collector's conference.

According to the directive, the requirement of bank's endorsement on post-dated cheques is meant for the cheques submitted as security for provisional assessment under section 81 of the Customs Act, 1969 only.

He said the board has waived off the condition for bank's endorsement of 'good for payment' on post-dated cheques for 'in bond' consignments, which were detained at Karachi Port for the last seven days. Now, such endorsement would only be required in disputed cases where customs officials are empowered to provisionally determine the tax liability under section 81 of the Customs Act.

The decision has been taken in a meeting between the FBR and the All Pakistan Customs Agents Association. The FBR side was headed by FBR Chairman M. Abdullah Yusuf and the Association was represented by the APCAA Chairman Syed Shams Ahmed Burney; General Secretary Arshad Jamal and others.

He said that all the 'in bond' consignments have been detained at the Karachi seaport since February 21, 2008 due to ambiguity in the decision of collector's conference held on January 31.

Under the conference's decision, instructions were issued to the Collector Model Customs Collectorate (MCC), Karachi, to reiterate that only such post-dated cheques as are endorsed “good for payment” by the banks concerned, be accepted.

Resultantly, consignments without the bank's endorsement on post-dated cheques were not provisionally released till fulfilment of the condition. The industrial and commercial sector faced huge demurrages, creating shortage of raw materials in the local market.

To resolve the issue, the representatives of APCCA and Karachi customs clearing agents met the FBR chairman, who promptly took action on the observations of the business community.

In this regard, the board has issued clarification to the field formations to waive off condition of bank's endorsement “good for payment” on these cheques. The post-dated cheques are now being accepted under the normal procedure, Abdullah added.

When asked about bank's endorsement, APCAA information secretary said that it is a kind of pay order. The bank endorses on post-dated cheque that the “good for payment”, which would become guarantee for encashment of cheques. The bank's stamp becomes pay order with the security that it would be encahsed, he added.

Leave a Reply