Govt bars NLC from outsourcing goods shipments to Afghanistan

Move aimed at curbing smuggling estimated at $2b a year.

ISLAMABAD:

The government has made an attempt to plug a major hole and curb smuggling under the guise of Afghanistan transit trade as it has barred the National Logistics Cell (NLC) from outsourcing the transport of Afghanistan-bound goods.

Sources in the Federal Board of Revenue (FBR) told The Express Tribune that from February 25 the government has stopped NLC from using the ‘hired mechanical transport’ (HMT) facility for the shipment of commercial cargo to Kabul.

Sources said NLC was using the HMT facility without any legal base and almost 80 per cent of the hired trucks and trailers had no proper sealing structure. The decision has created ripples in certain quarters and tax authorities came under pressure to withdraw it, they added.

The FBR has withdrawn a letter that NLC was using as a base to claim the right of outsourcing the transport of goods. FBR issued a letter in 2007 that pointed to anomalies in sealing and de-sealing in NLC and HMT carriers but NLC used this letter to claim that FBR had authorised the hiring of cargo carriers by NLC to transport goods, said an official of the legal department of FBR.

Under the 1965 Afghanistan Transit Trade Agreement, the Pakistan Railways has the right to transport goods to Afghanistan. In 2005, the Economic Coordination Committee of the cabinet allowed NLC to transport Afghanistan-bound commercial cargo due to capacity constraints faced by the Railways. In 2006, due to congestion at ports the authorities allowed NLC to hire HMT only for one time. However, since then, NLC had illegally been using the facility.

FBR has estimated over $2 billion of smuggling under the Afghan transit trade, involving a revenue loss of $250 million (Rs21.5 billion).

Sources said the tax authorities have also taken some other administrative measures to curb smuggling through the trade facilitation point at Amangarh, Peshawar. However, they said the Pak-Afghan Transit Group at Amangarh has retaliated and announced a strike against the new measures. The Amangarh point is about 80 kilometres from the Torkham border.

FBR has instructed that no shipment would be cleared without a duplicate copy of Goods Declaration, carrying physical examination report of the consignment. According to the practice, the Karachi Collectorate gives the original Goods Declaration to the truck driver transporting the cargo and courier a duplicate copy to the Customs checkpost that also carries a physical examination report. The Karachi Collectorate deliberately delays the courier to get the cargo cleared without the examination report by the Customs staff at the point.

The authorities have also banned the practice of amendments in the Goods Declaration report at Amangarh point. They have also disallowed goods examination after sunset and have made Customs officers responsible for any pilferage in the cargo from Amangarh to Torkham. Pakistan and Afghanistan have signed a new transit trade treaty but its implementation has been delayed due to disagreement over financial guarantees - a safety valve to curb smuggling.

Published in The Express Tribune, March 6^th, 2011.