The Federal Board of Revenue (FBR) on Monday decided to withdraw a show-cause notice issued to an ambassador and tendered an “apology” for the inconvenience caused to him.
The Express Tribune published a story on Monday, disclosing that the FBR Customs has issued a notice to the Palestinian ambassador for allegedly importing a duty-exempted luxury vehicle and then selling it to a local businessman –“causing loss to Pakistan’s exchequer”.
“It was brought to the notice of FBR today that Collector of Custom (Adjudication) Islamabad has issued a show cause notice to an ambassador for violation of Custom Act, 1969,” said a press release issued by the FBR on Monday night.
The FBR clarified that the issuance of the show cause notice was not in conformity with the privileges available to the diplomats under the Vienna Convention.
“Therefore, upon FBR's directions, the Islamabad Customs has modified the seizure report and the show cause notice is also being modified accordingly. The inconvenience caused to the worthy ambassador is regretted,” it added.
The FBR also used micro-blogging site Twitter to “apologise” to the ambassador.
After publication of the story, the readers including politicians reacted on social media and bitterly criticised the government for going after the Palestinian ambassador. Many of them questioned the timing of the move and linked it with recent UAE-Israel development.
The show-cause notice – issued by the FBR on August 4 – told the recipients – including the businessman, Basil Ahmed Affendi – that the vehicle might be permanently confiscated and they might also face penalties of up to 10 times of the value of vehicle.
It said this breach also carried punishment of up to three-year imprisonment.
“Ambassador, Embassy of the State of Palestine, Islamabad and Basil Ahmed Affendi are called upon to show cause as to why the seized vehicle should not be confiscated and why penal action should not be taken against them under section 156 for violations of the Customs Act,” said the show cause notice.
Both the persons had been asked to appear before the FBR on Tuesday [today]. However, the show-cause notice to the extent of Affendi would remain valid
The FBR has overstepped its mandate by directly sending the notice to the ambassador –a function that it cannot perform without taking the foreign office into confidence.
To a question about serving show-cause notice to an ambassador, FBR Member Customs Operations Dr Tariq Huda had said diplomats enjoy immunity under the Vienna Convention. The Vienna Convention is blatantly misused in Pakistan amid silence of the foreign office for illegal sale of duty-free vehicles.
If a luxury vehicle is imported through normal channels, it is subject to 100% customs duty, 70% regulatory duty, 7% additional customs duty, 30% federal excise duty, 17% sales tax and 12% withholding tax, bringing total taxes to 236% of the import value of the vehicle.
The actual duties impact comes to 360%.
Last month, the Pakistan Customs seized nine very expensive vehicles that were imported by foreign diplomats – including the Palestine ambassador – but were in the use of private persons.
At the prevailing taxes and duty rates, the estimated tax evasion in 16 such cases is Rs444.6 million, which indicates how pricey the vehicles are.
Mercedes Benz, Lexus LX570, BMW X7 series, Land Cruiser ZX, Nissan X Trail, Toyota Crown and others were imported duty-free by availing diplomatic exemptions and handed over to private persons without fulfilling legal and regulatory requirements.
The vehicles had been seized by the Model Customs Collectorate of Islamabad.
The diplomats working for embassies of the United Kingdom, Bahrain, Jordan, Saudi Arabia, Bangladesh, Kenya, the United Nations, Palestine, Russia, Cuba and Tajikistan imported these luxurious vehicles.
The Palestinian Mission imported a 2019 model BMW X7 and a Land Cruiser ZX by enjoying an exemption in duties respectively of Rs58.2 million and Rs18.4 million.
The FBR, however, recovered the 2019 model BMW X7 luxury vehicle from Multi Professional Cooperative Housing Society in Sector E-11 of Islamabad during a raid. It was in the possession of Basil Ahmed Affendi.
The possessor of the vehicle failed to produce any import, auction or amnesty documents on the basis of which the vehicle got registered in the concerned motor registration authority.
The FBR report said the Pakistan Revenue Automation Ltd (PRAL) data confirmed that the vehicle was imported by the ambassador under an exemption certificate, issued by the FBR in December last year.
The possessor has so far failed to produce any import documents of the vehicle despite issuance of notice under the Customs Act of 1969.
The show cause notice said, “It is crystal clear that BMW X7 jeep ,Model-2019, was imported under the diplomatic immunity by ambassador of the State of Palestine, Islamabad, under the exemption certificate, issued by the Model Customs Colle
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