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Wrong diagnosis?

Traders in Rawalpindi question the FBR’s action against retailers for allegedly selling smuggled goods

Wrong diagnosis?

On August 18, the Federal Board of Revenue (FBR) announced its special teams would visit big markets throughout the country, especially retailers, to check tax documents for imported goods from September 1 (today). The step has been taken to stop smuggling of imports and see if tax has been paid on all imported items.

Traders in Rawalpindi, which boasts one of the biggest markets of imported goods in the country, smell a rat in the exercise. Traders in Raja Bazaar, Narankari Bazaar, Tyre Market in Saddar, and China Market fear that this would further bring down their businesses.

Arshad Ali (not his real name), a trader in Raja Bazaar, opposes the FBR’s decision. “How is it possible that imported goods reach Rawalpindi and other cities inland without payment of customs duties and taxes at ports and borders?” He maintains that inspections would lead to corrupt practices rather than help control smuggling.

Rawalpindi Traders Association President Sharjeel Mir supports Arshad’s view. “It would be better if the FBR and the Customs department remove the black sheep from their departments and make tax collection more transparent. For every truck loaded with goods that leaves a factory after paying the general sales tax (GST), more than 10 trucks leave warehouses illegally with the connivance of FBR officials,” he claims.

To a question about traders’ response to the FBR, Mir says, “If trucks loaded with imported goods travel from Gawadar and Sost, for example, and reach Rawalpindi after crossing many check posts of the Customs Department, it should be concluded that the import is legal and the importer has paid all duties. If the FBR or customs officials claim that the goods have been smuggled into the country then the concerned departments should take action against their own officials deployed on these check posts before taking action against traders.”

Traders in Rawalpindi, which boasts one of the biggest markets of imported goods in the country, smell a rat in the exercise. Traders in Raja Bazaar, Narankari Bazaar, Tyre Market in Saddar, and China Market fear that this would further bring down their businesses.

He says many importers do not provide goods declaration documents to retailers who purchase various items in small quantities from them. “If the FBR is serious in controlling smuggling, it should check tax documents with the importers,” he adds.

The FBR has authority to ask for import documents under the provisions of the Customs Act, 1969.

Narankari Bazaar in Rawalpindi is famous for imported foods including juices, cold drinks, milk and cigarettes of several international brands. China Market is famous for imported decoration and crockery items. The College Road market is famous for birds and pet animals. People from Punjab, Khyber Pakhtunkhwa and Azad Kashmir visit the Tyre Market at Saddar for international tyre brands.

Haroon Shah, a trader in China Market, says “if an importer imports one thousand pieces of an item and a retailer from Rawalpindi purchases 100 pieces from him, the importer is required to give photo copy of tax documents to the retailer. But who will decide whether the 100 items he has have been imported legally or smuggled? Conducting raids on stores and shops cannot control smuggling,” he maintains.

Sharing his experience, he says, sometimes customs officials tag importers on their way to the warehouse or the market and demand more tax from them. “They harass traders and expect to be bribed.”

Tariq Jadoon, the China Market Traders’ Association president, says negotiations with FBR officials continue. “We do not tolerate trade in smuggled goods. But raids on warehouses will not be tolerated either.”

 

How imported items reach markets in Rawalpindi

A goods transporter from Rawalpindi, wishing anonymity, says “some countries sell their products to Afghan traders at cheaper prices. These products reach Afghanistan via Pakistan. When a container carrying these items reaches Pakistan, customs officials do not check the products. They merely collect transit fee from them and allow them to proceed to Afghanistan.”

However, he adds that “most these containers land in Peshawar’s markets. The importers sell these goods in the local markets from where these are later supplied to other cities.”

Narankari Bazaar in Rawalpindi is known for the material used in fireworks at weddings or other functions. Despite a ban on the import and purchase of these materials, a huge quantity of the materials is available in Narankari Bazaar. These items reach Pakistan through the Pak-China Border at Sust —with the alleged involvement of customs officials. “Customs officials coach the smugglers,” alleges a local trader who does not want to be named.

Shahid Ghafoor Paracha, Traders’ Association, Punjab Chapter’s vice president, says traders have been hit hard by the economic situation. This policy will further curtail business activity. It is like handing over our businesses to the FBR or customs officials.”

He argues that if the government is sincere in controlling smuggling it should take steps to stop smuggling at the borders. “The FBR and customs officials should be held responsible for smuggled item reaching the markets in Rawalpindi.”

Adnan Akram, an FBR spokesperson justifies the move and actions proposed to be taken. He says, “FBR officials have been directed to check tax documents of goods at shopping malls. If traders do not have tax documents, the goods shall be deemed to have reached them through illegal means. The FBR will take action in that case.”

 

How smuggled items are transported within the country

When a trader purchases goods from another city, he registers the goods with a company for transporting them to his city. The customs department has an intelligence wing. Customs officials also recruit labourers working in goods transportation companies as their informers.

When goods are loaded onto a truck, the labourer/informer for customs officials informs them about it, typically sending them a video clip or photos of the product. When the truck leaves for its destination, customs officials stop it on a road for checking. About 20 labourers are required for unloading and loading of the truck which is a time-consuming process. That is why, to avoid checking, truck drivers try to bargain with customs officials.

If a truck is loaded with smuggled items customs officials show photos and videos to the drivers as proof sent by the informer. In that case, truck drivers allegedly pay the demanded bribe to customs officials. In this way, smuggled items reach their destinations.

Sajjad Ali, a Peshawar-based journalist, says authorities have recently opened the Ghulam Khan crossing point at the Pak-Afghan border for trade. “In fact, trade is already under way illegally at this crossing point. The non-custom-paid vehicles in Waziristan and Malakand are smuggled from Afghanistan.

Shehzad Yousafzai

Shehzad Yousafzai is a freelance journalist based at Islamabad. He is an investigative journalist writing on environment, marginalized community, governance and rule of law. He tweets at @TheShehzad

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