The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to take strict disciplinary action against the customs officials of Collectorate of Customs (Appraisement East) Customs House Karachi involved in the illegal auction of imported goods.
In this regard, FTO issued an order on Thursday. According to the FTO order, it is observed that the auction proceedings are dubious, non-transparent, and not in keeping with the rules and procedures as mentioned in Auction Rules, 2001. The auction proceedings raise suspicions and have not been carried out in a just manner. Therefore, the Collector should refund the earnest money of 25 percent to Shabbir Trading Company and assure that the subject goods would be put to auction in the presence of all the above-mentioned Complainants.
Three complaints were filed against the Collector of Customs (Appraisement East) Customs House Karachi for conducting illegal auctions of the 13 containers of photocopy papers from Indonesia.
FTO has directed the FBR to direct the Chief Collector, Collectorate of Customs (Appraisement-East), Custom House, Karachi to look into the matter personally and take disciplinary action against the officials responsible for irregularities committed in conducting the subject auction and also take strict action against the officers who misrepresented the case before the Collectors.
FTO has further directed the Collector, Collectorate of Customs (Appraisement-East), Custom House, Karachi to refund the earnest money of 25 percent to Shabbir Trading Company within 15 days of the receipt of this order. It has further directed the concerned Collector to re-auction the goods in the presence of all above-mentioned Complainants, especially the importer Khawar Saeed, and dispose of auction as per law.
It has also directed the concerned Collector to issue a proper mechanism/SOPs in accordance with the auction rules issued vide SRO 450(1)/2001, dated 18.06.2001, for conducting the auction proceedings fairly; and (v) report compliance within 45 days.
FTO order said that the arguments of all sides were heard and written averments of Complainants and Collectorate have been perused. It is evident that the Complaints are filed on behalf of all three Complainants against the Collectorate of Customs (Appraisement-East), Custom House, Karachi for inaction and irregularities during the auction proceedings held on different dates.
The actual owner/importer (Khawar Paper Mart) of goods agitated that the Collectorate auctioned the goods three times by ignoring the Complainant’s request regarding payment of duty/taxes within fifteen days and, due to the connivance of Customs officers, his goods have been finally auctioned and are being handed over to another company.
The owner/importer further agitated that his bidder was not allowed to participate in the auction proceedings and his bidder was forcibly dragged out of the auction hall. The other bidder Amir Ali contended that his request to deposit the earnest bid amount was not considered by the Collectorate, because he was the second highest bidder, the highest bidder was unable to deposit the earnest money.
However, the combination of subject lots was re-opened/re-auctioned after a few hours with one and only single bid of Rs.85 million in violation of Rule 70 of Auction Rules and bid was finalized. Amir Ali had offered Rs.92 million against the same lots on the same date just a couple of hours earlier but was denied by the Department on the spot. Amir Ali agitated that the re-auction of goods after a few hours was without the approval of the competent authority and in violation of relevant Auction Rules.
The successful bidder namely Shabbir Trading Company also contended that he deposited the earnest money of 25 percent and wished to deposit the remaining 75 percent amount but during this period the importer namely Khawar Saeed Prop: Khawar Paper Mart filed a Complaint before the Office of FTO requesting therein that the delivery of auctioned goods may be stopped and offered that he is ready to pay more amount than Shabbir Trading Company.
The other person namely Amir All lodged an application dated 29.03.2023 before the Collector requesting therein that his bid amount of Rs. 92 million for the combination lot may be accepted. Later on, Amir Ali also lodged a Complaint before the FTO. Regional Office, Karachi requesting therein that the Collectorate be directed to accept his bid amount of Rs. 92 million.
In view of this situation, Shabbir Trading Company could not deposit the remaining 75 percent amount on the suspicion that in the presence of filing of two other Complaints filed by M/s Khawar Saeed and Amir Ali, the Collectorate would not release the auctioned goods in favour of Shabbir Trading Company. The aforesaid contentions of Shabbir Trading Company carry weight and are convincing.
On the other hand, the Collector (Muhammad Amir Thahim), contended that when the auction was held for the third time the bidder (Amir Ali) of Khawar Saeed Prop; Khawar Paper Mart was the second highest bidder with a bid of Rs. 92 million whereas the highest bid received was Rs. 11 million, for which the bidder failed to deposit 25 percent as earnest money.
Re-auction was announced for the same day in the later part of the auction proceedings where the highest bid received was Rs. 85 million and the bidders were readily willing to deposit the earnest money.
The Complainant’s representative bidder was also present in the auction hall and was repeatedly given an opportunity to participate but he flatly refused. The highest bidder deposited the earnest money accordingly and was later requested to match the second highest bid of the previous auction i.e. Rs. 92 million, which he readily did.
In response, Collector (Muhammad Mohsin Rafiq), has taken the stance that the Complainant (Amir Ali) had incorrectly stated that the highest bid submitted during an auction conducted on 20.03.2023 was Rs.110.000 million and the Complainant had submitted a bid of amount Rs. 92 million. It was reiterated that during the auction, the highest bid amounting to Rs. 85 million was offered by the bidder (M/s Shabbir Trading Company).
It is observed that one Collector took the stance that, in the third auction, the complainant’s bidder (Amir Ali) was the second highest bidder and his bid was Rs. 92 million and the other Collector took a different stance, stating that the Complainant (Amir Ali) did not give any bid of Rs. 92 million.
It is further observed that during the third auction when the Department was in the knowledge that the bidder of Khawar Saeed (importer) offered bids of Rs. 92 million and the highest bidder could not deposit earnest money, then why was the bid of the second highest bidder i.e. Complainant’s bidder not accepted.
Further, the Department’s action to forfeit the earnest money of Shabbir Trading Company despite the fact that two Complaints had been filed before the Office of FTO and are still pending for disposal, are against the norms of justice. The Collectorate should have waited before taking any strict action against anyone till the finalization of the cases pending before the FTO.
The contention of Shabbir Trading Company that they could not deposit the remaining 75 percent amount on the ground that two other Complaints were pending before the FTO and the concerned Assistant Collector could not undertake to guarantee the release of the goods, after receiving full payment, carries weight.
The FTO order said that the irregularities committed by the Collectorate’s officers while conducting the auction in a non-transparent manner, ignoring the rules, this tantamount to maladministration in terms of Section 2(3) of the FTO Ordinance, 2000.
The Collectorate’s action in forfeiting the earnest money of 25 percent of Shabbir Trading Company during the pendency of two complaints before the FTO, also amounts to maladministration.
Contradictory statements in para wise comments received from the two Collectors, mentioned in para 11 supra, regarding the third auction dated 20.03.2023 also amount to maladministration, FTO order added.
