Analysis Of Phases Of Customs Reforms

Published Date: 02 Nov 2017

INTRODUCTION:

1.1 Introduction to Customs Reforms Process

The objective of Customs reform process is to enhance organizational efficiency of Pakistan Customs, transform it into a modern organization performing its functions as per best practices and international standards. As the clearance of international cargo is the core Customs function and so the best method to measure the efficiency of a Customs organization is to measure its dwell time. In the developed countries the dwell times are typically measured in minutes. In the developing countries the dwell time is generally higher and measured in days, owing to numerous factors such as incomplete data base, parallel paper records, complex laws and procedures, weakness of institutions, an underdeveloped work force, lack of automation, low salaries, and low investment in research and development. All these problems were being faced by the Pakistan Customs Administration. A need was therefore felt to revamp and revolutionize the whole system using information Technology and business process reengineering.

In the rapidly changing international trading environment where national economies heavily rely on international trade, the departments dealing with cargo also had to update their systems for this new environment; hence there was an immediate international realization to standardize the functioning of Shipping lines, Terminal operators and Customs Administrations. Today detailed international standards are available for modernization of Customs Administrations so that they can achieve efficiency in operations.

1.2 Objectives and Goals of Customs Reforms

The objectives like achieving efficiency, high service standards, integrity and extensive use of best practices can be achieved by three factors:

Business process re-engineering, so that the redundancies in the processes are eliminated and disparate components of the system are integrated into one system covering the whole gamut of Customs activities.

Optimum use of information technology, so that processes can be automated to the maximum extent, and human input to the system is only applied where it is essentially required, and

Standardization, which includes use of international standards in documents, processing and Customs management, so that international benchmarks of efficiency can be emulated in the management system. The exchange of information is possible through use of universal data formats and e-Commerce techniques.

1.3 Background of Customs Administrative Reforms (CARE):

During the last three years, the reform process in Pakistan has undergone various phases. During the analysis phase (February 2002 ~ September 2002), CARE team comprising of very competent and dedicated officers exclusively worked on study of existing Customs processes. They identified the problems in the present system and worked for appropriate redressal measures. In August 2002, The concepts were consolidated and about 100-page "Visions" document were circulated to all field formations of the Customs for their feedback.

1.4 Scope of Customs Administrative Reforms:

The first phase of CARE implementation, PACCS–1 is being managed by the Model Collectorate of Customs (MCC) in Karachi. The scope of activities of Model Collectorate of Customs is cargo and vessels arriving at specified port areas. It is a composite Collectorate dealing with imports, exports and clearance of vessels. Therefore at start-up about one fourth of total workload of Appraisement and Export Collectorates of Karachi had been taken on by Model Customs Collectorate whereas at present workload has been increased more than 50% of Appraisement and Export Collectorates.

1.5 The New Organizational Structure:

The organizational structure for CARE has been designed to ensure the following:

Uniform and standardized structure

No duplications

No overlapping jurisdictions

Clear chain of command (clear boss)

Clear responsibility and authority

Compensations, rewards, and promotions commensurate to performance

CHAPTER NO. 2

ANALYSIS OF PHASES OF CUSTOMS REFORMS

2.1 Civil Service and Reforms:

Civil Servants are in habit of reading the last few lines. They just don't have the time to get into the nitty-gritty of things, but this raises three questions:

Who is supposed to get into the nitty-gritty?

What are we so busy at, if not our own work?

Can an effective decision be made without getting into the nitty-gritty?

As far as One and three are concerned the answers are obvious, it is basically two that needs an answer. Even the answer to two is known, we are busy addressing everything, which is other than our primary task. In short we are always Fire Fighting.

Machiavelli (yet to be known about this word) said that in the beginning a disease is difficult to diagnose but easy to cure, later it is easy to diagnose but difficult to cure. Unfortunately in the Civil Services of Pakistan, issues are addressed only after they have blossomed into full-fledged problems. Somehow we never see them coming until its too late, we are unable to intercept them as they brew. Our work starts as the first file arrives at our desk, we are only aware of that which is placed before us; we have no knowledge of that which is fermenting in some file somewhere, this results in a number of aberrations; the administration is inverted; decision making slips from top to bottom since now the lower staff is in a unique position to decide as to what gets done, merely by presenting it or keeping it from the decision maker. In such an environment the officers are unable to see. their work in totality; we see things in shape of separate disjointed individual files moving in a haphazard manner, we are like huge cumbersome outdated cameras seeing things in still frames one at a time in isolation of each other, the entire picture never complete. We are unable to see relationships; we repeat the same mistakes over and over, we are unsure of the information before us it may or may not be correct, insufficient or doctored. Our workload is unrealistic and unclear, we don't know as to what is really important and needs our immediate attention, most of the time we are just bogged down in acting as post offices, reporting endless data in one format or the other for the supposed urgent consumption of some other office. Most of our time is spent in being postal officers, statistical officers and very little as being custom officers. This is an atmosphere where adhocism reigns, things are individualized, every body has a vague idea, nothing is clear, nobody is responsible, and the buck is passed.

CARE is the humble effort to try to create an Information Technology based system in which we can be Customs officers most of the time, where everybody is clear about the DOs and DONTs, the workload is calculated and realistic. In short we wish to emerge from the mist; to create clarity from amidst confusion .

When it is our time to retire we want to know that we served, we mattered, and we improved or at least that we did try.

2.2 Customs Administration Reforms Raison:

While certain things are designed in one go, others evolve with time, their ultimate shape unclear. Where as design is a process of speed, evolution takes time, whereas design is by deliberation, evolution is a reactionary process, one of hit and trial. Whereas design progresses as per pre-defined, pre-set standards, evolution just progresses.

Imagine a village with no specific pre-set, pre-designed, building & road, sanitation, electrical standards. The village evolves, each household constructing as it requires. When the son grows up a new room is constructed, when sewerage is blocked a new drainage is dug, if somebody is injured by a speeding tonga a speed breaker is constructed. The village evolves not by design but as a reaction to changing circumstances. Along the way it becomes ugly, smelly, polluted, disorganized, confusing. This state of the village is most inconvenient to the villagers themselves.

It is our desire to design our village, this process may be painful since certain structures may have to be bulldozed, it may be expensive since certain structures would have to be constructed, we may run into conflicts, but for the sake of everybody this is necessary and has to be done. With the yardsticks of logic and impartiality let us proceed to measure each structure and decide its fate. .

Let us make a few simple assumptions:

That there is one Customs department all over the country.

That the Customs Laws and Procedures are uniformly applicable throughout the country.

These assumptions may seem superfluous; let's just keep them in mind in any case.

2.3 Role of Customs:

Public perception is that the major role of Customs is anti smuggling; nothing could be further from truth. Anti smuggling deals with trade that operate outside the Customs system. Certain people are of the view that the role of Customs is to collect Revenue, even this is not totally correct. A more refined view is that Customs deals with the clearance of goods in accordance with the law, this is its primary task and in order to accomplish this it has to indulge in all other functions like examination, assessment, valuation, adjudication, auction, acquisition of securities, running of bonds, maintenance of documents etc. Customs in totality does just the following:

Clearance of Goods as per Law:

All other processes are just a necessary by product of the above

In the following pages it is suggested a paradigm shift, Information Technology based. in perception as well as procedures so that a more efficient system is evolved for the clearance of cargo. We have also attempted to establish that such a shift is imperative, both for the nation as well as for the department. Let's examine things as they stand today.

If, I was to import a container of something, say, Second Hand Clothing in Pakistan, I know in advance the person who will examine my container as well as the one who will assess it. If I could somehow control these two individuals, I could breeze through the system. In reality, I could even decide the name of the examining official.

Should a system be so predictable and personalized?

Isn't this predictability and personalization the essence malpractices?

Clearance Speed:

For example total number of containers imported during the year 219836 numbers.

Average Clearance Time: 08 Days. Cost to Trade:

Inventory Cost @ 10% interest (8 days)

Demurrage Cost Rs. 474.06 M

Grounding Charges Rs. 219.38 M

Cost to Business Rs. 1261.38

Since this is the time taken by the cargo in negotiating all the processes/formalities between landing at the berth and exiting out of Customs Gates, certain elements within the department feel that it is unfair to attribute the entire time to Customs functioning, their view is that Customs is only a small player in this field and that numerous processes and formalities extraneous to Customs are responsible for the delay. We however, maintain that Customs is the key player and predominant delay in the clearance of goods is directly attributable to our processes. Our views are based on the study of data of time lapse between the filing of bill of entry (B.E) now called goods declaration (G.D) and final passing out of goods from Customs area.

The above information may appear incorrect to some, especially in the light of our claim that we examine and assess the Bills of entry on the same day as presented to us. The question is; are we not responsible for the prerequisites that precede our processes? After all we have designed those prerequisites.

Is our claim realistic in an atmosphere where it takes one full day for an importer just to get his entry Machine Numbered?

The Process of Clearance of Goods comprises of two basic subsidiary processes;

(i). Determination of description of goods. (Examination)

(ii). Determination of value of goods. (Assessment)

A typical examination pattern, where multiple containers are de-stuffed and re-stuffed simultaneously and adjacent to each other under thoroughfare conditions.

There are numerous reports of cargo being switched from one container to another, during and after working hours. Echoes surface that it is possible to remove entire containers without even being examined by customs.

Every few days, the owner of the containers gives notice to customs to vacate their containers. The temperature and the space constraints inside the containers ensure that no office automation product can be used.

Imagine if every day at 0830 hours, the Traffic Police of Karachi blocked the entire Sharah–e–Faisal (Karachi’s busiest road) because it wanted to check the documents of vehicles plying in the city! Sounds preposterous....

Well we have been doing this every day since time immemorial. Entire cargo that arrives or departs from the ports of this country is stopped and checked by Customs.

Is it necessary to ground and examine all containers? Can't we come up with some IT based risk criteria?

Let us appreciate a few realities regarding Examination of Goods.

It is the inherent right of Customs to ascertain the description of the goods that are arriving into, or departing from the country. For this purpose Customs can stop and examine whatever goods they may deem necessary, but is it necessary and logical to stop and examine all the goods? Does such a policy increase or decrease the effectiveness of the department? We are of the view that by shifting our focus on to everything, and basically end up with focusing on nothing.

The basic strength of the existing system is that it has lasted so long; in all fairness, it was an adequate system under the circumstances, however, circumstances have radically changed over the past few years, when the custodian for almost all cargo was Karachi Port Trust (KPT), being a government organization, KPT had a rigid, inflexible, inefficient and an elaborate procedure like, ourselves. Hence, an elaborate, Customs Examination Manual.

Today KPT is the custodian for less than 15% of all cargo. All containerized cargo whether at the West Wharf, or the East Wharf is in the custody of private terminal operators, even a portion of loose cargo or less container load (LCL) cargo is being handled by the private terminal operators at Pak Shaheen and AICT (Al-Hamd International Containers Terminal), QICT (Qasim International Containers Terminal) etc suddenly our Examination Manual is no more relevant. There is a need to tailor our systems to the changed realities. Today, the custodians of non-duty paid cargo are private organizations, private security agencies are deploye0d for safe custody of the cargo; pilferage is rare, online statistics regarding container locations and their movements are available, online weighment of containers while off loading from the vessel through modern ship to shore gantry cranes is a reality. Our existing procedures are not only irrelevant and out of step they are impeding the clearance speeds which are now achievable.

Shortcomings of the Present system:

It is not proactive; we wait for inputs from somebody else before we do anything. If an importer never files an bill of entry, we are happy with never knowing the contents of a consignment or a container. That is why, of the 9000 odd lots pending auctions at our ports over 2/3rd have never been examined and as a result we are unable to arrive at disposal values or decide what to do with them in time. The KPT Final Outturn Report is awaited for three months after which the job of Manifest clearance is started; even this outturn report is accepted unquestioningly. The rep of the importer or the exporter has to personally carry each document to each customs desk, if he stops, the work stops.

Our waiting to be approached policy is the corner stone on which the structure of malpractice is built. Since we are to be approached we can negotiate, the continuous contact between the tax payer and tax collector facilitates on spot settlements. The system is so well suited to the Clearing Agent as well as Customs that all efforts at trying to break this contact are bitterly resisted and ultimately shelved for one excuse or another. While Customs officials are able to get something for the services rendered, the Clearing Agents enrich themselves on the difference between what they may or may not pay to Customs, and what they charge from their clients in the name of Customs. Clearing agents in cases of risky cargo are known to present their B.E's to the relevant sections, only on days when their favored staff is available. In these conditions the law abiding and exchequer suffers.

At present, Customs as policy, does not allow examinations unless the Clearing Agent is present. The presence of clearing agents in the examination area facilitates collusion; the generating of fictitious, vague, incorrect examination reports and shifting of cargo from unexamined containers to examined ones, bypassing the entire process of examination.

The samples forwarded from the shed areas are manipulated since the clearing agents carry the same to the groups themselves. Similarly all samples en-route to the labs for testing are personally carried and handed over to the testing official hence perpetuating the philosophy of contact.

Although the examination staff is physically looking at the goods, the responsibility of determining the PCT (Pakistan Customs Tariff) and the value even for second hand goods rests with the Groups; as such responsibility is passed on, shared and diluted.

CHAPTER NO. 3

PAKISTAN CUSTOMS COMPUTERIZED SYSTEM

3.1 Introduction to Pakistan Customs Computerized System (PACCS):

PACCS is a Decision Support Solution. It is an Information Technology based and a secured web-based system to modernize Customs operations. It facilitates electronic processing of goods import and the management of such activity by the business man as well as the Customs department to provide higher level of compliance and faster service with lower cost.  

The efficient movement of goods across the borders is critically important for better trade and service to the business community. The move towards electronic interchange of data through PACCS will streamline the entire process of customs clearance. Round the clock availability of the services in PACCS allows Customs and the trade community to track shipments anytime, anywhere. The intelligent risk management system of PACCS supports advanced decision making, track non-compliance and enhance revenue collection.

To cope up with the booming growth in international trade and enforcement of the varying laws, augmentation of the Customs operations is required on a timely basis. PACCS can be customized to restructure and adapt new Customs operational processes easily. It also provides a rich and extensible foundation for building sophisticated customs clearance applications that integrate seamlessly with existing back–end systems. 

The operational system of PACCS is ACCESS (Automated Customs Clearance System) which is world’s first end-to-end solution is an integrated computerized system covering all activities and processes. The system includes the following sub systems namely, CDS Carried Declaration System, TMS Transshipment Management System, PMS Payment Management System, GDS Goods Declaration System, RMS Refund Management System, BWS Bonded Warehousing System, SMS Security Management System, ADS Adjudication Management System, UMS User Management System, AMS Assessment Management System, EMS Examination Management System, RMS Risk Management System, CMS Clearance Management System, DSS Declaration Status System, ENS E-mail Notification System, MIS Management Information System.

A management reporting system has been designed whereby the users will be able to access, view, save or print data according to his access level. Standard reports based on frequent requirements of the users have been designed. In addition, user will be able to generate and customize queries and reports according to his specific requirements .User will be able to transfer data to other spread sheet or data base applications like MS Word. The unique characteristic of PACCS Management Information System is that it can generate structured reporting, has the ability for data compilation, extraction and manipulation, reply to ad-hoc enquiries and give online printable reports.

3.2 PACCS Physical Architecture:

PACCS physical architecture is based on the Microsoft .NET architecture that supports many different physical configurations that also support highly scalable Web applications. 

3.3 PACCS Key Features:

The features of PACCS are listed below:

Multi-Culture Support:

PACCS provides functionality to ease the process of internationalization. PACCS supports multi-language, multiple currencies, various date formats, etc. PACCS includes features for tracking the language chosen by the user, for maintaining text in multiple languages, and for manipulating date, time, and currency strings for presentation in the language of choice. PACCS Solution is built on 16–bit UNICODE compliant in order to support non–alphanumeric characters. The system supports the capability of providing and accepting data in more than one language; e.g. names with Spanish spelling or English spelling depending upon the customer’s profile.

Flexible Architecture to Manage Change:

PACCS can be tailored to change the system workflow with practically no coding. New services may be added or removed from the system with ease. PACCS has the ability to accommodate different organizational patterns of different national Customs administrations requirements while maintaining uniformity as well as compliance to common international standards. The flexible architecture facilitates incorporating any business rule changes easily.

The workflow of the system can be revised for any future developments.  Its services can be extended to any sector of the society like the banking sector, Govt. agencies, and Insurance systems and so on.

Use of Global Standards:

PACCS is compliant with WTO, WCO, and GATT standards. This makes easy the interface to external systems, ease trade facilitation and enhance customs revenue.

Security:

PACCS maintains security and access control from any device, any time, anywhere. PACCS provides user authentication and identification to secure the Web sites. Logging facilities are available. PACCS gives access to various parts of the system based on the particular user access right. This makes sure the privacy of traders/clients information.

Repository of Business Services:

PACCS has the feature to manage change in the business environment by building new components easily. Provides superior flexibility to fabricate complex services, define business rules, and define operation plans. This helps to meet the business challenges quicker. Framework for solutions that are integrated and can be integrated into customers current environments.

Intelligent Risk Management System:

Risk Management System (RMS) is a systematic application of management procedures and advanced decision support that provide Customs with the necessary information to deal with consignments that pose a risk.

Risk Management Services cover the overall risk management process steps such as identifying, analyzing and evaluating the Risk. The decision support system will improve customs and tax revenue while deterring fraud and criminal activity. PACCS supports two main types of risk management inspections: Goaled selectivity inspection and prioritized selectivity inspection. The key difference between these selectivity inspections is that the goaled selectivity inspection is based on certain predefined goals while, on the other hand, the prioritized selectivity inspection is based on and assigned a weight that controls how frequently an item or a case should be selected for inspection relative to all other items or cases in the system. RMS is in compliance with international standards and principles such as WTO, WCO, and Kyoto convention.

location of container will be available to the PO. PO will enter the report in this computer.

If any detection is reported by PO Drug Cell, it will be sent by the system to Superintendent Enforcement for preparing contravention report.

Weighment: The requisition for Weighment at weighbridge will be sent to TO through RMS. TO will make arrangements and report the Weighment bridge weight to PACCS system.

Terminal Operator (TO):

T.O. will be custodian of goods and will be responsible to:-

make arrangements for examination of goods;

share his data with PACCS regarding all goods under former's Custody in a manner that position and status of each cargo is verifiable at any moment.

update PACCS on real-time basis about container numbers, time of receipt/delivery, history, stack position, seal numbers etc.;

ensure that nobody enters the port except functionaries;

receive any goods into port area (from vessel or from gates) when authorized by PACCS;

deliver any goods from port area (to vessel or from gates) when authorized by PACCS;

provide weight of each container as recorded in ship-to-shore gantry;

maintain a video surveillance system, covering areas specified by Customs. The output of the surveillance system would be available to the Customs.

Authorization to receive or deliver will be electronically sent by PACCS to TO. Cargo list from incoming vessel declaration will be transmitted to TO at ETA. TO will only be allowed to off-load container numbers mentioned in the list transmitted to him. Likewise for export, TO will be intimated container numbers to be passed-in.

Except empties, all container lying inside the port in any stack (other than examination stack), or passing-in or being delivered would be sealed. The import containers would be shipper sealed, and where seal was found broken, TO will "fix a seal, and after examination container will be resealed by TO and container seal number data field will be kept updated accordingly. Likewise, TO will receive containers for export which have shipper's seal (to be checked at pass-in).

List of containers selected for examination by PACCS on the basis of RMS will be communicated to TO immediately after off-loading of the containers for import, and after pass-in of export cargo.

TO will ground "to be examined" containers in designated examination area and will intimate PACCS the status "ready for examination". Likewise, instruction to TO for grounding for Examination or for weighment at weigh bridge will also be sent electronically by PACCS.

TO will arrange to de-stuff the containers as required by AO Examination. On completion of examination, TO will re-stuff the container and put post-examination seal on the container. Each movement of container will be recorded by TO and made available to PACCS.

When a cargo is cleared by Customs, PACCS will notify the status "cleared". Now TO is entitled to deliver the container to trader in case of imports, and load the container on the vessel in case of Exports. TO will notify PACCS when a container is delivered, to party or vessel.

Payments:

Payments will be made in NBP Custom House, Branch, or in any of the on-line designated branches of the NBP. List of such designated branches located in all major Customs stations will be available on the PACCS website. Bank will give a cash number to each payment transaction, and will communicate cash number to PACCS. NBP Custom House Branch will be linked to PACCS like an internal user, but other designated branches will act as external users.

Traders or third parties, who maintain deposit account with Collector of Customs MCC, will quote their account number. Since it is mandatory that GO will be pre-paid, if declarant wants to file GO after office hours, he will be constrained to make payment during banking days and hours before filing GO, or alternatively he should have deposit account with Customs with sufficient balance to file GO. Filing of GO can be done round-the-clock.

Transshipments & Transit:

TP will be filed electronically by trader or his authorized bonded carrier. TP application is a simplified form available to trader on web. System will automatically make necessary validations by checking TP fields against IGM fields, and grants CRN# and permits transshipment without manual interference. Simultaneously, system transmits release instructions to TO. On invalid data values in TP application, rejection message will be sent to the declarant.

Trader can also file application for cancellation of TP, and if GD is filed against the BL system will automatically cancel the TP previously filed.

Assistant Collector Dry port will be users of PACCS and on delivery of goods by T.O. to the concerned bonded carrier, system will send intimation to AC Dry port. AC Dry port will acknowledge receipt of goods at port to PACCS. If the goods are not received within prescribed time, system will generate a message for Licensing Authority to initiate necessary action against the bonded carrier.

TP can be filed any time in 24 hours and 7 days, and since Customs and Terminal Operator are working at port full-time, so deliver to TP cargo (like any other cargo) can be any time in 24 hours.

Likewise, dry port user will intimate the TP originating from dry port and destined for KICTL through PACCS. Acknowledgement of receipt of goods at KICTL will be sent back to dry port user's in-box automatically.

Multimodal transport to be allowed, and in this case no separate TP application will be required, provided the BL type has been declared in Cargo Declaration.

Transit:

Afghan Transit will be cleared on the basis of GO. Transit containers off-loaded at port to be loaded onto another vessel will be so declared in the Carrier Declaration. Concerned carriers and their agents will intimate to PACCS regarding their movements, and system will instantaneously authorize removal to the declarant and TO. Like any other cargo, system will maintain complete inventory and history of such containers.

Contravention / Seizure, Adjudication, Appeals, Court Cases:

PACCS provides a comprehensive management tool for case handling from preparation and approval of contravention/seizure report adjudication process, appeal process and handling court cases.

Contravention / Seizure Reports:

The Adjudication Management System (ADS) of PACCS provides facility to generate Contravention Report on the system. The form of Contravention Report is designed in the manner that most of the data fields which are already in the' system through GO or CD processing data are system filled. However, facts of the case, will be a free text field, and will be typed in by the reporting officer Such reports will be sent to the concerned AC and ADC Law, who can view and edit the report before sending' it to Adjudicating Authority. The whole process will be through the system.

Adjudications and Collector (Appeal):

Adjudicating Officers and Collector (Appeal) are remote internal users. They will receive Contravention Reports in their jobs-in-hand in-box. System will provide management tool to perform the following functions:

Issuing of a Show Cause Notice: System will automatically prepare a show-cause notice

from the data fields of Contravention Report

Receipt of documents and hearing adjournment application from party.

Issuing hearing notices

Issuing Document Calling Memo

Recording hearing proceedings

Issuing Order-in-Original

Adjudicating Officer has a planning and executing tool to perform his task. He can view date-wise hearing schedule, and system will prompt on the date of hearing.

Centralized Valuation of Imports and exports:

CARE envisages the following features regarding Valuation:

Clear delineation of work between clearance and valuation formations along the lines that the clearance formation will not pursue any issue beyond Article III of the GATT code. For issues beyond Article III, matter will be referred to the Valuation formation.

All Valuation decisions will automatically become part of the Central Valuation system.

Valuation Department at Karachi will be user or PACCS. All provisional assessment cases will be referred to them through the "system and will be dealt and responded through the PACCS interface available to officer of Valuation Department.

Repayments:

Refunds

Since application for refunds will be filed electronically on a prescribed format and filed into the system like a GO. Process is described below:

The moment a refund application is filed at the front office it will appear as a job in hand at the concerned AC's terminal, the documents submitted along with the application are also forwarded.

AC/DC should be the final authority for deciding a refund claim irrespective of the amount involved (as in Sales tax)

AC has 30 days to decide the issue, unless there is delay on part of the claimant in responding to hearing memo, filing of any missing documents etc. System will automatically make the following confirmations:

Claim is within time: The system will compute from the date of filing (recorded when• the claim is lodged in FO) and date of payment (available in system against the "IGM / EGM-Index) by comparing it with Cash Number. The date of payment in cases not relating to IGM / EGM-index will be specified by the claimant in his application.

Confirmation of payment; the system will confirm the payment of the amount claimed from the Cash Number.

Confirmation of no-duplication, the system will indicate the details of any refund claimed/granted against the same IGM / EGM-index has been earlier claimed.

Recovery Outstanding, the system will indicate if any amount is recoverable from the claimant so that the same may be adjusted. Any notices for recovery against the claimant received from other Collectorates/department will also be reflected, so that the same can be legally adjusted from the amount sanctioned.

If more documents from the claimant are needed, system generated Document Calling Memo or Hearing Notice will be issued. The references of such correspondence will be recorded in the system against the Refund Application's Record The process is similar to that of adjudication. (See Adjudication)

Refund Sanction Order will be computer generated which will be communicated to the claimant and to the Accounts Section.

Duty drawbacks:

GD for export will be application for drawback. Processing of drawbacks is built into assessment and processing system.

Recoveries:

A management system for dealing with recoveries has been designed in PACCS having the following functionalities:

Issuing Recovery Notices to the client

Issuing Notices for deduction and recovery to other departments

Embargo Notices of business transactions

Recording proceedings of Sealing of business premises

Appointing Receiver on the business

Recording proceeding of attachment of assets

Recording proceeding of sale of assets

Recording proceeding of arrest of .the defaulter

A complete case history and planning tool will be available to the Recovery Officer. Recovery process in case of ONO and security lapse will automatically be triggered and referred to AC Recovery. Prescribed notices as per recovery rules will be automatically initiated--by the system.

The process will only be stayed when RO stays the recovery process. The reasons will be recorded in the system and validity period of stay will also be specified. The authority of stay (Collector, Board or judicial forum i.e. Tribunal or Court) will be recorded in the system. Date of stay order and date of expiry of stay will be recorded in the system; Six months from the date of stay the system will automatically expire the stay, unless further extended by any other system. On expiry of stay, the system will continue the process onwards and will reflect the task in RO's pending jobs

Each amount recovered, waived and written-of will be recorded in the system. Payment will be recorded against the Recovery Case Reference number.

5.3 Valuation:

Valuation is a Customs function and although the same is not ascertained in isolation but based on research of the market, consultation with trade bodies etc, yet there is a forum through which a value becomes applicable for assessment that is evidential etc. This forum within the department is the controller of Valuation. It is proposed that all value certificates among the above be abolished and that the controller Valuation may ascertain the requisite values in consultation with the trade or whatever other means available under the law and then these values be placed for application on the Customs server. The present mechanism of certification of value on each individua.l consignment by APTMA, EPB and Provincial bureau of supplies may be abolished.

6.4 GRAPHICAL REPRESENTATION OF REDUCTION

OF DWELL TIME:

In the earlier part of the report it was indicted that the dwell time of the cargo is 10 days plus wherein the customs processing time is 08 days. With the implementation of PACCS the dwell time has reduced considerably. The dwell time is a measure of Customs efficiency. It means the number of days the Container stays at the port. The pie below indicates that about 28% of the cargo is cleared by Customs within one hour and about 8% cargo within two hours. The graphs and figure given below enumerate the overall position of dwell time:–

                                  

CONCLUSION:

CARE involves the replacing of the current mix of a personalized system of manual and electronic processes with an integrated and automated cargo clearance system that meets current and future challenges facing the trading community and the tax administration.

The new system is supported by legislative and administrative changes. The changes mean that the trading community has a greater freedom of choice in how it interacts with Customs and Customs has enhanced ability to segregate the predominantly legitimate trade from the occasional illegitimate trade so as to facilitate the legitimate while blocking the rest. The Customs Administration fully respects the innocent resistance, which is a result of the fear of the unknown; as such, our prime strategy is to ensure that there are no surprises or unknowns for the legitimate trade. We have been holding and intend to continuously hold detailed briefings and training sessions with all our stakeholders, this will be in addition to extensive advertising of new processes. Our aim has been to ensure that all the concerns of our legitimate stakeholders are addressed in advance to ensure a smooth transition.

This project is unique in its characteristics due to the use of the most advanced technological and procedural systems. Only a few advanced countries of the world are having such systems in their custom Administration. It is hoped that the successful completion and roll out of this project will make it a model for of Effective modernization and reform to be followed by the rest of Administrative Machinery of Pakistan and other countries of the region. This computerized taxation system was formally inaugurated by the Honourable Prime Minister of Pakistan. The highlights are given below:-

HIGHLIGHTS OF CUSTOMS ADMINISTRATIVE REFORMS (CARE)

Model Collectorate of Customs, Custom House, Karachi, the pilot project under Customs Administrative Reforms (CARE) was inaugurated on 18.04.2005 by the Honourable Prime Minister of Pakistan, Mr. Shaukat Aziz. The inauguration ceremony was attended by Federal Minister of State for Finance, Mr. Omar Gohar Ayub and Federal Minister for Ports and Shipping, Mr. Babar Khan Ghouri and other Federal and Provincial Ministers, leading businessmen, bankers, foreign delegates and senior government officials. In the inauguration speech, the Prime Minister highlighted the importance of reforms and revamping the tax machinery in order to provide a conducive and enabling atmosphere to businesses. The Prime Minister emphasised that unless the government machinery, which deals with the business community, is made more efficient it will continue to be an impediment to the growth of national economy. It was further added by him that with this realization Pakistan Customs is concentrating its energies and resources on modernizing itself. The first concrete step in this direction was the reform in Customs, known as "Customs Administrative Reforms." The launching of CARE has thus indeed, laid the foundation of an integrated, automated and facilitative tax system. Earlier the Chairman, Central Board of Revenue, Mr. Yousuf Abdullah, welcomed the Honourable Prime Minister and the guests. In his address the Chairman focused on the initiatives undertaken by CBR for tax reforms. He stated that with the development and implementation of Pilot Project of CARE, Pakistan Customs will transform into a service oriented, modern and efficient organization that will benefit the economy. He commented that Customs Software application is a unified application and is compliant to Revised Kyoto Convention of WCO and other international protocols relating to Customs. Project Director, Model Collectorate of Customs, gave a comprehensive Presentation on CARE on the launch day and highlighted the salient features of the new automated system. He stated that the objective of Customs reform process was to enhance organizational efficiency of Pakistan Customs, commensurating with best practices and international standards. He informed that with the launch of CARE, Pilot Project, the Customs Clearance time will be drastically reduced which will minimize the cost of doing business. The Project Director observed that CARE is the result of relentless and dedicated efforts of the officers and staff of the Central Board of Revenue.

PACCS was launched on 18th April, starting with registration of users. Clearance of import cargo started on 10th May. Performance statistics (till 24 August) is as under:

No of vessels handled: over 120

No of Goods Declarations cleared: over 12,000

No of registered users: over 8,500

No of containers cleared: over 60,000

Value of goods cleared over Rs. 35 Billion

Total Revenue collected Rs. 4.99 Billion

Customs duty collected Rs. 2.24 Billion

The software developed under CARE is named PACCS—Pakistan Customs Computerized System. It is end-to-end integrated system covering all Customs functions so that importers and exporters can clear their goods without any hassle. PACCS is designed for a paperless environment. There is no concept of assigning or executing a task outside the computer system The System contains Carrier declaration Module, Goods Declaration Module, Assessment Module, Examination Module, Clearance Management Module, Payment Management Module, securities Management Module, Refund and Drawback Management System, Adjudication system and Management Information system. Keeping in view the modern technique of risk management selectivity criteria, a comprehensive dual phase Risk Management System has also been designed which is based on dozens of risk parameters and their combinations to select risky consignments for detailed examination and assessment check.

PACCS is a modern decision support system based on latest Information Technology tools. It is a secured web-based solution to modernize Customs operations. It facilitates electronic processing of imports and exports to provide higher compliance level at the lowest possible cost. Transformation from a manual and semi automated system to fully automated system was an uphill task especially from the angle of resistance to change, mind set and human resource development. This reality has been engrained in the mind of CARE Team right from its inception. Therefore, since the development of concept papers all the major stakeholders were taken on board. It was also endeavored to take all the stakeholders along at all the stages.

PACCS involve a paperless environment where all data with regular stakeholders is in electronic form. The data is formatted and is accessible only through specified input output points. Each user is identifiable through his unique user name & pin code. PACCS covers the entire spectrum of customs activities. There is no concept of assigning or executing a task outside the computer system, resultantly any person performing any function with Model Customs Collectorate has to be an authorized user of the Pakistan Customs Computerized System (PACCS).

Information Technology is the air for CARE, this signifies that CARE is completely engulfed by Information Technology; no part is outside the realm of computerization. Except in external communications with certain institutions like the courts, a completely paper less environment is envisaged. All documents are system generated without the need for manual signatures by the department. All business processes are integrated; as such, a change in one automatically updates the related fields in the entire system. PACCS has inbuilt performance evaluation since all tasks are logged with time of receipt and disposal and all this is generated as performance evaluation reports for groups as well as individuals.

It is premature to look into the results being achieved as the system is in stabilization stage. However, a look into statistics is very encouraging. PACCS has achieved significant reduction in Customs Processing time, succeeded in elimination of contact between Customs staff and external stakeholder and enhance Customs efficiency. With the processing of Goods Declaration through an automated environment, at Model Collectorate of Customs, Customs Processing time, which used to be for many days has been reduced to a few hours.

The analysis of the Pie and graph show that Model Collectorate of Customs clears approximately 12.7% consignments in less than one hour, 25.95% are cleared within one to two hours, 9.5% are cleared within two to four hours, and thus 48.1%