Public Auction of 500 Stranded Vehicles at Karachi Port

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The Federal Tax Ombudsman (FTO) has found more than 500 non-cleared stranded vehicles at the Karachi port. As per FTO’s Own Motion investigation, the vehicles have been imported in violation of Statutory Regulatory Orders (SROs) by the Ministry of Commerce. FTO has ordered the Federal Board of Revenue (FBR) to clear these vehicles in a public auction ASAP. FBR started the auction yesterday and will continue it today until all the vehicles are sold and removed from the port.

According to the Customs Act, any imported goods, if not cleared from the port within 20 days of arrival, should be taken care of by the FBR. The act holds the FBR responsible for timely removing such items from the port and listing them in the Auction Schedule

FTO has stated in its order that FBR has “failed” to put a system in place. The decision further states that this is an issue of maladministration in the hands of FBR. So, Federal Tax Ombudsman, Mushtaq Ahmed Sukhera, has directed FBR to take the necessary action and expedite the auction activity.

Own Motion Investigation by FTO 

FTO launched an Own Motion investigation and found out that the subject vehicles were imported under Personal Baggage, Transfer of Residence, or Gift Schemes. Under the investigation, FTO has also observed that most vehicles are being sold to the same group of bidders in each auction.

These auctions’ sales records show that 62 bidders purchased 167 vehicles auctioned from July to November, while 20 bidders purchased 117 vehicles. These so-called professional bidders have been purchasing many auctioned vehicles and then selling them in the open market to earn huge profits.

As a result, FTO has posed serious questions to the transparency of these auction proceedings and advised the FBR to get their act together. 

FBR is hosting the auction of these non-cleared cars as per the orders of FTO. The auction is public, which means anybody can participate and take their chances of winning their favourite auctioned vehicles. Since the official order by FTO, FBR has auctioned 167 vehicles, while over 500 cars are still in line.

The Truth About Custom Auction

According to the Customs Act 1969, FBR confiscates an imported vehicle and issues an auction notice when:

  • The vehicle is older than the age limit specified by FBR (3 years for cars; 5 years for Jeeps etc.)
  • The vehicle stays unattended, and there’s no clue of the owner
  • The owner fails to pay customs duty and tax 
  • The owner does not possess the legal papers, and the vehicle is non-tempered.

FBR claims that all of these imported vehicles are treated as sources of revenue for the country. The department hosts legitimate auctions to sell such vehicles to the highest bidders. 

Truth be told, these FBR agents don’t go by the rules. They play interesting games with the auction proceedings; the ones that let them have the sweetest rides for themselves or sell them to their connections. What they do is they advertise all the auction items and make the “eye-candy” vehicles sound least attractive for the buyers. As a result, such vehicles keep moving in and out of several auctions with an “unsold” status. Each time that happens, their prices go down by a certain percentage. In the end, they sell these eye-candies in their network at the minimum prices. 

In another game, they team up with the professional bidders’ mafia and play against the new buyers. They negotiate the prices of auction vehicles with these professional bidders before the auction. When the time comes, the regular bidders bully the newbie buyers by making unreasonably high biddings. They do so just to make the “commoners” give up on these sweet custom rides and then take them home on whatever price they fixed with FBR in the first place.

Solution: Online and Transparent Auction

The antidote of this whole FBR plus professional bidders mafia is an online bidding procedure. Instead of old and rusty newspaper ads, FBR should post about these auction items on an online portal where the posts can reach the whole nation. Anybody can cast their bid and have a fair chance of winning their favourite auction item and that too at a reasonable price. 

Good thing the FTO has already addressed these issues in the auction proceedings of FBR. Consequently, the customs department is working on an E-auction module to enable people to purchase imported vehicles digitally. 

Let’s see how long does FBR takes to develop and implement this new E-auction module and what improvements the new system brings to auctioning and disposing of the un-cleared stranded vehicles.

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