Framing rules to empower the government to write off arrear duty and relevant other charges that have little prospect of being recovered, is an appropriate move under the given circumstances. No credible figure on such dud revenue is yet available. However, the amount, in all likelihood, will be quite sizeable. The size of this particular kind of revenue has grown bigger over the years. This is largely because the importers concerned did not take delivery of their goods for unknown reasons, including bankruptcy. Some importers reportedly could not even be traced at the addresses mentioned in their documents. But the customs officials are required under the existing rules and regulations to keep the realisable duty and other charges against such undelivered imports in their books of account. And they have to carry on this burden, year after year, for accounting purposes.
All concerned are, however, aware of the futility of such a practice. Yet no initiative has been taken to rid the department of this accumulated burden. This is how government agencies do, by and large, operate. The officials working in such agencies usually remain steadfast on this. They hardly feel any urge to make any departure from this time worn practice. So. the initiative by the National Board of Revenue (NBR) to change the old order should have come long ago. In fact, there would be no loss or gain, in monetary terms, for the government, if the books of account of the customs are unburdened from such unrealisable amounts of revenues. But it surely would leave a positive psychological effect on those who are in charge of collecting duties and taxes at the NBR.
The financial institutions, including banks, regularly write off nonperforming loans (NPLs) and that is allowed under the law. This practice enables the banks at times to make their financials look better. However, the process followed by the banks and the one suggested by NBR are different. The financial institutions remove the written off amounts from their financials but they are required to make provision for the same every year, side by side keeping their efforts on, to recover the bad loans. In the case of unrecoverable arrears, the Customs, according to the proposed legal provision, would not be required to take all these troubles.
But one element of risk dishonesty, might come into play here, too. The practice of loan writing off has exposed many financial institutions to irregularities. It is thus hard to rule out the possibility of similar developments taking place in the customs department unless proper safeguard measures are put in place. After all, the department is not held in that high esteem so far as honesty and integrity are concerned. Under the proposed provision, the customs commissioners would recommend the write off of any 'unrecoverable' dues, furnishing the details of the efforts and initiatives made to recover the duty and taxes levied on the imported goods. But what will be important here is due compliance with all relevant legal requirements.
Writing off unrecoverable duties
FE Team | Published: May 09, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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