Frustrated cargo and customs laws

Imtiaz Ali Shah
The Import and Export business in Pakistan is growing, and it’s a substantial source of economic growth in Pakistan. However, with this business, manyimporters and exporters face many issues and are unaware of the Customs Laws, Rules, and Import Policy related to ‘Frustrated Cargo’. The issue of ‘Frustrated Cargo’ is one of the many issues which cause significant losses to the importers and exporters. Frustrated Cargo is defined under Rule 86, of Customs Rules, 2001; it will be such goods as are brought into a customsstation by reason of inadvertence or misdirection or where the consignee is untraceable or has dishonoured his commitments, and the consignor wishes to have it re-shipped to him. Section 138 of the Customs Act, 1969 provides the procedure for dealing with frustrated Cargo. It permits re-export on three events, i.e., an act of inadvertence, misdirection, or untraceability of the consignee. Importing goods into customs stations is inevitable for the applicability of the above three factors. Thus, Section 138would make or break the situation for the consigner and consignee.It is also worth noting that the relevant inadvertence or misdirection for the purposes of the section must be related to bringing the goods into a customs station. That is what this section is about; therefore, if the error or misdirection is related to something else, it is irrelevant to this section.It often happens that the consignee files a goods declaration for a particular classification of goods, but he receives shipments of different categories, so the consignee does not accept the consignment. Besides, sometimes goods are brought into a customs station by reasons of inadvertence or misdirection of the consignor, or restricted or prohibited goods have been shipped by the consignor. These situations cause trouble for the consignor or consignee, as the circumstances may be. Besides, section 138, read with Rule 87 of the Customs Rules, 2001, empowers the Master of the vessel or his authorized agent or the Consignor of the goods himself or through his authorized agent to apply in writing or electronically where Pakistan Customs Computerized System is operational, to the Collector of Customs or an officer of Customs not below the rank of Additional Collector of Customsconcerned for permission to re-export the frustrated Cargo. According to Rule 88, on receipt of an application, the Collector of Customs is duty bound to satisfy himself with reference to the relevant import manifests and other documents that the goods are “frustrated cargo”, as provided in section 138 of the Act. If the Collector is so satisfied, he will permit re-export of the frustrated Cargo under Customs supervision without payment of duties (whether of import or export) chargeable thereon, provided that such goods have remained and are exported under the custody of an officer of customs. However, the applicant shall bear expenses attending to such custody. Furthermore, Clause 19 of Import Policy Order 2016 deals with the issue of imports that do not comply with requirements of this Order or are madeon the basis of any false or incorrect particulars and shall be deemed to have been made in contravention of the Act. It says all goods onthe banned list imported in commercial quantity shall be re-exported at importers or shipping lines costs. Moreover, goods rejected or denied import shall be allowed to be re-consigned or returned to the foreign exporters subject to the laws and regulations pertaining to the trade of contraband goods. In the event of “Frustrated Cargo,” when the consignee does not accept the goods, Customs Officers ask the consignee to pay the customs duty and taxes and then submit an application for a refund claim. Such practice violates the laws and rules;the consignee is not required by the law to pay the customs duties and taxes when he is unwilling to accept the consignment. Moreover, the Master of the vessel or Consignor is authorized by the law to apply for re-export of frustrated Cargo without payment of duties (import or export) chargeable thereon.