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Simplification of procedures of duty drawbacks.

Simplification of Procedures of Duty Drawbacks

The importance of international trade cannot be underestimated. It is the most important tool of foreign economic policy of a nation. The existing international economic system has deeply been rooted in the concept of free trade. By free trade we mean that restrictions to the flow of goods and services across the international frontries be removed. The underlying idea to the notion of free trade refers to comparative advantage of nations. The simplification of procedures are thus necessary to provide a mechanism for an efficient customs administration to process the documentation for speedy flow of goods and services. As each stop in the movement of goods and services would increase the national cost of production by reducing the competitive edge of a nation, thereby, causing serious economic shocks. Consequently, we experience deficits in the terms of trade. The deficits of national economics upset the priorities thereby causing setbacks to the process of development. As such we need increased efficiency in the export sector. The export trade thus assumes top priority in the realm of national economic policy.

The import trade is regulated by government controls, similarly regulations for export trade do exist. The departments engaged in the implementation of these controls include the Customs which functions within the framework of Customs Act, 1969. The said Act empowers the government to regulate different aspects of international trade including the exports. The system of duty drawbacks derives its authority from the said Act.

Sections 21 and 37 of the said Act empowers the Central Board of Revenue with wide and flexible powers for assisting export-oriented industries which use imported materials in the manufacture of their goods by relieving such imported materials of the duties these would ordinary bear. The relief may be given either by allowing the imported material to be imported or delivered from warehouses free of duty or by repayment in whole or in part of the duty shown to have been paid on such imported materials. No doubt, these repayments have now assumed significant importance in respect of competitiveness of Pakistani goods in the international market. As such regulations prescribing procedures for these repayments should be easy, simple and operatable by an ordinary citizen.

Procedure are devised in order to gain optimal results while operating the public policies to achieve desired objectives. Thus, at times, to cope up with the requirements of a procedure, makes an intending user, uneasy. Similarly, the operating executives and managers at times make things difficult through faulty implementation process. Regulations too make things complex. The combination of regulatory flaws and a complex design of procedure leads to failure of the procedural system. This is why, today, we are confronted with the problem of limitations of the procedure on duty drawbacks.

To my mind the following factors would lead to complications in a given work situation, namely: (i) uncertainty; (ii) lack of guidance; (c) imperfections in the regulations; (d) conflict and contradictions in the procedures; (e) untrained personnel; (f) withholding of information; (g) casual attitude of the members of the community; (h) lack of knowledge of concerned regulations; (i) unclear communications; (j) deceptive tendencies; and (k) increased volumes of work.

Keeping in view the aforementioned factors in mind, any simplification work relating to procedures should aim, in the first instance to review the existing regulations on the subject in order to determine their workability. For example, if the regulations prescribes an unrealistic timeframe for doing a specific job, it would not be possible for a user to meet such a deadline and hence the problems would arise. In order to remove such difficulties it is desirable that framers of the policy should consult the relevant members of the community who are going to be affected by such policies before the same is translated into a regulation. It is, therefore, proposed that a consultative body consisting of members of the trade and of policy framers should be constituted at the federal level to oversee the implementation process.

Similarly advisory bodies at the local level can also aid in reducing the existing gulf of legitimacy between the departments and the members of the community. Accordingly to give credit worthiness to the decisions of these advisory bodies, concerned regulations should be amended so as to provide a binding effect of the decisions arrived at by mutual consultations. This can easily be done by reviewing the existing provisions of the Agreements Act which provide for formalising the agreements arrived at by a state department and individual member of the community.

The increased volumes and the problem of uncertainties can be controlled by introduction of ADP (Automatic Data Processing) application for handling and disposal of duty drawback claims. A workable software can be devised whereby the exporting act can be co-related by an automatic issuance of repayment authority in favour of the exporter by the computer. Such a measure would reduce to a possible optimal level the contact of the exporter with the concerned official which in turn would relieve official discretion to minimum levels. Such an arrangement would bring confidence amongst the community members and would lead to desired competitive edge for our exporters with the improved financial liquidity position.

Training of the officials as well as that of users of the department is equally important. Procedural difficulties arise due to lack of knowledge on the part of the users and misapplication of regulations by the authorities. This gap can easily be bridged by strengthening the existing training institutes and preparing them for imparting good quality technical training. Such an arrangement would strengthen the member of the community to gain efficiency and innovation for achieving the creative ability to maximise their output and their exports. The training would create a better level of understanding of the intent of policy and emanating implementation problems, thereby, reducing the conflict between the policy makers, implementors and users. These steps would force, devising of an ideal situation between the system and users, where complications would be minimised and controllable through mutual understanding. To my mind the problem of simplification of procedures of duty drawback would require the following steps:

a) Review of the existing regulations and making them simple and workable after due consultations with the members of the trade; b) Introduction of ADP application, bringing in modernity and speed to the working and minimising the official discretion. c) Impartation of education of tax regulations amongst the exporters and the tax officials. d) Creation of legitimacy of the institutions by devising ways and means to formalise the consultative proceedings of the Export Collectorate by redrafting the existing regulations. e) The regulations should be easy to understand and workable so that users be able to fulfil their responsibility without hindrance, fear or favour.

I hope that if these tools are employed by the policy framers, the procedural difficulties would automatically vanish and new morning providing for ease and comfort to the users will dawn.
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Title Annotation:custom duties in Pakistan
Author:Ali, M. Anwar
Publication:Economic Review
Date:Nov 1, 1991
Words:1156
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