Smuggled vehicles confiscated by the Customs Department, a subsidiary under the Federal Board of Revenue (FBR), are being auctioned at prices below the reserve price established for the auctions.

The startling revelation prompted the FBR to take notice of the auction of seized vehicles at less than the reserve price, despite objections raised in audits by the Directorate of Revenue Receipt Audit (DRRA) over the course of several years.

A document obtained by the Express Tribune shows that the Legal and Accounting Customs Wing of the FBR has written to the FBR, highlighting the persistent issue of auctioning smuggled vehicles below the reserve price. The problem is also evident in investigations and inquiries into several cases of such auctions.

Furthermore, the DRRA has been raising audit objections on this issue for years, yet it remains unresolved, causing persistent problems.

According to Customs General Order No 12 issued on June 15, 2002, for the auction of confiscated smuggled vehicles, auctions should start at the reserve price or higher bid. If bids in the first and second auctions don’t meet the reserve price, the concerned Deputy Collector and Assistant Collector may suggest reducing the reserve price based on the vehicle’s condition.

Despite this, Customs Field Formations argue that they accept the highest bid in auctions of seized vehicles under Customs Auction Rules issued on June 18, 2001, claiming they are not violating any rules.

However, the issue persists due to contradictions between Customs Rules and Customs General Order No 12. Field formations intentionally set reserve prices much higher than the market value to meet revenue targets, a move conflicting with relevant Customs General Order No 12.

In a communication to the FBR, the Customs Wing suggested amending Customs General Order No 12 to avoid auctioning confiscated smuggled vehicles below the minimum reserve price, preventing future audit issues and objections.

Published in The Express Tribune, May 4^th, 2024.

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