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FBR discovers three importers involved in Rs750m tax fraud

By Mehtab Haider
December 14, 2019

ISLAMABAD: The FBR’s Directorate of Intelligence & Investigation Customs Karachi Regional Office found three importers allegedly involved in fraudulent clearance of mis-declared imported consignments for evading taxes of Rs750 million.

According to special report sent out to Chairman FBR on Friday revealed that acting upon a credible information regarding misuse of customs duty concessionary regime by certain importers, the Directorate Intelligence & Investigation Customs Karachi Regional Office retrieved import data of a Karachi-based company and Hyderabad based companies.

The scrutiny of the data reveals that these importers are involved in misuse of the customs duty concession notified vide SRO 655(1)/2006 dated 22.06.2006, for importer-cum-manufactures of components and assemblies for different vehicles (1% concessionary duty as against the statutory rate of 20%), subject to fulfillment of the specified conditions, through mis-declaration of description, size and grade of the imported raw materials.

The official special report further stated that the mechanism adopted in this fraudulent activity was submission of commercial invoice with one description and filing of GD (Goods of Declaration) with another description. Customs examination of these consignments was also not carried out in GDs cleared through green & yellow channels.

The Engineering Development Board (EDB) had, under provisions of the SRO, allowed quota for concessionary import of electro-galvanized steel sheet in coils whereas the actual import, as per invoice, was hot-dipped galvanized sheet in coils.

Similarly, the EDB allowed quota for concessionary import of prime quality steel sheets, and with particular thickness, but actual import was of secondary quality goods (without mill test certification specifying any grade) and of different thickness. The extent of evasion of duty & taxes through this fraud is about Rs750 million.

Another disturbing aspect that has emerged during the investigation is that these import cum manufacturers after availing the benefit of SRO 655(1)12006, sold the goods in the markets as commercial importers without any manufacturing. Ninety six coils of two companies had already been seized by the Regional Office and two FlRs have been registered against them when that imported goods were lying in the private warehouse of transport companies.

Recently, 26 more FIRs have been lodged against three importers for this fraud and evasion of Rs705.290 million. The role of associates in the crime including clearing agents, customs and EDB staff is also being determined.