Tuesday November 29, 2022

Customs probes illegal transfer of forex through iron, steel import

By Our Correspondent
April 10, 2021

KARACHI: Pakistan Customs has launched an investigation into illegal transfer of foreign exchange by importers of iron and steel goods under doctored invoices, sources said on Friday.

They said cases had been detected where importers had declared GDs and changed the original description and origin in order to reduce duty and tax liability.

A group of importers were found involved in this scam, sources said, adding that the authorities had finalised at least one case where an amount of $440,000 reportedly transferred from Pakistan unauthorised under the garb of import to the country.

The customs authorities stated that an importer had obtained dollars at the time of letter of credit for importing iron and steel.

The importer provided details in the LC of importing the lower grade goods from Europe. The same consignment was cleared with the same description and origin at the time of customs clearance.

However, an examination revealed a different story on the goods invoice. The goods were actually of high grade and were imported from Brazil, the source said.

Customs authorities said that the declared value of goods of European origin was $483,835. The value found on the invoice imported from Brazil was $813,287, showing a difference of $440,000. Therefore, “the difference of amount was transferred illegally from Pakistan to their foreign suppliers,” authorities added.

Following the discovery, officials began scrutinising other similar cases to identify the illegal transfer of foreign exchange from Pakistan and evasion of duty and taxes on the import of iron and steel.

It is important to note that iron and steel is one of the major sectors that enjoy a duty free regime on import.

According to the annual report of the Federal Board of Revenue (FBR) the duty free on imported goods valued Rs2.6 trillion in tax year 2020 as compared with Rs2.44 trillion in the preceding tax year.

Imported iron and steel valuing Rs232 billion were allowed duty free entry during tax year 2020 as compared with Rs65 billion in the preceding year.

Sources said that the iron and steel sector had been allowed certain concession and exemption in order to boost development and construction works in the country.