The Directorate General of Post-Clearance Audit (PCA), Federal Board of Revenue (FBR), has deleted a tax fraud case tax fraud case, which shows involvement of appraisement staff of Model Customs Collectorate (MCC) Pakistan Customs Computerised Clearance System (PaCCS) Karachi and a Karachi-based contractor who wrongly obtained exemption of customs duty and sales tax on import of seamless steel pipes/tubes, causing massive loss to the national kitty.

Sources told Business Recorder here on Saturday that the directorate has made audit observations against the contractor for short realisation of duty and taxes on import of seamless steel pipes/tubes.

Details of the case showed that to check the application of customs value determined by the Director General of Customs Valuation Karachi, vide Valuation Ruling N.s.No 25-A-29 dated May, 21, 2007, the Directorate General conducted audit of Pakistan Customs Computerised Clearance System (PaCCS) data of import clearances of 'seamless steel pipes/tubes', classified under HS Code 7304.

It was observed that an Engineering and Contractors (Private) Limited firm of North Nazimabad, Karachi got assessed and cleared their goods under the aforesaid H.S Code at the lower customs value than the value determined by the Director General of Customs Valuation, Karachi under Section 25A of the customs Act, 1969.

Therefore, an audit observation was issued to the importers advising therein to deposit the short paid amount of duty and taxes, in terms of Para 1(iii) (c) of CGO 03 of 2009, dated 13.06.2009.

The importers responded that they had imported 'Ductile Cast iron pipes' which are correctly classifiable under H.S Code 7303.0000 and not seamless steel pipes or iron steel pipes (H.S Code 7304).

They also provided copies of import documents.

According to the report of the Directorate General of PCA, the reply of importers was examined in the light of the documents provided by the importers.

It emerged that valuation ruling No 25-A-29 dated 21.05.2007 was not applicable to their imported goods, but exemption of customs duty and sales tax under SRO.575(I)/2006 dated 05.06.2006 was claimed and extended unlawfully, which caused huge loss of revenue to the national exchequer.

Accordingly, a revised Audit observation was issued to the importers wherein they were intimated that they had wrongly got cleared/assessed their imported goods ie Ductile Cast Iron Pipes, under PCT 7308.0000, and also availed exemption of customs duty and sales tax against serial No 6 of the SRO.575 (I)/2006 dated 05.06.2006 unlawfully by treating their goods as machinery and equipment.

The importers' reply to the revised audit observation was examined and it was found unsatisfactory.

It is evident that the importers with the active connivance of appraisement staff of MCC, PaCCS.

Customs House, Karachi knowingly and deliberately got assessed/cleared their imported goods ie Ductile Cast Iron Pipes and fittings classifiable under PCT heading 7303.0000 against PCT heading 7304.3900 at the lower rate of customs duty along with inadmissible benefit of serial No 1(J) and 6 of SRO.575(I)/2006 dated 5.06.2006, despite the fact that the impugned goods do not fall within the ambit of machinery and equipment; and even freight charges were also not included in the customs value for assessment of duty and taxes, sources said.

It is, thus, clearly established that the said Engineering & Contractors (Pvt) Ltd, Karachi wilfully, intentionally and knowingly evaded duty and taxes to the tune of Rs 23,335,392 (Customs Duty Rs 10417619 sales tax Rs 11531519 and income tax Rs 1316948 Federal Excise Duty Rs 69306).

Since the case falls within the administrative jurisdiction of MCC PaCCS, Karachi, a contravention report alongwith relevant documents has accordingly been forwarded to them for initiation of adjudication proceedings under the relevant provisions of the law.

Further progress in the matter shall be intimated to the Board in due course, the Directorate General of PCA added.

Copyright Business Recorder, 2012

Share

Add comment

Name (required)

E-mail (required, but will not display)

Website

Notify me of follow-up comments

Refresh

Send

Cancel

JComments