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ISLAMABAD: The Federal Board of Revenue (FBR) has busted counterfeit cigarette cartel of different companies, which has caused revenue loss to the tune of billions and putting documented industry at disadvantageous position.

Sources told Business Recorder here on Tuesday that the FBR has unearthed tax evasion of Rs 15.4 million by seizing 730 cartons of 7.3 million illicit cigarette sticks from two loaded trucks on a tip of information.

According to the official documents, the consignment was destined from Muzafarabad to Rawalpindi without payment of duties and taxes in violation of the rules and regulations, evading cumulative taxes of Rs 15.395 million, the document said.

A surveillance squad of the FBR's Directorate General of Intelligence and Investigation said that they took two trucks in custody with the help of the local Khyber Pakhtunkhwa police in Abbottabad and on search recovered the illicit cigarettes of More One brand manufactured by Wayward Tobacco Company Limited.

The FBR has seized the non-duty paid cigarettes along with the vehicles under section 26 of the Federal Excise Act 2005 and were moved to the main office for further necessary action under the law, it said.

Moreover, the documents revealed that an illegal manufacturing unit, established in Buner was involved in the infringement of different trademarks and copyrights. The company is neither registered with the Securities and Exchange Commission of Pakistan nor the FBR.

It has also not declared its machinery used for the manufacturing of cigarettes, which is mandatory under Federal Excise Act and corresponding rules. Similarly, they have also not registered a single brand on their name rather they are using well established brands of other tobacco companies to damage their goodwill that is created after investing millions of rupees by these legitimate tobacco companies, the documents said.

The Buner company in the past had remained sealed by the FBR on account of manufacturing counterfeit cigarettes, and it is still facing charges of trademark violations in lower courts in Buner. In addition, the Dar ul Qaza had prohibited Summer Tobacco from manufacturing illicit cigarettes but they continued to do so in clear violation of the court's order.

Instead of getting registered and paying legal taxes, they continued illegal production of cigarettes under brands namely More One (which is passing off Morven brand).

The relevant stakeholders have requested the FBR to seal premises of the company and confiscate its machinery at the earliest, in order to avoid any further damage, both monetary and goodwill, to the registered brands of legitimate cigarette manufacturers and to protect the revenues of the national exchequer collected by FBR in lieu of different taxes levied on the production of cigarettes in the best public interest.

In addition, the FBR documents revealed that three companies are in collusion as regards manufacturing and illegal removal of one brand of cigarettes without payment of duties and taxes.

In its report to the FBR, Directorate of Intelligence and Investigation alleged that two local companies of KPK colluded with the Wayward Tobacco Company Muzaffarabad.

It is worth mentioning here that illicit cigarette manufacturing causes a loss to the tune of billions every year and the FBR is always on the move, especially in KP, to find out such factories. In this regard RTO Peshawar has been very effective in disrupting this illicit cartel.

Copyright Business Recorder, 2020