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KARACHI: The Collectorate of Customs, Adjudication II, Karachi has uncovered a massive Rs 233 million scam involving a textile unit based in Karachi.

According to the details, the adjudication collectorate has imposed a hefty penalty of Rs 100 million and surcharges, bringing the total recoverable amount to a staggering Rs 333 million.

The order, passed by Collector Adjudication Abid Hakro, marks a robust response to severe irregularities detected in import operations under the Export Facilitation Scheme (EFS). The Post Clearance Audit (PCA) South had initially lodged an FIR after detecting discrepancies in the textile unit’s operations.

Textile unit commits Rs1.4bn tax ‘fraud’ by ‘misusing’ EFS

Investigations revealed alarming signs of operational dysfunction at the textile manufacturing site, which was found to be closed for an extended period. This closure was further corroborated by nil utility bills and the absence of labor employment, as verified from tax returns and cross-checks with KESC, EOBI, and SESSI departments.

Alarmingly, the importer was found to be exploiting its “manufacturing status” to claim benefits of concessionary rates of duty and taxes, a misuse that pointed to a larger issue of governance within the sector. During physical verification, the exempt fabrics imported under the EFS scheme, which were supposed to be manufactured and exported, were nowhere to be found, hinting at a deliberate attempt to defraud the national exchequer.

After providing the textile unit ample opportunity for defense, Collector Abid Hakro’s order has thrust the company into the limelight, subjecting it to strenuous recovery proceedings for the realization of the hefty amounts of taxes, surcharges, and penalties.

This case served as a significant deterrent against the misuse of EFS schemes and the fraudulent misuse of manufacturing status by entities seeking to gain unlawful fiscal advantages. The decisive action taken by the PCA South highlights the authorities’ stringent stance on ensuring compliance and fostering a fair and transparent trading environment.

Copyright Business Recorder, 2024

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Ch K A Nye Apr 20, 2024 10:08am
No names as usual.
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