MCC establishes Rs 33.94 million tax evasion by paint company

Model Customs Collectorate (MCC), Appraisement (East), has established tax evasion of Rs 33.94 million by one of the leading paint companies and its clearing agent, it was learnt on Monday. According to sources, the said paint company imported 34 consignments of "WANNATE 8019" from China and filed Goods Declarations (GDs) under PCT Heading 3909.5000 for clearance.
The company declared the value of consignments at US $159.93 million through its authorised clearing agent and determined and paid tax liability amounting to Rs 9.491 million under Section 79(1) of the Customs Act, 1969. The sources said that the company had also availed duty and tax relief against FTA certificate in terms of SRO-659(I)/2007 and SRO-1125(I)/2011. The consignments were released as per importers' declaration on payment of customs duty @ zero percent, sales tax @ 2 percent, additional sales tax @ 2 percent and income tax @ 3 percent.
Following a credible information regarding tax evasion, the Research and Development (R&D) team thoroughly scrutinised relevant record of the consignments in both WeBOC and PaCCS systems which revealed that the importer had succeeded in getting clearance of the impugned goods by mis-declaring description of the consignments.
It has been confirmed that the impugned item was a component of Polyurethane rather than Polyurethane as mis-declared by the importer. Therefore, it did not qualify for tax benefit under SRO 1125(1)/2011, which was restricted to import of "Polyurethane" only but not its components. Besides, the importer was also not entitled for customs duty exemption under SRO-659(l)/2007. Thus, the impugned goods were chargeable to customs duty @ 5 percent, sales tax @ 17 percent, additional sates tax @ 3 percent and relevant income tax.
The sources said that there was no dispute of classification of the impugned goods, which required consideration by the Classification Committee. However, in pursuance of the company's request, the issue was formally referred to the Classification Committee for lawful decision on merit. After having detailed deliberations, the Chairperson Classification Committee also clarified that the impugned goods were rightly classifiable under PCT Heading 3824.9091 and did not qualify for the tax benefit.
Therefore, it is established that the company through its clearing agent caused a colossal revenue loss of Rs 33.940 million to the national kitty in terms of mis-declaration of the consignments and undue tax benefit, which is a punishable act as per Customs Act, 1969.