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KARACHI: The Directorate of Post Clearance Audit (PCA) South has “exposed” a large-scale tax fraud worth millions of rupees against a Karachi-based textile unit. The company is accused of misusing three exemption licenses under manufacturing bond, DTRE, and EFS regimes.

According to the details, Sheeraz Ahmed, Director PCA on the instructions of Dr Zulfikar Ali Chaudhry, Director General of PCA, has investigated the allegations of misusing export facilitation regime by the accused textile company.

Initial scrutiny of customs, sales tax, and income tax data revealed significant discrepancies, leading to a physical inspection of the factory premises on July 2, 2024.

The inspection confirmed the illegal removal of 494 metric tons of Polyester DTY/ FDY Yarn, valued at Rs 187 million. This yarn was imported through 21 EFS Goods Declarations (GDs), 7 Manufacturing Bond (MB) GDs, and 1 DTRE GD. The unlawful removal resulted in an evasion of duty and taxes amounting to Rs 125 million.

The accused importer initially claimed the missing goods were with vendors in Faisalabad and Lahore. However, he failed to provide any supporting evidence when given the opportunity, raising suspicions of local market sales of exempt goods.

The audit team’s factory visit revealed a glaring mismatch between the installed machinery and the exported goods. While only yarn-texturing machines were found on-site, many out of service, the company had reportedly exported finished items like garments, suits, fabrics, and various household items under DTRE, MB, and EFS regimes.

On June 4, 2023, PCA South filed an FIR for fiscal fraud under Section 32A against the accused proprietor and her husband. The investigation has also expanded to probe potential money laundering activities due to the inconsistency between the volume of yarn imports and the importer’s financial standing, official sources said.

The accused are currently at large, with two PCA teams deployed to track their whereabouts. All sea and land customs export collectorates have been alerted to prevent any flying exports through misdeclaration by the accused textile unit, they informed.

As this investigation unfolds, it serves as a stark reminder of the need for stringent oversight and accountability in the country’s export sector to maintain economic integrity and ensure compliance with trade regulations along with level playing field to the genuine exporters.

Copyright Business Recorder, 2024

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