The Directorate General Intelligence and Investigation (I&I) Inland Revenue (IR), Federal Board of Revenue (FBR), has detected an unregistered cigarette manufacturing factory in small mountain valley of district Buner, Khyber Pakhtunkhawa (KP), using machines of a Karachi-based multinational cigarette manufacturing company.
A senior FBR official told Business Recorder here on Thursday that the directorate of intelligence IR is investigating the case from different angles. Firstly, cigarette manufacturing unit in Buner has not obtained Federal Excise registration and is thus involved in the evasion of Federal Excise Duty (FED). Secondly, how the machines of a multinational company have been purchased by someone in village Chingley, district Buner, for running unregistered cigarette manufacturing unit in the said area? The Karachi regional directorate of I&I IR would inquire whether the company has duly informed the tax department/Large Taxpayer Unit Karachi about selling and transfer of the cigarette making machines to some individual in village Chingley, Buner. Thirdly, the directorate would also check whether or not the machines have been shifted or sold to someone after fulfilment of all legal formalities and rules and regulations with the Large Taxpayer Unit Karachi.
The official said when the raid was conducted at the unregistered cigarette manufacturing unit in Buner, the holder of manufacturing premises threatened the officers of the Directorate General Intelligence and Investigation (I&I) Inland Revenue (IR) Peshawar of dire consequences. However, the credit goes to the raiding team which smoothly carried out the task without any fear. Detailed investigation of the case is under way.
Official documents including photographs of machines available with Business Recorder revealed that Additional Director I&I IR Peshawar, Muhammad Ayaz has submitted an incident report to the director general I&I IR Islamabad regarding raid at the unregistered cigarette manufacturing unit running in village Chingley, Buner.
The incident report said whereas initial investigation conducted by the Directorate of Intelligence and Investigation-IR revealed that a cigarette manufacturing unit is running under the supervision/ control of Waheed Khan at the said address without getting Federal Excise registration and, thus, the unit is involved in the evasion of Federal Excise Duty. In order to probe into the matter, a team consisting of the following members along with support staff was deputed to take necessary legal action under the Federal Excise Act, 2005 and seize/confiscate the goods manufactured in violation of the relevant provisions of the Federal Excise Act, 2005, besides action under rule 29 of the Federal Excise Rule, 2005: Sarzamin Khan, (Audit Officer Inland Revenue); Saifur Rehman, (Audit Officer Inland Revenue); and Muhammad Tufail, (Inspector Inland Revenue).
The team raided the manufacturing premises, but the said manufacturing facility was found closed. A man was found having alighted fire in far-off corner of the closed premises but despite repeated calls and shouts he gave no response to open the main gate. No other person in or around the factory premises was found. The team returned back and decided to visit the premises under Section 25/26 read with Rule 62/63 of the Federal Excise Act, 2005 again on Saturday (10th December 2016) and reported the following:
The said factory was found opened, four cigarette making machines and one each packing, wrapping and bundling machine were found being installed or were under the process of installation. The examination of these machines reveals that the machines have been purchased from M/s Philip Morris (Pakistan) Ltd, the report said.
The report said that search of the manufacturing premises revealed that one making machine was run on trial basis but was found non-operational on the visit day. Some residuals of trial production were found but no raw material or finished stock either of tobacco or cigarette material was found meaning thereby that machinery was not fully installed and was probably under the process of installation. Since no stock or manufactured goods were found, therefore, the machines were not seized, it said.
The owner Waheed Khan was interviewed who was even unaware of the name of their factory and the brands of cigarettes to be manufactured, which leads to their hidden motives of acting like a facilitator for concealed manufacturing for other local cigarette manufacturers, the report maintained.
It is, therefore, requested that the chief commissioner Inland Revenue (IR), Regional Tax Office (RTO), Peshawar may be approached to post staff of RTO, Peshawar u/s 45(2) of the Federal Excise Act, 2005 so that the manufacturer may be registered under relevant Federal Excise Rules and any loss of revenue to national exchequer may be thwarted.
The owner was strictly directed to visit I&I-IR, Peshawar so that the process of their registration could be ensured and relevant documents could be forwarded to RTO Peshawar for submission to CRO.
Incident report has been submitted to the FBR for information along with videos and photographs of the manufacturing halls and factory premises. Further progress shall be communicated within due course of time, incident report of the additional director I&I IR Peshawar added.
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