KARACHI: The Post Clearance Audit (PCA) South has unveiled a colossal fiscal fraud and Export Facilitation Scheme (EFS) scam amounting to Rs 551 million, allegedly perpetrated by a prominent textile unit. The investigation, which commenced in July 2024, has led to the arrest of the company’s sole proprietor.
Under the directive of Dr Zulfikar Ali Chaudhry, Director General of PCA, Sheeraz Ahmed, Director PCA South, spearheaded the investigation into suspected misuse of export facilitation regimes. Initial scrutiny of financial records uncovered significant discrepancies, necessitating physical inspections of the factory premises on July 10 and 23, 2024.
The audit team’s findings revealed a complex web of fraudulent practices:
Illicit removal of 163 MT of export-designated yarn, violating EFS Rules and evading Rs 55 million in taxes and surcharges.
Exploitation of “manufacturing status” for undue tax benefits, resulting in Rs 338 million evasion.
Engagement in smuggled goods trade, leading to Rs 158 million tax evasion.
Substantial discrepancies between installed machinery and exported goods, casting doubt on export authenticity.
Deliberate over-invoicing, inflating import and export values by Rs 173 million.
Further investigation exposed the accused company’s lack of essential manufacturing facilities, despite claims of exporting finished fabrics. This inconsistency suggests the potential procurement of goods from unregistered local markets to fabricate compliance with EFS regimes.
The PCA has also initiated a separate inquiry into possible money laundering activities, prompted by the disproportionate volume of yarn imports relative to the company’s financial capacity.
On August 8, 2024, the PCA South filed an FIR against the company under Section 32A of the Customs Act.
Copyright Business Recorder, 2024