Directorate General Intelligence and Investigation - Customs, Karachi has made a "historic" tax recovery of Rs 221.7 million from Oil & Gas Development Company Ltd (OGDCL).

The department received information that OGDCL had claimed "undue" tax exemption under SRO 678(I)/2004 on the import of a consignment of 4" to 8" seamless pipeline (SCH-80) external three layer polyethylene (NACE) (3LPE). Reacting to it, the DGI&I detained the consignment after being assigned to gate out at MCC, East, Karachi.

The OGDCL imported seamless pipeline from China and got it cleared under HS code 7304.1900, claiming tax exemption under serial no 1 of SRO 678(I)/2004.

The goods declaration (GD) was assessed and cleared by the Collectorate under claimed exemption on customs duty @ 5 percent and additional customs duty @4 percent total amounting to Rs 71.77 million against total assessed value of Rs 797.538 million. Scrutiny of the GD revealed that the exemption was "wrongly" claimed as it was not admissible on the goods being locally manufactured.

Later, the representatives from OGDCL when confronted with CGO 02/2017 "admitted" the position and submitted pay orders amounting to Rs 221.715 million against the differential duty and taxes.

Consequently, it is established that OGDCL had wrongly claimed exemption under serial no 1 of SRO 678(I)/2004, which resulted into a loss of government revenue to the tune of Rs 221.715 million - customs duty Rs 39.87 million, sales tax Rs 154.562 million and additional sales tax Rs 27.275 million.

Furthermore, sources said that pay orders were sent to the concerned Collectorate for deposit the same in the government kitty after reassessment of the GD and added that consignment would be de-blocked, shortly. Moreover, sources said that the role of customs officials was also being ascertained in the matter.