The Federal Board of Revenue’s Directorate of Customs Post-Clearance Audit South has recently uncovered a major fraud involving evasion of duties and taxes, amounting to Rs2.4 billion. This fraud is related to the misuse of various import exemption schemes under the Manufacturing Bond, Duty and Tax Remission for Exports (DTRE), and the Temporary Import and Export Facilitation Scheme.
Fraudulent Activities by Qazi Sanjrani Enterprises
The fraud was traced back to Qazi Sanjrani Enterprises, which had imported a large quantity of raw materials and packaging materials meant for cement manufacturing under the export exemption schemes. However, the investigation revealed that instead of using the materials for manufacturing and exporting, the company illegally sold them in the local market.
Fraud Details
| Fraudulent Activity | Details |
|---|---|
| Company Involved | Qazi Sanjrani Enterprises |
| Imported Materials | Raw and packaging materials for cement manufacturing |
| Scheme Abused | Manufacturing Bond, DTRE, Temporary Import and Export Facilitation Scheme |
| Amount of Fraud | Rs2.4 billion |
| Evasion Methods | Selling goods locally, not manufacturing or exporting |
Audit and Investigation Process
The Directorate of Customs Post-Clearance Audit South conducted an audit of the company, focusing on customs resource tax data. The audit revealed several irregularities during a physical inspection of the factory.
Investigation Findings
| Imported Goods | Quantity Imported | Quantity Found | Missing Goods |
|---|---|---|---|
| Clinker (for cement) | 463,334 metric tons | 62,000 metric tons | 396,000 metric tons |
| Value of Missing Goods | Rs3.3 billion | N/A | Rs3.3 billion |
Misuse of Export Exemption Schemes
The company fraudulently took advantage of various exemption schemes meant for exports but failed to fulfill the necessary conditions. It did not manufacture the goods or export them as required. Instead, it illegally sold the goods in the local market, evading duties and taxes.
Evasion Breakdown
| Scheme | Amount Evaded | Details |
|---|---|---|
| Manufacturing Bond | Rs369 million | Duty and tax evasion through manufacturing bonds |
| Temporary Import Facilities | Rs91 million | Evasion via temporary imports under SRO 492 |
| Export Facilitation Scheme | Rs1 billion | Misuse of export facilitation schemes |
| DTRE | Rs222 million | Evasion through the DTRE scheme |
| Illegal Sale of Goods | Rs676 million | Sale of imported goods in local market |
False Claims by the Company
Further investigations revealed that the company falsely claimed to have a reserve of 15,000 tons of clinker at the Gwadar Dry Port. However, this claim was proven false during the audit, and it became clear that the company had been misusing the exemption schemes for personal profit.
False Claims and Findings
| Claim Made by Company | Details | Outcome of Investigation |
|---|---|---|
| 15,000 tons clinker reserves | Claimed to have it at Gwadar Dry Port | Found to be false |
The Impact of the Fraud
This fraudulent activity, which has been ongoing since 2020, has caused significant loss to the national revenue. The Customs PCA has already registered a case against Qazi Sanjrani Enterprises. The department is now working to arrest the accused and bring them to justice.
Impact on National Revenue
| Fraud Type | Total Evasion | Consequences |
|---|---|---|
| Duties and Taxes Evasion | Rs2.4 billion | Loss to the national revenue and economy |
| Illegal Sale of Goods | Rs676 million | Unlawful sale of imported goods |
The Road Ahead
With the case registered, the Directorate of Customs PCA is now focused on apprehending the culprits involved in this large-scale fraud. The Customs PCA teams have been formed to track down the suspects, and efforts are ongoing to bring them to justice.
Legal Actions and Investigations
| Action Taken | Details |
|---|---|
| Case Registered | Against Qazi Sanjrani Enterprises |
| Investigation Teams Formed | To arrest the accused |
This investigation highlights the importance of regular audits and inspections to ensure that companies comply with the rules and regulations set by the Customs department. The case also emphasizes the need for more stringent measures to prevent tax evasion and fraudulent activities in the future.
