ISLAMABAD: Three dry ports have been found to have mis-declared imported goods, causing a loss of over Rs4 billion to the exchequer.

“This is just the tip of the iceberg,” a tax official told Dawn.

The quantum of tax evasion might eventually be found to be a few times higher, he added. The tax department has quietly transferred officials allegedly involved in the scam.

The FBR’s revenue collection, mainly customs duty, is likely to fall short of the target by over Rs200bn during the current financial year.

The tax official said the Customs Intelligence Directorate, Islamabad, has formed two committees to investigate the evasion of duty and taxes at dry ports of Peshawar, Sambrial and Sialkot, but it appeared that the FBR was trying to hide corruption and tax evasion at the Islamabad dry port.

Committees formed to probe scams at Peshawar, Sambrial and Sialkot

Two scams were detected involving clearance of imported liquor on nominal duty and waiving of taxes on auto parts import at the Islamabad dry port.

A case of de-stuffing (replacing imported goods with other items) was also detected at the Islamabad dry port, but it is yet to be investigated. There are also reports about clearance of auto parts under the garb of scrap.

A customs intelligence report submitted to the FBR has put duty and tax evasion on import of liquor at Rs410 million in three years. The value of imported liquor, including cost of freight and insurance, was declared at 92 cents.

The report was lying in the office of FBR chairman for several months for action, but nothing happened so far, the official said.

The only action taken was transfer of tax officers of the Islamabad dry port to other places, he said.

About the Peshawar dry port scam, the official said the initial inquiry report submitted to the FBR showed that goods were cleared at much lower rate of duty by declaring them as ‘miscellaneous’. The number of such containers is yet to be ascertained.

“The practice was going on for eight months,” the official said.

“The FBR quietly stopped clearance of 167 containers at the dry port,” he said, adding that a detailed investigation led to disclosure of massive tax evasion.

The case was detected in January this year, but the FBR transferred the officers in April.

The FBR was informed about abnormality in volume of containers at the Peshawar Dry Port in December last year, but no audit was carried out by the customs intelligence, Peshawar.

The Model Customs Collectorate, Peshawar, also remained silent. The preliminary report submitted to the FBR showed a loss of Rs2.2bn on clearance of goods at much lower duty and taxes at the Peshawar Dry Port.

Another scam was unearthed at the Sambrial Dry Port. The official said the preliminary estimate of duty and tax evasion was estimated at Rs800m. “A committee has been constituted to investigate the case.”

Published in Dawn, June 8th, 2014