LAHORE: A Customs court has ordered recovery of Rs63 million in evaded import taxes from three importers of toys from Lahore and Mailsi. It has also imposed a penalty of Rs1.5m on the three companies, according to documents available with Dawn.

Customs authorities at Port Qasim had instituted the case against the importers for incorrectly declaring finished goods (toys) as “parts” at the time of shipment clearance to escape application of valuation rulings and get benefits of lower duty and tax rates.

Sources in Customs alleged that these importers — Boss Enterprises, Lucky Traders of Lahore and Zing Enterprises of Mailsi — were frequently incorrectly declaring the description of toys in the past to evade payment of actual taxes on their imports.

Customs officials said that the companies involved in misdeclaration of toy cars and tricycles in SKD condition had paid five per cent import duty against the actual duty of 35pc on finished products.

“Goods were declared as ‘parts’ under the Pakistan Customs Tariff (PCT) heading 9503.0040 (parts of toys) attracting Customs duty of five per cent by removing certain parts from the complete unit to deceive the authorities. CBU toys under PCT 9503.0010 attract Customs duty of 20pc and regulatory duty at the rate of 15pc,” the officials said.

They say many importers have formed multiple companies for the purpose of tax evasion on imported goods. “Majority of these firms are ghost companies registered against addresses that do not exist, which makes it impossible to proceed legally against them.”

The officials said toy importers often incorrectly declared their shipments for tax evasion and many of them, including Xing Enterprises, had been penalised.

Tax evasion in Customs duty had caused a loss of more than Rs78 billion to the national exchequer during the last fiscal year, according to an Auditor General of Pakistan’s report.

The authorities have issued instructions to all Customs offices across the country to improve vigilance at the time of clearance of suspected items and warned its examining and assessment staff that if any further misdeclaration is reported they will be held responsible for the losses and punished under the government servant rules.

The Customs authorities are also screening other consumer products, such as mobile phones and electronics to verify their compliance with the tax laws.

Published in Dawn, October 29th, 2018

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