KARACHI: Collector of Customs Adjudication-I Muhammad Asif Marghoob Siddiqui has issued Order-in-Original (ONO) against M/s Master Beverages and Foods Limited for allegedly evading customs duty and taxes to the tune of Rs 25.8 million.
According to official sources, the Directorate General of Post Clearance Audit (PCA) vide contravention report found M/s Master Beverages ‘willfully and knowingly’ claimed the inadmissible and illegal benefit of the fifth schedule to the Customs Act 1969 and paying the customs duty at the five percent reduced rate instead of actually payable customs duty at the statutory rate of 20 percent.
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It had imported two consignments of “4961.24 M2 Steel Workshop as Prefabricated Building for Dairy Form” classifiable under PCT Heading 9406.0020 and cleared the same from Customs Appraisement West through clearing agent M/s Cavish Associates (Private) Limited.
The goods are declared as prefabricated building for dairy farm to avail concessionary rate of customs duty whereas on-line NTN verification available on the on FBR’s website shows that the business activity of the importer is manufacture of soft drinks, production of mineral water and bottled waters’ which obviously has not connection the dairy industry. Therefore, the conditions specified in column (5) of the table given in the 5th schedule are not met.
M/s Master Beverages evaded an amount of Rs Rs 25.8 million Customs Duty Rs 20.29 million, Sales Tax Rs 3.44 million and Income Tax Rs 2.13 million).
The importer has thus contravened the provisions of Section 32(1), (2), (3A) of the Customs Act 1969, Section 3, 6, & 7 read with Section 34 of the Sales Tax 1990 and Section 148 of Income Tax Ordinance 2001 punishable under clauses (1), and 14 of Section 156(1) of the Customs Act 1969, Section 33(5), of the Sales Tax Act, 1990 and Section 148 and 182 of Income Tax Ordinance.
Subsequently, the firm was given a show-cause notice and opportunity to defend its case. Its counsel vehemently denied the charges leveled against it.
Muhammad Asif Marghoob Siddiqui observed that after going through the whole record and reply/arguments of all sides as also reproduced above, I have come to the conclusion that the respondent importer have failed to establish that benefit of 5th Schedule to the Customs Act, 1969 was available to them as the principal activity of the importer is “manufacture of soft drinks, production of mineral water and bottled waters” which has not link with the dairy industry.
The case making agency has been successfully able to prove its case that the government revenue to the tune of Rs 25.8 million under the head of customs duty, sales tax and income tax has been evaded by the importer.
The importer is therefore ordered to deposit the evaded government revenue as mentioned in the national exchequer immediately. A penalty of Rs 2,000,000 is also imposed on the importer under relevant provision of law as mentioned in the show-cause notice.
A penalty of Rs 500,000 is also imposed on clearing agent i.e M/s Cavish Assosciates (Private) Limited, Karachi.
