KARACHI: Directorate General of Intelligence and Investigation (DGI&I)-Inland Revenue (IR), Karachi has detected grave inconsistencies in import of gold worth more than Rs 9 billion under Entrustment Scheme through the past two years.
According to sources, DGI&I (IR) has inquired into alleged abuse of the Entrustment Scheme by gold exporters where bulk quantity of gold/jewellery was imported without fulfilling gold import conditions required vide SRO 266 (I)/2001 issued by Commerce Ministry on May 07, 2001.
Sources said that the objective of the mentioned SRO was to broaden the base of Pakistani exports and provide opportunity to Pakistani artisans to sell jewellery abroad. However, the scheme allowing 80 percent of the value of jewellery set against duty-free import of gold within eight months was being misused with no benefit to the country.
In this regard a ban of 30 days, which has now been extended to four months, was imposed on gold imports, due to serious apprehensions. They said that the ban was imposed by Economic Coordination Council following reports that the schemes for duty-free import of gold namely, ‘Entrustment’ and ‘Self Consignment,’ were being misused by some dishonest elements as the duty-free gold was being smuggled to neighbouring country.
Reacting to it, the DGI&I (IR) analysed the records of gold imports for the period July 2011 to June 2013, which revealed that huge amounts of gold/jewellery were imported without paying normal import tariffs and duties under the said SRO. The export data has depicted a different picture, showing that no gold export had been made during the same period.
Sources said that DGI&I (IR) had so far detected two cases where importers had availed of the benefits of Entrustment Scheme but failed to contribute to the national exchequer. They said two importers had separately imported gold worth Rs 4.015 billion and Rs 5.249 billion, respectively during July 2011 to June 2013, and added that both importers had violated the said SRO as they failed to export single value-added gold product, which was required under the SRO.
They said that these importers were liable to pay leviable duty and taxes on the imported gold along with penalty at five percent of leviable duty and taxes for first month and 10 percent for subsequent months. They said that DGI&I (IR) was presently working on identifying the source of investment and possible sale of the commodity in the local market. It is hoped that the directorate would unearth more similar cases, soon.
