MULTAN: The Customs Collectorate has detected tax evasion of Rs6.833 million against M/s Ahmad Hassan Textile Mills on the misuse of DTRE.
According to details, Multan Customs has granted duty and tax remission to M/s Ahmad Hassan for export on 10/1/2015 under the rule -298 of DTRE under SRO.450 (I)/2001. Multan Customs has given DTRE approval to M/s Ahmad Hassan Textile Mills for twelve months for import and locally procure goods after manufacturing them.
M/s Ahmad Hassan Textile Mills imported 39,010 kilograms of cotton yarn worth Rs10.608 million for manufacturing of cotton grey fabrics under DTRE. During the scrutiny of DTRE record by audit team, DTRE user did not export a single kilogram of cotton grey fabric manufactured from imported cotton yarn. Customs teams found that M/s Ahmad Hassan Textile Mills have not imported any cotton grey fabric after manufacturing from imported cotton yarn under DTRE.
M/s Ahmad Hassan Textile Mills has also purchased locally 30 percent cotton yarn quantity from local market and used in the manufacturing of cotton grey fabric. But the DTRE user was failed to differentiate between export and locally purchased quantity on export document during audit.
Customs PCA found that M/s Ahmad Hassan Textile Mills tried to mislead the audit team and evaded Rs3.206 million from 39010 kilogram of imported cotton yarn. The DTRE user purchased cotton yarn of 114,624 kilogram of worth Rs28.076 million and M/s Ahmad Hassan Textile Mills has rejected quantity 24 358 of worth Rs.5.619 million of polyester cotton yarn and exported almost 24798 kilogram of worth Rs6.075 polyester cotton yarn.
M/s Ahmad Hassan Textile Mills has also obtained DTRE approval for purchase of packing material which includes paper tubes, polypropylene sheets, polyethene, paper cones, cartons, PP bags, cone washer, HD bags, 3 ply sheets, starch chemical and it involved tax Rs1.47 million. The cotton yarn was manufactured from local cotton and cotton is exempted from sales tax.
However, packing materials, used in the consignments are taxable. Therefore sales tax [ayable on purchase of packing materials is recoverable from DTRE user.
In this way Duties and Tax Remission for Export (DTRE) user contravened section 19& 219 of the Customs Act 1969 section 32(3A) of the Customs Act with DTRE rules 305,306,307A & 307 –E 10 (A) of DTRE rules envisaged under SRO 450 (I)/2001 punishable under clause I &10 (A) & 14 section 156 (i) of Customs Act 1969 section 3, 6 & 31 of the Sales Tax Act 1990 .
Therefore Multan Customs formed contravention report against M/s Ahmad Hassan Textile Mills Ltd for misuse of the DTRE of Rs6.833 million and forwarded the contravention report to Customs Adjudication for trial.
