ISLAMABAD: In a landmark and unprecedented enforcement action against illicit tobacco trade, the Federal Board of Revenue (FBR), through the Regional Tax Office (RTO) Peshawar, has seized a massive quantity of non-duty-paid unmanufactured tobacco in District Mardan, preventing a potential revenue loss of around Rs 19 billion to the national exchequer.
Following the directions of the prime minister and in strict compliance with FBR’s enforcement plan, the Regional Tax Office (RTO) Peshawar carried out a successful enforcement operation in District Mardan, resulting in the seizure of approximately 2.75 million kilograms of unmanufactured tobacco from the godowns of M/s Khyber Tobacco Company, said a news release.
The recovered tobacco, which constitutes the basic raw material for cigarette manufacturing, was found to be non-duty paid. The estimated evaded Federal Excise Duty on the seized goods amounts to approximately Rs. 1.1 billion. M/s Khyber Tobacco Company is a known manufacturer of cigarette brands, including Kissan and Gold Street Classic.
After completion of all codal formalities and obtaining the necessary approvals, the godowns of M/s Khyber Tobacco Company were sealed on 12th December, 2025 by officers of RTO Peshawar.
The operation was executed by Assistant Commissioner Inland Revenue Shehroz Rashid Ahmad Khan, under the supervision of the Chief Commissioner Inland Revenue, RTO Peshawar.
Further proceedings under sections 21, 22, 19(3), 19(10), and 27 of the Federal Excise Act, 2005, relating to sealing and confiscation of machinery used in the production of non-duty-paid unmanufactured tobacco and cigarettes, are currently underway.
Preliminary assessment indicates that, had this quantity of unmanufactured tobacco not been seized in time and subsequently converted into cigarettes, it could have resulted in evasion of duties and taxes amounting to approximately Rs. 19 billion, causing a massive loss to the national exchequer.
This recovery has therefore prevented significant revenue leakage and disrupted a major potential source of illicit cigarette production.
Pakistan continues to face the serious challenge of illicit trade and unlawful activities in the tobacco sector, which adversely affect the national economy and result in substantial loss of public revenue, it added.
The unchecked movement, storage, and use of non-duty-paid unmanufactured tobacco, being the primary raw material for cigarette manufacturing, poses a grave risk as it directly facilitates large-scale evasion of Federal Excise Duty and other applicable taxes.
Recognizing the gravity of this issue and its far-reaching economic implications, the prime minister has issued clear and categorical directions to decisively curb illicit practices in the tobacco and cigarette sector and to ensure strict enforcement of tax laws across the entire supply chain, including raw materials.
In pursuance of these directions, the Federal Board of Revenue (FBR) has implemented a comprehensive and multi-layered enforcement strategy aimed at eliminating non-duty-paid cigarette production, strengthening intelligence-based monitoring, and disrupting illegal manufacturing and supply networks.
This national initiative is being supported by relevant stakeholders and law-enforcement agencies to reinforce enforcement actions and safeguard government revenue.
It is also pertinent to mention that only a week prior, RTO Peshawar seized undeclared cigarette manufacturing machinery belonging to M/s Universal Tobacco Company during another enforcement operation. The owners of both entities are reportedly related and possess political influence in the area.
Despite immense and undue pressure, the Chief Commissioner Inland Revenue, RTO Peshawar, along with his enforcement team, carried out these actions strictly in accordance with the law and without yielding to any external influence.
These enforcement actions underscore FBR’s unwavering commitment to uphold the rule of law, ensure tax compliance, protect legitimate industry, and safeguard public revenue, irrespective of the status or influence of those involved.
