ISLAMABAD: The Collectorate of Customs (Enforcement), Karachi has uncovered an alleged large-scale misuse of the Export Facilitation Scheme (EFS) by importers, prompting the launch of an inquiry against senior customs officials, including an Additional Collector, a Deputy Collector, and appraising and scanning staff of the Collectorate of Customs (Appraisement-West), Karachi
According to a letter of the Collector of Customs, Collectorate of Customs (Enforcement), Karachi to the Federal Board of Revenue (FBR), an incident report regarding misuse of EFS has been compiled, indicating the possible role of concerned officials.
Details of the issue revealed that the consignments were declared to contain scrap items, including compressor scrap, aluminum condenser scrap, iron and steel remeltable scrap, and recoverable copper.
However, on the basis of credible information regarding mis-declaration of description, evasion of duty and taxes, and attempted clearance of banned goods under the garb of the EFS facility, the said consignments were blocked at the terminal, namely AICT. All four consignments had already been cleared by the Collectorate of Customs (Appraisement-West), Karachi and were at the gate-out stage.
The consignments were subsequently de-sealed and physically examined. During examination, the cargo was found to primarily comprise slightly used/almost new window air conditioners, portable air conditioners, and dehumidifiers of Midea brand and Thailand origin, along with a small quantity of compressor scrap, instead of the declared scrap items.
The Export Facilitation Scheme (EFS) is a government initiative aimed at promoting exports by allowing manufacturers and exporters to import raw materials, components and other industrial inputs without paying customs duties and taxes upfront, provided the imported goods are used to produce items for export.
The scheme is intended to lower production costs and improve the competitiveness of Pakistani exports. However, because it offers tax and duty exemptions, customs officials say it can be vulnerable to abuse if importers falsely declare goods or attempt to bring in restricted or commercial items under the cover of the scheme to evade taxes or bypass import restrictions.
According to the inquiry, the importer first requested permission to have the cargo inspected before formally filing the customs goods declaration (GD), a procedure allowed under the Customs Act.
After the declarations were submitted, the customs computer system placed all four consignments in the “Yellow Channel,” meaning they were flagged for document verification and could be selected for physical inspection if officials considered it necessary. All four consignments were also scanned before being moved between ports, and those scan images remain available in the customs system.
The inquiry found that two of the four consignments were cleared directly by assessment officers without any request for a physical examination. In the other two cases, the assessment officer did ask for the cargo to be physically inspected. However, senior customs officials rejected both requests, saying the importer had a long record of previous imports and that no sufficient reason had been provided for ordering an inspection. They instructed the officer to rely on the available scan images and documents unless stronger grounds for an examination could be established.
The record states; “Industrial profile with 587 GDs. No valid reason has been recorded while calling examination. Please check scanned documents and, if examination is still required uired, resend the request with proper reasons.”
It is pertinent to mention that the scanned images were available in the system to the concerned Deputy Collector (DC) and Assessment Officers and clearly appeared to indicate that the goods did not correspond with the declared descriptions.
Subsequently, all four GDs were processed and assigned for the gate-out role after completion of the assessment process. The detailed examination report shall be communicated upon finalization.
It is also relevant to note that these were the first EFS consignments of the said importer brought to the AICT terminal through Port Muhammad Bin Qasim (PMBQ). Previously, the importer’s consignments were reportedly being cleared directly from PMBQ. It has further been reported that the said consignments were shifted to AICT after a similar consignment was intercepted at PMBQ by the concerned Collectorate.
It has also been reported that seven (07) 40-foot containers of the said importer are lying at AICT, for which declarations have yet to get approval. Examination of the said containers prior to clearance by the relevant Collectorate is now sought, as they may constitute evidence in the matter already detected.
It is further reported that the preliminary inquiry indicates the need to examine the role of the concerned DC, in the processing of the subject GDs as her present reputation regarding transparency in her official affairs is not sound. Moreover, the conduct of the relevant Appraising and Scanning officers also needs to be further inquired. The role of ADC is also to be further seen as initial inquiry into the matter has revealed that the said examination was rejected on his telephonic directions to the concerned DC.KP asks Centre to defer tax exemption withdrawal in Malakand, merged districts
