KARACHI Under the supervision of Director-General Zulfiqar Ahmad Chaudhary and Director Sheeraz Ahmad, Directorate of Post Clearance Audit (PCA) South Customs has detected a scam involving Rs9.7 billion in tax evasion and money laundering within the iron and steel sector.
According to the details, the scandal is linked to nine importers who exploited the “manufacturing status” to evade Rs315 million in duty and taxes.
Following reports of massive misuse, Directorate of Post Clearance Audit started a sector-based audit focusing on iron and steel imports.
PCA South served audit notices to the nine importers, however, all notices were returned by the courier company with remarks that the addresses were untraceable.
Upon verifications by the PCA teams, it was confirmed that the said nine importers were physically non-existent.
During scrutiny of FBR database led to the discovery that these companies had transferred Rs9.72 billion abroad while evading Rs315 million in taxes through illegal exemptions availed by way of misuse of manufacturing status.
The modus operandi of these importers indicated a well-orchestrated plot to siphon funds out of the country illegally.
The importers claimed exemptions and reduced rate of duty / taxes that was only allowed for manufacturing enterprises. The importers engaged in commercial sales of same-state iron and steel products while lacking any manufacturing facilities or business premises.
The scrutiny further revealed that said nine importers had very poor financial worth, as per their income tax declarations, which made financing such massive imports highly suspicious.
Even more striking, three of the nine importers did not file income tax returns at all, thus substantiating Nil financial worth, while financing imports worth Rs2.48 billion, showcasing a blatant money laundering scam.
Nine implicated importers include: Metal Toss (Pvt) Ltd, Unity Recycling Industry, The Material House, Fornax Icon (Pvt) Ltd, Metropolitan Steel Corporation Limited, Hasnain International, Khaleej Trading, H. B & Sons, Al-Hadeed Steel.
The PCA teams are investigating to identify the real masterminds behind these fraudulent operations. With an aim to hold the true perpetrators accountable, the investigation is expected to uncover deeper layers of this intricate scam.
The FBR is determined to bring all culprits to justice. This scandal serves as a stark reminder of the lengths to which criminal entities will go to evade taxes and launder money, posing severe repercussions for the economy.
