KARACHI: Directorate of Post Clearance Audit (PCA) Karachi has detected tax evasion of Rs 1.390 million by M/s FG Enterprises on import of carbon brushes through under invoicing. The audit observation has been issued under Section 26 and 32 of the Customs Act, 1969.
The PCA, while scrutinising the import data, found that M/s FG Enterprises imported “carbon brushes packed in cartons net weight declared as 1,950 kilogram” under PCT heading 8545.2000 vide Goods Declaration No. KAPE-HC-40242 dated October 14, 2014 and KAPW-HC-2204 dated July 04, 2015 through Model Customs Collectorate Appraisement-East and West and got their consignments released at declared unit value of $1.50 per kg from China.
It is evident from the history of the importer that a case of under valuation of the identical item from the same supplier and origin i.e. “Renqiu Stroghold Carbon Products Company Limited China” has been found and adjudicated vide Order-in-Original (ONO) No. 155013 – 09122013 on the basis of the invoice found in the container at the time of examination, showing unit value at the rate of $10.18 per kg and the goods were adjudicated, assessed and cleared by the importer on the found value. The difference of declared and found value is to the extent of approx 1046.33 percent.
The imports made by M/s FG Enterprises vide above mentioned GDs were also made from the same supplier and from the same origin of the same item, therefore, it is also under invoiced in the same way. M/s FG Enterprises were required to pay custom duty and other taxes at the ascertained unit value of $10.18 per kg considering under invoicing to the extent of 1046.33 percent. This has resulted in short levy of Rs 443,309 in wake of custom duty, Rs 541,083 under the head of sales tax, Rs 101,960 as additional sales tax and Rs 303,706 as income tax and total short payment of taxes was estimated at Rs 1,390,058. The importers are directed to deposit the short levied amount in the national exchequer within 10 days with intimation to this office.
In case, M/s FG Enterprises are of the opinion that the above finding is incorrect or that the short paid amount has been erroneously calculated or it has already been deposited, it is requested to provide a self-explanatory written reply with viable documentary evidences and complete set of import documents within 10 days from the issuance of this Audit Observation.
