KARACHI: The Directorate of Post Clearance Audit (PCA) Karachi has detected sixth case of tax evasion of Rs 6.97 million by M/s Omar Associates (Pvt) Limited for availing facility of provision of DTRE rules.
According to details, during the scrutiny of DTRE No. KEXP/4334/29032011 Dated 29.03.2011, it has been observed that M/s Omar Associates imported 15000 M. tons Soap Stone under H.S. Code 2526-1010 availing facility of provisions of DTRE Rules notified vide SRO.450(i)/2001 Dated 18-06-2001.
The importer imported the raw material under 47 Goods Declaration during the period 06-04-2011 to 06-06-2011. The DTRE user exported 14030 M. tons of Finished Talc Lumps under 8 Export Goods Declarations during 07-04-2011 to 24-06-2011.
M/s Omar Associate under Rule 302 of DTRE Rules was granted specific contract based DTRE approval for acquisition of duties and taxes suspended input goods for solely use in exports as specified in the application to the Regulatory Collector in the form set out in Appendix I to the DTRE Rules having all required information (Rule 298 of DTRE rules).
This approval is on the basis of declaration of the applicant who stand responsible for fulfillment of these declarations which besides others includes that the input goods acquired under Chapter XII of SRO.450(I)/2001 dated 18-6-2001 shall be utilized in the manufacture and export of output goods within 12 months. The DTRE user submitted reconciliation statement on 20-12-2011 on prescribed form (App-III) in terms of Rule 307-D of the aforesaid Rules.
It is worth mentioning that under Rule 302-A, samples of imported input goods and output goods meant for export shall be drawn at the time of import and export so that the same could be used for cross matching or any other purpose as required. Rule 302© categorically states that before allowing release of consignments for export under the DTRE facility, compare literature of the imported raw materials, received from relevant Customs import station with the certified ones provided by the DTRE user for finished goods in order to satisfy himself that the finished goods have been manufactured or produced using such imported raw materials and endorse the same in the examination report.
The analysis of import and export documents and the record provided with Reconciliation Statement revealed that DTRE user has not followed the Rules in its true spirit. Port of importation is shown Karachi instead of Torkham in Appendix-I. Similarly the date of import at Torkham is recorded as date of arrival in Karachi. Clearance at Torkham, unloading at Peshawar Terminal, sorting by Labors, reloading and transportation to Karachi will take minimum 10 days.
The analysis of data provided with Reconciliation Statement further revealed that 1St import of input goods was on 06-04-2011 at Torkham while 1st export of output goods of 3240 M.Ton vide KEXP-SB- 52518 dated 07-04-2011 and 2nd export shipment of 540 M.T vide KEXP-SB 52811 dated 08-04-2011 was made at Karachi . The input goods acquired and imported for the instant DTRE in surely not used in production of the output goods of this 1st export because the period between date of importation and issuance of sales tax invoice is one day only in it cannot reach Karachi.
It means that 3780 M.Tons output goods in the 2 export shipments is from input goods of other source as for these no input goods acquired was available during the period. From all this it is crystal clear in this DTR 4041.339 M.T input goods is utilized from unknown source because input goods acquired for s DTRE was not available at the time of production. In consequence the input goods of 4041.339 M.T imported free of duty and taxes for this DTRE is surely used somewhere else which is violation of Provisions of DTRE Rules as notified vide SRO.450(i)2001 dated 18.6.2001 and attract recovery of suspended duties & taxes on these input goods besides penal action under the relevant provisions of law. The value of 4041.339 M.Tons @Rs.5000/M.T comes to Rs.20206695 which suspended CD @ 10% was Rs. 2020669, sales tax 17% was Rs 3778651, Spl FED @ 1% was Rs 202066 & WHT @3% was Rs 974984. Total duty and taxes suspended were Rs 6976370.
M/s. Omar Associate (Pvt) Ltd, Karachi, is accordingly advised to deposit the short levied amount of Rs. 6976370/- along with additional duty and taxes.