KARACHI: The Collector of Customs Adjudication-II Ahmed Mujtaba Memon has issued Order-in-Original (ONO) against M/s Coca Cola Export Corporation (Pvt) Limited in its alleged involvement in a huge tax evasion to the tune of Rs 84,754,838 in terms of Federal Excise Duty (FED) of Rs 66,379,784; Sales Tax of Rs 8,889,975 and Income Tax amounting to Rs 9,485,079 by declaring incorrect PCT heading in clearance of 15 Goods Declaration (GDs).
According to details, the Directorate General of Post Clearance Audit (PCA), Customs House Karachi vide its contravention report No.PCA/2264/2011/Audit/9568 stated that the M/s Coca Cola Export Corporation (Pvt) Limited have imported consignments of flavouring substances for use in aerated beverages correctly falling under PCT heading 3302.1010 (HS) and chargeable to the FED @50per cent ad valorem. Whereas M/s Coca Cola Export Corporation (Pvt) Limited have imported mentioned raw-material of flavors/concentrates to be used in aerated beverages through MCC-Appraisement (East) by declaring incorrect PCT heading 3302.1090 without payment of Federal Excise Duty leviable thereon.
As per Audit observations an amount of FED and other taxes short realized and was conveyed to M/s Coca Cola Export Corporation (Pvt) Limited vide the Directorate letter C No. PCA/1788/2010/Audit/1948.
Subsequently, the import requested to offer their opinion on the findings of the department and the amount of FED, Sales Tax and Income Tax calculated therein through their consultants M/s A F Ferguson submitted their written reply to the Audit Observation vide letter dated 02-06-2011 and 20-06-2011.
Later on, the matter of classification was also disputed by the importer M/s Coca Cola Export Corporation (Pvt) Limited, the case was referred to Classification Center of MCC-Appraisement (East). The classification Center of MCC-Appraisement (East) decided that the imported goods i.e. raw material of the flavors and Concentrates for use in aerated beverages shall be classified under PCT Heading 3302.1010.
The authorities concerned were of the view that the importer violated the provisions of Section 3(1)(b) and Section 12(3) read with serial number 41 of the Table 1 of the First Schedule List to the Federal Excise Act, 2005.
It further stated that the aforesaid amount of the FED is recoverable under Section 14 together with default surcharge under Section 8 and penalty under Section 19 of the Federal Excise Act, 2005.
It further stated that the short paid amount of sales Tax is recoverable under Section 36 together with default surcharge under Section 34 and penalty under section 33 of the Sales tax Act, 1990.
Similarly, the amount of Income Tax is recoverable under section 148 of the Income Tax Ordinance, 2001.
After the hearing of the case conducted on 17-06-2014 and 16-07-2014, the Collector of Customs Adjudication-II in the light of given details in his judgment stated that the allegations leveled in the show-cause notice issued on 05-06-2014 stand established against the respondents M/s Coca Cola Export Corporation (Pvt) Limited and hereby ordered as under that the importer should liable of evaded amount and taxes amounting to Rs84754838 in terms of FED, Sales Tax and Income Tax.
The Collector of the Collectorate Customs Adjudication-II Ahmed Mujtaba Memon has also imposed a penalty of Rs2,000,000 imposed upon the respondents under clause 14 of section 156(1) of the Customs Act, 1969 and Section 33(5) of the Sales Tax Act, 1990, Section 148 of the Income Tax Ordinance, 2001 and Section 14 and 19 of the Federal Excise Act, 2005.
