Non-recovery of duty and taxes found in departmental audit

KARACHI: The Departmental Audit Committee (DAC) of Federal Board of Revenue (FBR) has identified non-realization of government revenue of Rs1.124 million as the Model Customs Collectorate (MCC) did not recover duty and taxes from an industrial unit who failed to consume imported consignment of Polythene bulk container liner.
The DAC notes in its audit para that a formation working under the Collector of Customs (Exports), Custom House, Karachi did not recover duty and taxes from an industrial unit who failed to consume imported consignment of Polythene bulk container liner which was warehoused under Goods Declaration CRN-31685 dated 23.12.2005.
According to law input goods imported by manufacturing bond licensee shall be consumed within a period of three years from the date of filing of bill of entry; and in case of non-consumption of input goods for manufacturing, the bonder shall apply for extension in time on payment of advance surcharge vide sub section (2) of section 98 of the Customs Act, 1969; and According to sub section (1) section 112 of the Customs Act, 1969 where the owner fails to clear bonded goods for the purposes specified within the warehousing period, the post-dated Cheque submitted under section 86 by the owner of goods may be got en-cashed after the expiry of warehousing period.
However, department did not en-cash the post dated Cheques to recover the government revenue. This resulted into non-realization of custom duty, sales tax, advance tax, warehousing surcharge and penal surcharge aggregating to Rs. 1,124,301.
The MCC Appraisement submitted in response of the audit para that M/s. Novatex Ltd, holder of manufacturing Bond License No. PWL-02/2002 have paid an amount of Rs1.665 million vide Cash No. 01 dated 09.02.2009 in respect of the unconsumed quantity of raw materials imported vide CRN 31695 dated 23.12.2005 Consumed quantity of raw material and finished goods so produced have been re-exported within warehousing period as per requirement of exemption notification.
After the due process of audit and verification, the DAC decided to settle the said para.

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