Raw material importer booked for abusing concessionary SRO to defraud exchequer

KARACHI: The Directorate of Intelligence and Investigation of Inland Revenue has lodged FIR against plastic sector raw material importer for abusing the concessionary SRO 670(I)/2013 to defraud national exchequer of Rs 184 million.

The Directorate of Intelligence and Investigation-Inland Revenue, Karachi received information that a number of registered persons of plastic sector are grossly misusing the facility of import of raw materials at zero percent of sales tax under SRO 670(l)/2013 which are otherwise chargeable at standard rate of 17%. Such persons are importing huge quantities of plastic raw materials (PP, HDPE etc), whereas their business activity/production capacity do not commensurate to such heavy imports of raw materials. Reportedly the excess quantities of zero rated raw materials are clandestinely sold in open markets in violation of the conditions envisaged in the aforesaid SRO and thus deprived the national exchequer of millions of rupee.

The federal Government through the aforesaid SRO provided the facility of zero rating of sales tax on import and supply of goods comprising raw materials, packing materials, sub-components, components, assemblies and sub-assemblies imported or purchased locally for the manufacture of said goods subject to certain conditions specified therein.

To check the veracity of information the Directorate initiated desk scrutiny of import data/record of certain importers who under the garb of manufacturing status have made huge concessionary imports of plastic raw materials during short period of time, which was provisionally allowed to them by the concerned Commissioner IR under SRO 670(l)/2013 and later on under Fifth Schedule of the Sales Tax ACT 1990.

On examination of data/record of M/s. Winsome Packages, Karachi and after inspection of production facility of the said unit, it was found that during the period from July 2013 to December 2014, the said unit imported 5529.85 Metric Tons (M.T.) of plastic raw materials at the rate of zero percent sales tax and concessionary rate of income tax and thereby availed benefit of sales tax to the tune of Rs142.00 million and advance income tax of Rs. 42.00 million aggregating to Rs. 184.00 million.

Whereas, the estimated consumption of raw materials by the said unit during the same period, is worked out as 45-50 M.T only. It is evident that the excess imported quantity of zero rated raw material approximately 5479 M.T, which is not justifiable in consumption or in stock, as such it was reasonable to conceive that the same has been sold out in open market. Thus M/s Winsome Packages grossly misused the aforesaid facility and deprived the government exchequer to the tune of Rs. 142.00 million on account of sales tax concession/zero rating and Income tax concession of Rs.42.63 million aggregating to Rs. 184.63 million.

ln addition, on verification of recently imported consignment of 382 M.T. raw materials of M/s Winsome Packages stored at Kuasar Warehouse at SITE Karachi, it was found that seven (07) containers of PMC were brought in the said warehouse in the name of Suhail Plastic against GD of M/s Winsome Packages and the same were entered in warehouse registers on account of Suhail Plastic and goods from said lot/ containers have been dispatched/issued against delivery orders from Suhail Plastic.

In support, statement of the owner of warehouse along with copies of receipt of clearing agent M/s Ghadeer Enterprises regarding delivery of seven containers of Winsome Packages from port toward Kausar warehouse, copy of receipt of Kuasar Warehouse for receiving seven containers in warehouse, copies of stock (inward/outward) register, delivery orders issued by Suhail Plastic have been retrieved.

The above verification of warehouse and documents/record recovered from them further established that owner and partner of M/s Winsome Packages namely Syed Tanveer Ahmed is involved in illegal activity of supplying/selling zero rated plastic raw material in open market through Suhail Plastic thus causing loss to national exchequer.

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