KARACHI: Directorate of Post Clearance Audit (PCA) Karachi has serve a contravention report on M/s Nestle Pakistan for mis-declaring classification of imported goods to evade incidence of taxation.
Deputy Director Iqbal Ahmed, on the directives of Director Gul Rehman, conducted scrutiny of import data. It was been found that M/s Nestle Pakistan Limited, Lahore imported 18 consignments of “peach puree/peach puree concentrate”, and got them cleared by mis-declaring the classification of the imported goods under PCT 2009.8900 from MCC Port Mohammad Bin Qasim, Karachi, through their clearing agent M/s. AAS Enterprises (Pvt) Ltd to avail undue and inadmissible benefit/exemption of Sales Tax, whereas the imported goods are correctly classifiable under PCT 2007.9900.
It is clarified that “puree” by name is specified in HS code 2007 under heading “jams, fruit jellies, marmalades, fruit or nut puree and fruit or nut pastes, obtained by cooking, whether or not containing added sugar or other sweetening matter.” where there is no Sales Tax exemption.
It is pertinent to mention that, M/s. Nestle Pakistan Limited, Lahore itself has imported identical/same import under correct PCT heading 2007.9900 earlier. Apart from it all other importers of “puree” have either been declared by the imports or assessed by the Collectorates under PCT 2007.9900.
Thus, by way of misdeclaration of classification, M/s. Nestle Pakistan Limited, Lahore, have evaded/short paid an amount of Sales Tax amounting to Rs. 36.73 million and corresponding Income Tax Rs. 2.132 totaling Rs38.863 million
Accordingly, an Audit Observation was issued to the said importer. However instead of submitting reply, the importer requested for extension of 10 days in submitting reply. However, Nestle failed to come up with any tangible evidence and explanation and was also unable to refute the charges leveled by the Department.
In view of the aforesaid M/s. Nestle Pakistan Limited, Lahore, are held to have intentionally & willfully caused loss to the government exchequer amounting to Rs38.863. A Contravention Report is forwarded herewith for initiation of adjudication proceedings.
It may be mentioned here that Appraising Officers Faiz Mudassir and Alvis Williams had scrutinized the data and detected this evasion of government revenue.