Textile millers misusing DTRE facility causing loss to national exchequer

KARACHI: Textile millers are evading government revenue through misuse of DTRE facility, sources said.

It was known that several textile mills are importing craft paper under DTRE facility, and the same is being sold in the local market instead of being used in making exportable goods.

DTRE Scheme provides suspension of import duty, sales tax, FED, WHT on acquisition through import and local purchase of input goods required for the manufacture of output goods meant for exports.

Sources said the textile mills are awarded import quota for the craft paper, and each textile mill involved in this wrongdoing is evading duty/taxes of Rs50,000/ton. According to estimates, each textile mill is causing a loss of at least Rs25 million to the national exchequer on their imported quota.

Sources said the millers import the craft paper under DTRE scheme i.e. tax free and sell the imported goods in the local market at Rs140/kg. Craft paper is used to manufacture paper boxes in which goods are exported.

However, textile millers buy locally manufactured paper box making material for Rs60/kg. These millers then show the exports justifying the import of craft paper.

Sources said the import quota is automatically renewed once the millers make the exports.

Sources informed the textile millers are allotted designated space (warehouses) to keep the imported craft paper; and manufacture the boxes. However, these designated warehouses are empty as the imported goods have already been sold in the local market.

This illegal practice is ongoing on imports clearing from MCC Appraisement West, MCC Appraisement East and MCC Port Qasim.

Sources said the authorities should conduct an audit into the matter of textile mills including Liberty Textile, Younus Textile, Arzoo Textile, Sadaqat Textile, Gul Ahmed Textile and Al-Karam Textiles etc.

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