Under-invoicing of imported tea causes Rs5.0 billion loss to exchequer annually

KARACHI: It is estimated that around Rs5.0 billion is evaded on the import of tea every year, as high value tea is grossly under-invoiced.

Sources said valuation of tea was very complex as the commodity is auctioned at the exporters’ market in India, Sri Lanka, Kenya, Vietnam etc., and the price of the commodity differs from orchard to orchard.   

The best quality of Indian tea is Darjeeling, and it is priced at $4kg to $7/kg, while other Indian teas are priced at $2/kg to $4/kg. Since trade between India and Pakistan is halted, Darjeeling and other Indian teas are imported from China. It is important to mention here that the importers do not claim Free Trade Agreement (FTA) benefit. It imported on much lower prices.

Sources said Customs relies on the pricing certificate provided by the Pakistan Tea Association (PTA) for the assessment of the imported consignments. Chief Collector Appraisement South tasked Pakistan Tea Association (PTA) to determine the value of the tea. Sources said this authority has largely been misused.

“However, it is noted that Pakistan Tea Association under-quotes the prices. It seems tea is mostly under-invoiced by at least 25 percent,” sources added.

It may be mentioned here, Abdul Majeed Paracha, Acting Chairman Pakistan Tea Association (PTA) tendered resignation from post of Acting Chairman in protest over valuation or amount of customs duty payable on imported tea.

In a letter addressed to the Secretary  General of PTA, Mr Majeed Paracha referred to a meeting held on request of Pakistan Customs over valuation issue in which PTA was to make a presentation for deciding the price of imported tea per kilogram.

According to resignation letter, members of PTA resorted to brief the custom officials on the basis of auction price but to his astonishment they suggested and presented a different criterion not practiced by PTA.

So on principles Abdul Majeed Paracha a founding member of PTA decided  to step down. He took charge in Nov 2020 when former Chairman Khalid Puri also resigned over similar issues.

Collector MCC Port Qasim Ashad Jawad has formed a team headed by Deputy Collector Wasif Malik to investigate the under-invoicing on import of tea.

According to sources, PTA members are involved in blackmailing officials in the name of the association for securing release of tea consignments citing price lower than actual. The money saved by under invoicing and evasion of duty is then laundered through “HAWALA”.

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