KARACHI: The Directorate of Intelligence and Investigation (I&I) Karachi has issued three alerts to the field formations of the Federal Board of Revenue (FBR) regarding the malpractices of some industrial importers of yarn, who are evading duties and taxes and violating the ban on import of yarn from India.
According to the alerts, the industrial importers of yarn are entitled for a cumulative benefit of 7.5% of duties and taxes over commercial importers. They are entitled for exemption of 3% Additional Sales Tax (AST) under 12th Schedule of Sales Tax Act 1990, 2% Additional Customs Duty (ACD) under SRO 967(1)/2022 and payment of 1% Income Tax in terms of SRO 1125(1)/2011 instead of 3.5% paid by the commercial importers.
However, I&I Karachi found that certain unscrupulous industrial importers, availing this exemption of 7.5% on import of yarn, are involved in its sale on commercial basis to other entities, which results in huge loss to the national exchequer.
It is pertinent to mention that the annual demand of imported yarn for the country is more than 0.8 million tons valuing Rs.375 billion. This implies that even a small quantum of commercial sale by the industrial importers results in huge loss to the national exchequer.
While the matter is being further investigated, the Director I&I Karachi Engineer Habib has advised the field formations to ensure that import of yarn being allowed to industrial importers after exemption of 7.5% in duties and taxes is in consonance with their manufacturing capacity.
The Director I&I Karachi has also highlighted that there is a ban on import of yarn from India since 2019-20. However, credible information was passed by him to Additional Directors Afzaal Wattoo and Inamullah Wazir that Indian yarn is still finding its way into Pakistan via Dubai, Malaysia, Indonesia and Thailand.
The labels, packing and container of a consignment of yarn coming from India are changed in these countries and are then shipped to Pakistan.
According to the data compiled by I&I Karachi, 141 tons of Indian yarn was imported via Dubai in 2019-20, which surged 370% to 666 tons in 2020-21. Similarly, 10,608 tons of Indian yarn was imported via Malaysia in 2019-20, which surged 43% to 15,149 tons in 2020-21.
According to the data, 105,780 tons of Indian yarn was imported via Indonesia in 2019-20, which surged 36% to 144,128 tons in 2020-21, while, 80,086 tons of Indian yarn was imported via Thailand in 2019-20, which surged 10% to 87,784 tons in 2020-21.
Moreover, unscrupulous importers are evading duties and taxes through mis-declaration of the denier in import of yarn for home consumption as well as under export facilitation schemes.
While further investigation into the matter is on, the Additional Directors Afzaal Wattoo and Inamullah Wazir are advised to develop cases against the accused.