KARACHI: Customs Adjudication in Karachi has established a Rs 233 million scam involving M/s Fairdeal Textiles Pvt Ltd, slapping the firm with a hefty Rs 100 million penalty and surcharge. 

The order, passed by Collector adjudication Mr Abid Hakro, culminates in a total recoverable amount exceeding Rs 333 million and marks a robust response to serious irregularities detected in import operations under the EFS (Export Facilitation Scheme).

The Post Clearance Audit (PCA) South had lodged an FIR upon detecting serious discrepancies. Investigations revealed alarming signs of operational dysfunction at M/s Fairdeal Textiles’ manufacturing site, which was found closed for a prolonged period. This closure was further confirmed in the nill utility bills and absence of labor employment, as verified from tax returns, and verifications made from KESC, EOBI and SESSI departments. 

The importer was found to be exploiting its “manufacturing status” to claim benefits of concessionary rates of duty/taxes, a misuse that pointed to a larger issue of governance within the sector. Furthermore, during the physical verification process, the exempt fabrics imported under the EFS scheme, which were supposed to be manufactured and exported, were nowhere to be found, hinting at a deliberate attempt to defraud the national exchequer. 

After providing M/s Fairdeal Textiles with ample opportunity for defense, the order passed by Mr Abid Hakro has thrust the company into the limelight. The firm now faces strenuous recovery proceedings for the realization of the hefty amounts of taxes, surcharges, and penalties, a reminder of the legal and financial repercussions that stem from such fraudulent activities.

The case serves as a significant deterrent against the misuse of EFS schemes and the fraudulent misuse of manufacturing status by entities seeking to gain unlawful fiscal advantages. This decisive action by PCA South highlights the authorities’ stringent stance on ensuring compliance aiming to foster a fair and transparent trading environment.