KARACHI: Customs Appraisement SAPT have uncovered a scheme to evade taxes by misdeclaring the origin of imported water filtration membranes, resulting in a potential loss of 8.5 million rupees ($30,500) in government revenue.
The case, detailed in a First Information Report (FIR) filed March 25, involves M/s S&B Global Traders, a Lahore-based importer, and M/s Pakland Trading Corporation, a Karachi-based clearing agent. The companies allegedly falsified labels on a shipment of reverse osmosis (RO) membranes to underpay duties by declaring them as Chinese-made instead of U.S.-made.
According to the FIR, the importer filed a goods declaration on March 11 for 798 RO membranes, valuing them at $159,600 (45.6 million rupees) and claiming they originated from China. However, a tip-off led customs officials to inspect the shipment, where they discovered labels reading “Made in China” had been pasted over the original “Made in USA” markings.
The actual value of the membranes, manufactured by U.S.-based EZ Water Technology Inc., was assessed at $303,240 (86.7 million rupees). The misdeclaration allowed the importer to avoid higher duties under Pakistan’s Valuation Ruling No. 1652/2022, which sets different rates for Chinese and U.S.-made RO membranes.
Authorities seized the goods and charged the importer and clearing agent under multiple sections of the Customs Act, 1969, as well as tax evasion laws. An investigation is ongoing to identify other accomplices.
“The deliberate misdeclaration was an attempt to defraud the government,” said Ghulam Muhammad, the appraising officer who filed the FIR. “Had it gone undetected, the treasury would have lost significant revenue.”
The case highlights ongoing challenges in curbing trade-based tax evasion in Pakistan, where misdeclaration of origin and value remains a persistent issue.