KARACHI: A sweeping audit of Pakistan’s customs clearance system has exposed deep-rooted lapses in enforcement and compliance, resulting in an estimated revenue loss of Rs. 37.8 billion. The findings, drawn from the scrutiny of over 13,000 Goods Declarations (GDs), reveal widespread duty and tax evasion, under-invoicing of luxury imports, and systemic failures to impose statutory fines.
The audit revealed that despite identifying duty and tax evasions in 21,925 GDs—including 6,669 cases each involving evasion of Rs. 1 million or more—only 762 Assessment Alerts were issued. Of these, contravention cases were framed in just 206 GDs for duty and tax evasion, and in 72 GDs for violations of the Import Policy Order (IPO). No contraventions were framed in the remaining alerts, resulting in substantial revenue loss due to the non-imposition of fines under SRO 499(I)/2009.
Officials emphasized that failure to frame contravention cases at the time of goods clearance leads to permanent revenue loss, as fines under SRO 499(I)/2009—imposed in lieu of confiscation—cannot be recovered once goods are released.
A particularly troubling pattern emerged in the import of luxury vehicles, where declared values were found to be grossly understated. In 1,335 GDs, importers declared a combined value of Rs. 670 million, while customs officers assessed the actual value at Rs. 7,254 million—indicating a 91 percent under-invoicing rate. The corresponding duty and tax assessments jumped from Rs. 1,293 million to Rs. 18,783 million. Importers failed to provide proof of foreign remittances for these purchases, raising concerns about the use of illicit financing channels such as hawala and hundi. The scale of discrepancies suggests a high-risk area for trade-based money laundering (TBML) and calls for urgent investigation.
Delayed Declarations of Dormant Cargo Raise Red Flags Over Port Clearance Integrity
The audit also flagged delayed GD filings for manifested cargo, particularly in the wake of fraudulent solar panel clearances between December 2024 and February 2025. A total of 1,390 GDs were filed for consignments that had remained unclaimed at ports for periods ranging from 60 days to over two years. Authorities are now seeking verification from shipping lines to determine the legitimacy of these imports.
Among the 2,530 GDs with detected discrepancies, the majority were cleared through the Red Channel—reserved for high-risk consignments—further underscoring the failure of existing safeguards.
The audit’s final assessment paints a grim picture: duty and tax evasion totaling Rs. 5,007 million across 1,524 GDs; loss of statutory fines worth Rs. 2,433 million; clearance of restricted goods valued at Rs. 10,538 million in violation of IPO conditions; and a potential fine loss of Rs. 30,364 million due to non-framing of contravention cases. Additionally, instances of fiscal fraud were uncovered involving the cancellation of finalized GDs and unauthorized clearances linked to fake NTNs and Customs User IDs.
In total, the audit estimates a revenue loss of Rs. 37,804 million, alongside the clearance of restricted goods worth Rs. 10,538 million. Authorities are expected to launch deeper investigations and implement corrective measures to plug systemic gaps and safeguard public revenue.