KARACHI: In a significant blow to the integrity of Pakistan’s Export Facilitation Scheme (EFS), the Collectorate of Customs (Exports) Port Muhammad Bin Qasim has registered a First Information Report (FIR) against M/s. Denim Clothing Company for the illegal removal of duty-free imported raw materials valued at over Rs. 52 million. The case, which has exposed serious lapses in the system, was initiated based on sensitive intelligence passed to the authorities, but has also raised troubling questions about operational protocols at the export collectorate.
The FIR, registered on August 13, 2026, reveals that M/s. Denim Clothing Company, an EFS-licensed manufacturer-cum-exporter, had been granted the license to import duty-free raw materials for the production and subsequent export of Denim Garments under SRO 957(1)/2021. The company’s registered premises were located in the Korangi Industrial Area, Karachi.
According to the FIR, a team from the Collectorate of Customs (Exports) PMBQ was tasked with a physical stocktaking of the licensee’s inventory on July 21, 2026, in compliance with regulatory directives. However, upon arrival at the registered addresses, the team discovered that the manufacturing facility was non-existent. This was subsequently acknowledged in writing by the company’s CFO, Muhammad Mudassir, on July 24, 2026. A follow-up visit by the Deputy Collector (EFS) on August 10, 2026, confirmed the unit’s complete disappearance.
A subsequent data scrutiny from the Pakistan Revenue Automation Limited (PRAL) painted a stark picture of the fraud. It was revealed that the company had imported a total of 163,898 kilograms of raw material under the scheme. Of this, only 79,963 kilograms were accounted for in exports, leaving an unaccounted balance of 83,935 kilograms of imported raw materials, including Denim Fabric, Yarn, Buttons, and Rivets. The total duty and taxes evaded on this missing stock amount to a staggering Rs. 52,168,855/-. The FIR lists over 40 import transactions that make up the evaded amount, spanning various PCT codes and import values.
The FIR has formally charged M/s. Denim Clothing Company with violating multiple sections of the Customs Act, 1969, and the EFS Rules, including Sections 18, 19, 32(1)(2), and 32(3A), read with Rules 871(a), 880(4), and 882(1) of the SRO. The company is also accused of contravening the Sales Tax Act, 1990, and the Income Tax Ordinance, 2001. The offence is punishable under sub-sections 10(A), 14(i), and 14(ii) of Section 156(1) of the Customs Act, 1969.
While the case was initiated on actionable intelligence, sources within the Export Collectorate Port Qasim have revealed a deeply concerning operational hurdle. Officers at the collectorate, it is claimed, are finding themselves in a helpless position due to a controversial instruction issued by the Collector. The directive reportedly states that no “green channel” exports are to be intercepted or examined, even if specific information is received, unless the informer personally appears before the Collector to verify the tip.
This requirement is viewed as highly unusual and impractical by field officers and security agencies. Informants, who are crucial to uncovering such large-scale frauds, often risk their lives and must remain hidden to ensure their safety. The demand that they personally meet a top official is seen as a major deterrent that effectively protects fraudulent exporters. “Such a condition effectively handcuffs the field staff and renders intelligence useless,” a customs official lamented on condition of anonymity.
The FIR against Denim Clothing Company states that efforts are underway to apprehend the “culprits and their accomplices.” However, the case has once again exposed the systemic vulnerabilities within the EFS and the bureaucratic hurdles that can impede effective enforcement, even when credible intelligence is available.