KARACHI: The Directorate of Internal Audit – Customs has pointed that MCC Exports Port Qasim failed to collect duty/taxes on the disposal of wastages from manufacturing bond, which is required as per Section 95 of Customs Act.
Internal Audit team comprising Deputy Director Sabir Jamal, Superintendent S.A Jafri and Deputy Superintendent Shaikh Mansur scrutinized the records which revealed that M/s. International Industries Limited made disposal of wastages without payment of leviable Customs Duty/ Sales Tax & Income Tax from manufacturing bond. As a result of which Bonder also made partial payment of Custom Duty involved on the disposal of wastages related to period prior. Despite having the solid legal ground and lawful authority MCC Export (Port Qasim) Karachi failed to recover the duty/Taxes on the disposal of wastages. Thus, exchequer sustained a loss to the tune of Rs.182.6 million.
It was also observed that the Bonder also availed inadmissible benefit of SRO 595(I)/2012 resulting in a loss of Rs305.848 million to the national exchequer. MCC Exports Port Qasim is required to reconcile the record and effect recovery.
Internal Audit has also points non-recovery of legitimate government revenue and adjudged amount from M/s International Industries Limited.
According to Rule-352 of the Customs Rules 2001 licensee of a manufacturing bond was entitled to export of finished goods from manufacturing bond. It was noted that M/s. International Industries Limited intimated the Collectorate in March 2015 that they made export of Zinc wastages during July-2012 to June-2014.
It was also observed that licensee failed to mention the exact quantity of Zinc wastages exported during 2014-15, in the quarterly return filed by the exporter. Collectorate is also required to ascertain the exact quantity of Zinc wastages exported during 2014-15 by the Bonder. Export of wastages from manufacturing bond was not admissible in terms of above rule. Thus, the benefit of availing duty/Tax free Import of related quantity does not come under the scheme of manufacturing bond.
MCC Export (Port Qasim) Karachi is required to conduct the exercise to determine the exact liability of duty/taxes involved in above un-lawful export of Zinc wastages from manufacturing Bond and to initiate further necessary action for recovery of duty & taxes.
M/s. International Industries Limited also made export of their goods from manufacturing bond to Afghanistan during audit period. No such records/proof was furnished to audit. The Collectorate is required to verify from concerned RTO/LTU or exporting collectorate that bonder has obtained Sales Tax refund, rebate of federal excise duty & repayment or drawback of customs duty or otherwise.