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PCA detects duty, tax evasion worth Rs 39m by M/s Nestle Pakistan

PCA detects duty, tax evasion worth Rs 39m by M/s Nestle Pakistan

KARACHI: The Directorate of Post Clearance Audit (PCA) has detected evasion of duty and taxes of Rs 39 million allegedly by M/s Nestle Pakistan Limited by way of mis-declaration of classification, it is learnt.

According to sources, the PCA Directorate, while scrutinizing the import data, found that M/s Nestle Pakistan Limited, Lahore imported 18 consignments of “peach puree/peach puree concentrate”, and got them cleared by mis-declaring the classification of the imported goods under PCT 2009.8900 from Customs Port Mohammad Bin Qasim, Karachi, through their clearing agent namely  M/s AAS Enterprises (Private) Limited to avail the undue/inadmissible benefit/exemption of Sales Tax vide S. No. 26 of Table-1 of  the Sixth Schedule of the Sales Tax, 1990, whereas the imported goods are correctly classifiable under PCT 2007.9900.

It is clarified that “puree” by name is specified in HS code 2007 under heading “jams, fruit jellies, marmalades, fruit or nut puree and fruit or nut pastes, obtained by cooking, whether or not containing added sugar or other sweetening matter.” where there is no sales tax exemption.

It is pertinent to mention that, M/s Nestle Pakistan Limited Lahore itself has imported identical/same import under correct PCT heading 2007.9900. Apart from it all other importers of “puree” have either been declared by the imports or assessed by the Collectorates under PCT 2007.9900.

Thus, by way of mis-declaration of classification M/s. Nestle Pakistan Limited, Lahore have evaded/short paid Rs 38,863,093. Therefore, the Importer, has violated the provisions of Section 34 of the Sales Tax Act 1990 and Section 148 of Income Tax Ordinance 2001 punishable under clauses (1), and 14 of Section 156(1) of the Customs Act 1969, Section 33(5) of the Sales Tax Act 1990 and Section 148 & 182 of Income Tax Ordinance 2001 and section 7A of the Sales Tax Act 1990 read with chapter X of the sales tax special procedure Rules 2007 (special procedures for payment of sales tax by the importers)  and under   relevant provisions of Income Tax Ordinance 2001.

Accordingly, an audit observation was issued to the said importer. The importer was requested to submit the reply by 10-07-2017. However instead of submitting reply, the importers vide their letter requested for extension of 10 days in submitting reply.  However till 26-07-2017, even after lapse of 16 days, instead of 10 days, the importer, has failed to come up with any tangible evidence and explanation and is also unable to refute the charges leveled by the Department.

In view of the aforesaid M/s Nestle Pakistan Limited, Lahore, are held to have intentionally and willfully caused loss to the government exchequer amounting to Rs38,863,093/-. The contravention report is forwarded herewith for initiation of adjudication proceedings in the case.