Authorities have uncovered a major tax evasion scheme, with around 77,000 kilograms of cellulose acetate tow, used in cigarette filter production, being misdeclared as polyester staple fibre, leading to a Federal Excise Duty (FED) evasion of Rs3.38 billion, Business Recorder reported.
The case emerged after an investigation by the Customs Collectorate of Gilgit-Baltistan, which seized a suspicious consignment during a routine examination.
Initially, the goods declaration for the shipment listed items such as walnuts in shell, stipple fibre, and school bags. However, customs officials discovered a different set of goods upon physical inspection, including 37,800 kilograms of undeclared cellulose acetate tow, undergarments, school bags, and children’s bags made from artificial leather, none of which matched the original declaration.
To confirm the mis-declaration, samples of the goods listed as PSF were sent to the Customs House Laboratory in Faisalabad, which confirmed that the material was indeed cellulose acetate tow. This raw material, primarily used in the production of cigarette filters, is subject to a high FED rate of Rs44,000 per kilogram, making it a prime target for tax evasion.
Further investigations revealed that the same importer had previously cleared seven other consignments with portions of goods misdeclared as PSF, totaling 77,000 kilograms. Authorities are now expanding their probe to determine whether these earlier shipments also involved similar misdeclarations.
If the pattern of misdeclaration is confirmed, the total evasion of Federal Excise Duty could amount to Rs3.38 billion. The customs department is continuing its investigation into the case.