Rs. 2.4 Billion Tax Fraud Exposed: Cement Manufacturer Under Investigation

The Post Clearance Audit (PCA) South has uncovered a massive tax fraud of Rs. 2.4 billion by a major cement manufacturer, reportedly exploiting four export tax exemption schemes, according to BR.

The schemes involved include the Manufacturing Bond, Duty and Tax Remission for Exports (DTRE), Temporary Import under SRO 492, and the Export Facilitation Scheme (EFS), as revealed in PCA documents.

The manufacturer allegedly imported large quantities of clinker and packing materials under the guise of export but failed to comply with the export requirements set under these schemes. An investigation led by PCA South Director Sheeraz Ahmed, under the directives of DG PCA Dr. Zulfikar Ali Chaudhry, identified significant discrepancies during an initial data review.

A physical inspection conducted on December 18, 2024, confirmed that of the total 463,334 metric tons (MT) of imported clinker, only 62,000 MT was accounted for at the factory. An alarming 395,000 MT, worth Rs. 3.3 billion, was missing and allegedly diverted for local sale.

Claims by the manufacturer of 15,000 MT being stockpiled at Taftan and Gwadar dry ports were found baseless, with no supporting evidence.

The importer also failed to meet export obligations under the schemes, with several utilization periods long expired, including those for the Manufacturing Bond, DTRE, and SRO 492.

PCA findings revealed an evasion breakdown of Rs. 369 million through the Manufacturing Bond, Rs. 222 million under DTRE, Rs. 91 million via Temporary Import (SRO 492), and Rs. 1 billion from EFS misuse. Additionally, a surcharge of Rs. 676 million was imposed for the illegal removal and sale of exempt goods.

An FIR has been filed under Section 32A of the Customs Act to initiate a detailed investigation aimed at identifying all individuals and entities involved in this fraud, which reportedly dates back to 2020.