IPO violation: FCA system clears banned goods worth Rs10.53bn
The audit, conducted by the Directorate General of Post Clearance Audit (PCA) between December 16, 2024, and March 15, 2025, revealed widespread violations of import regulations and massive duty evasion that had gone undetected by the FCA system, which was meant to be Pakistan's answer to customs corruption.
The most alarming finding was the clearance of restricted/banned goods worth Rs. 10.538 billion through the FCA system, which was a direct violation of Import Policy Order (IPO) conditions.
PCA audit report: FCA: Rs38bn revenue losses suffered in 3 months
Over 1,006 Goods Declarations (GDs) involved restricted/banned goods that should never have been allowed through the old customs system, highlighting critical flaws in the FCA system.
This clearance represents a fundamental breakdown of the FCA system's core function,' sources in customs said. 'The system was specifically designed to prevent such violations, but it failed,' they added.
The audit also detected Rs. 5.007 billion in duty and tax evasion across just 1,524 GDs, averaging over Rs. 3.3 million in losses per declaration. More concerning was the failure to frame contravention cases as required by law, resulting in an additional Rs. 2.433 billion loss in statutory fines.
The total revenue loss from these cases alone reached Rs. 7.44 billion, but the audit report suggested this may represent only the tip of the iceberg.
The audit was conducted by just nine officers and this severe resource imbalance meant only 8.8 percent of total clearances could be audited, suggesting the actual scale of losses could be far greater.
The audit report further said that around Rs. 30.364 billion was lost due to the non-framing of contravention cases as required under SRO 499(I)/2009. Less than 2% of high-value tax and duty-evading cases were officially booked, allowing massive revenue losses to go unpunished.
The audit report also highlighted that around Rs. 60 million in duties and taxes were evaded after the cancellation of assessed and finalized GDs, and added that solar panel containers were cleared against unauthorized NTNs and Customs User IDs, raising trade-based money laundering concerns worth Rs. 643 million.
The FCA system was launched last December 2024 with great fanfare as Pakistan's solution to endemic customs corruption, promising automated, transparent, and efficient trade facilitation. The system was designed to remove human discretion from customs assessment, theoretically eliminating opportunities for bribery and favoritism.
However, these audit findings suggested that although the FCA may have reduced traditional corruption, it has created new vulnerabilities that are being systematically exploited on a massive scale, resulting in Rs. 38 billion revenue loss.
Copyright Business Recorder, 2025
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