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Business Recorder
6 days ago
- Business
- Business Recorder
PCA audit report: FCA: Rs38bn revenue losses suffered in 3 months
KARACHI: Pakistan's much-touted Faceless Customs Assessment (FCA) system has suffered a massive revenue loss of Rs. 38 billion during just three months of operations, casting serious doubts over this corruption-proof digital reform. This was revealed in an audit report prepared by the Directorate General of Post Clearance Audit (PCA) for the period from December 16, 2024, to March 15, 2025. The audit was conducted by just nine officers covering the entire PCA South region, compared to over 100 officers facilitating FCA clearances. 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. According to the details, the PCA, South has examined 13,140 Goods Declarations (GDs) out of 149,086 total clearances, detecting irregularities in nearly one in every five transactions they have audited. The audit revealed multiple layers of revenue haemorrhaging across different categories of violations. A staggering Rs. 7.44 billion was lost through duty and tax evasion in just 1,524 GDs, averaging over Rs. 3.3 million per declaration. Additionally, Rs. 10.538 billion worth of restricted goods were cleared in violation of Import Policy Order conditions across over 1,006 GDs involving items that should never have passed customs. The most significant loss came from the failure to frame contravention cases as required under regulations, resulting in Rs. 30.364 billion in losses, with less than 2 percent of such cases being officially booked. The reported Rs. 38 billion figure excludes an additional Rs. 23 billion in statutory fines linked to smaller-scale duty evasions, suggesting the actual losses could be substantially higher. Among the most shocking revelations was the massive under-invoicing of luxury vehicles, with discrepancies reaching 91 percent. Out of 1,335 vehicle import GDs reviewed, declarations worth Rs. 670 million were enhanced to Rs. 7.254 billion during assessment, yet even these enhanced valuations were processed without proper verification of foreign remittances. The audit specifically highlighted cases like luxury Toyota Land Cruiser imports being declared at absurdly low values, raising concerns about potential money laundering through illicit channels. The audit also flagged over 4,973 import consignments, including solar panel containers worth Rs. 23.4 billion, that remained unclaimed at ports for unusually long periods, with some delayed by over two years. These containers were cleared on unauthorised National Tax Numbers and Customs User IDs, raising trade-based money laundering concerns worth Rs. 643 million. Even goods subjected to multiple assessment stages showed faulty processing, with 313 GDs wrongly assessed despite full oversight, leading to Rs. 2.11 billion in duty evasion. An additional 58 GDs that passed through Quality Assurance still resulted in Rs. 77.2 million losses, including cases of misclassification, illegal exemptions, undervaluation, and vague goods descriptions. The audit report further said that Pakistan's customs framework has become 'heavily tilted toward blind facilitation,' allowing repeated mis-declarations and tax evasions without accountability. The report warned that limiting visibility of GD particulars under FCA has undermined assessment quality, creating a 'structural lag in the taxation framework.' The PCA South audit report also urged the authority concerned for immediate action, including reinforcing audit directorates with qualified staff, rebalancing the FCA model to restore supervisory checks, digitally flagging GDs for mandatory contravention framing, and launching forensic probes into repeated GD re-filings. Copyright Business Recorder, 2025
Business Recorder
29-07-2025
- Business
- Business Recorder
PCA uncovers fraudulent cases worth Rs60.5bn
KARACHI: The Post Clearance Audit (PCA) has achieved unprecedented success in combating tax evasion, detecting fraudulent cases worth Rs. 60.5 billion, and having recovered over Rs. 6.7 billion during the past two years. According to the official statistics, the PCA, previously considered a lesser-known component of customs' machinery, has been transformed into a leading enforcement arm through sophisticated data-driven operations and landmark actions across multiple sectors including revenue recovery, fraud detection, anti-money laundering, and policy reform under the leadership of Dr Zulfikar Ali Chaudhary, who served as Director General of PCA throughout this transformative period and now preparing for his tenure end on August 4, 2025, which has been marked by groundbreaking achievements, institutional strengthening, and the implementation of data-driven enforcement strategies. The most significant breakthrough came from the Directorate of PCA South, under Director Sheeraz Ahmed, which uncovered the largest money laundering cartel in Pakistan Customs history. The massive fraud network, linked to the solar panel import sector, involved Rs. 120 billion in illegal transactions. This high-profile detection has prompted major reforms within the customs department, successfully plugging revenue leakages and preventing further losses to the national economy through over-invoicing schemes and money laundering operations. The PCA South directorate alone detected duty and tax evasion cases worth Rs. 48 billion and recovered Rs. 2 billion in revenue—an unprecedented achievement in the unit's history. Similarly, the Directorate of PCA Central, headed by Director Azmat Tahira, contributed significantly to the overall success with detections worth Rs. 12.5 billion and recoveries of Rs. 4.7 billion in duties and taxes. Across all regional directorates—South, Central, and North—PCA teams identified widespread misuse of the Export Facilitation Scheme (EFS), successfully reclaiming billions in evaded duties and taxes. These investigations have also led to substantial policy reforms that have strengthened checks and balances within the system. The regulatory improvements implemented as a result of these investigations are now actively preventing revenue losses worth billions of rupees, creating a long-term positive impact on Pakistan's fiscal health. PCA has evolved from a relatively obscure department into a key enforcement arm of Pakistan Customs. The unit's success in detecting large-scale fiscal fraud, curbing money laundering activities, and reclaiming billions in evaded duties and taxes has established it as a crucial component of the country's revenue protection framework. The transformation represents a significant shift toward modern, technology-driven customs enforcement, setting new standards for revenue recovery and fraud detection in Pakistan's customs operations. Copyright Business Recorder, 2025
Business Recorder
01-05-2025
- Business
- Business Recorder
Legal challenge to audit regime: SHC hails director (PCA) South assistance
KARACHI: The Sindh High Court (SHC) has acknowledged the assistance provided by Director Post Clearance Audit (PCA) South, Sheeraz Ahmed, in resolving a complex legal challenge to Pakistan Customs audit regime. The case involved Karachi-based importer, an Export Facilitation Scheme (EFS) user that imports iron and steel scrap. What began as a standard regulatory audit by PCA South evolved into a legal dispute when the company filed the suit, challenging the audit proceedings. While the SHC initially issued an interim order preventing 'coercive action,' it notably did not halt the ongoing audit process being conducted by the PCA Directorate. According to the details, the importer subsequently withheld complete records during the audit, particularly critical stock statements that would verify the status of imported EFS goods. This non-compliance prompted PCA to issue a second audit notice in October 2024, alongside conducting stock-taking at the EFS premises. The importer, alleging repetitive auditing for the same period, approached the SHC again with a Constitutional Petition that same month. The court expressed serious concerns about the legality of conducting two simultaneous audits for the same period. A double bench comprising Justice Agha Faisal and Justice Abdul Mobeen Lakho summoned Director PCA South to explain the procedural conduct. During the hearing on April 23, Director PCA Sheeraz personally appeared before the court and provided a detailed explanation that the second audit notice was issued specifically due to the importer's non-compliance with the first audit notice. He argued that the legal maneuvers by the said importer appeared to be tactical delays aimed at obstructing the legitimate audit process. Advocate Khalid Rajpar, representing PCA South, reinforced this position by assuring the court that the department would adhere strictly to legal protocols after completing the audit. He highlighted concerns about the importer's apparent use of repetitive court cases as a strategy to derail standard procedural audits. The SHC acknowledged the thorough explanation provided by PCA director, with the court's commendation representing a significant endorsement of PCA South's persistence despite operational challenges. The court ultimately disposed of the petition, establishing an important precedent for future audit-related litigation. Legal experts suggested this decision will strengthen confidence in Pakistan Customs regulatory framework for post-clearance audits, potentially deterring similar obstructive tactics in the future. Copyright Business Recorder, 2025
