Pakistan’s customs authorities suffered revenue losses exceeding Rs. 3.56 billion due to the incorrect classification and undervaluation of imported goods, according to a new audit report highlighting serious irregularities across multiple Federal Board of Revenue (FBR) field offices.
The audit found that 16 FBR field offices wrongly classified 7,585 import consignments under incorrect Pakistan Customs Tariff (PCT) headings. As a result, the national exchequer lost more than Rs. 2.35 billion in customs duties and taxes.
According to the report, imported food products, mobile phone pouches, power cables, printing ink, auto parts and several other goods were cleared under inaccurate tariff classifications, allowing importers to pay lower duties than required.
The audit also uncovered 2,246 cases across 17 FBR field offices where imported goods were declared at values lower than their actual worth. This practice resulted in an additional loss of over Rs. 1.20 billion in customs duties and taxes.
Products identified in undervaluation cases included household appliances, watches, soap, cosmetics, tea, fabrics, solar inverters and mobile phone covers. The report stated that failure to properly implement Customs Valuation Rulings significantly weakened customs enforcement and contributed to repeated revenue leakages.
Despite the massive losses, the department has recovered only Rs. 2.5 million so far. Recoveries worth more than Rs. 810 million are currently under process, while cases involving over Rs. 1.46 billion remain pending at different stages of proceedings.
The audit further revealed that authorities challenged cases worth over Rs. 1.27 billion but failed to provide sufficient evidence to support their claims, limiting the department’s ability to recover lost revenue.
The Departmental Accounts Committee (DAC) has directed customs authorities to expedite recoveries, strengthen oversight mechanisms and submit detailed reports on pending cases. The audit also recommended disciplinary action against responsible officials and called for improved post-release verification procedures.
The report warned that customs misclassification and import undervaluation have repeatedly surfaced in audits over the years, describing the continued recurrence of such irregularities as a serious concern for revenue collection and governance.
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