Rs73 million tax evasion detected in PAPCO, PARCO

The internal audit team of customs detected tax evasion of Rs73 million on dutiable petroleum products (High Speed Diesel) of PAPCO and PARCO at the time of ex-bonding. Official sources said that the team audited custom duties and other taxes at the bonded warehouses of M/s PAPCO and M/s PArCO, Mahmood Kot, Muzaffargarh for the period of July 1, 2008 to April 30, 2011.
According to details, Mehmod Kot bonded warehouse receives non duty paid imported HSD from PAPCO which is transported from Port Qasim, Karachi through a pipeline under customs safe transportation. PAPCO maintains record of HSD oil for delivery to joint installation of oil marketing companies (JIMCO) Mehmood Kot on the payment of duties and taxes, whereas the rest of the oil is transferred to Faisalabad and Machike under safe transportation.
About PARCO warehouse, it is only used in case of duel product movement (Crude and HSD) through Kemari Korangi pipeline. Inter-mix generated in the Kemari Korangi pipeline is documented on the completion of the pipeline operation and is transferred through PArCO pipe line system to PArCO Mahmood Kot under proper safe transportation. The duties and taxes on this inter-mix HSD oil quality is
paid by the respective oil marketing companies (OMCs). During the audit, it was revealed that incorrect application of “petroleum development levy” (PDL) by Model Customs Collectorate Multan caused huge monetary loss to the national exchequer. It was further pointed out that customs duty and sales tax was deposited but PDL was evaded on the said goods declared.
According to documents, oil was cleared at the rate of Rs8 per litre whereas ex-bonded rate was Rs8.53 per litre. During further audit, it was also pointed that PSO short deposited sales tax by applying incorrect rate of price differential claim (PDC) causing loss to national exchequer. The evasion was brought to the notice of the M/s PAPCO, PARCO, PSO and customs authorities Multan who agreed with the audit observations and deposited the evaded duties of Rs73 million.