The Federal Board of Revenue (FBR) is moving forward with legal action against 463 importers, 106 clearing agents, and several officials from Pakistan Revenue Automation Limited (PRAL) and Pakistan Single Window (PSW) for tampering with over 2,300 customs declarations, resulting in an estimated Rs14 billion in evaded taxes, according to a news report.Â
The fraud, which had been operating since January 2020, came to light after a former PRAL employee, facing corruption charges, blew the whistle on the operation. The whistleblower implicated several individuals who had moved from PRAL to PSW after the system transitioned in 2022.
The report said that the culprits took advantage of weaknesses in the Web-Based One Customs (WeBOC) and PSW systems to alter transshipment (TP) Goods Declarations (GDs). Instead of converting these declarations to Home Consumption GDs at dry ports, as required by law, they manipulated product classification codes, quantities, and values to evade customs duties.
The fraud was primarily carried out at dry ports, with Peshawar having the highest number of tampered GDs at 1,671, followed by Lahore with 522. Other affected cities included Sialkot, Islamabad, Quetta, Risalpur, and Multan.
Despite the breach, the Customs Risk Management System (RMS) helped avert a financial disaster by flagging 99.2% of the manipulated declarations for further scrutiny. Only 19 declarations, primarily from multinationals and large manufacturers, passed through the green channel without detection.
A preliminary audit of 60 randomly selected GDs showed that the initial declared duties of Rs136 million were reduced to Rs99 million due to system manipulation. However, inspections triggered by RMS uncovered Rs351 million in duties, recovering an additional Rs251 million in the process.
The FBR has instructed its Directorate General of Post Clearance to conduct a full audit of all affected declarations to assess the total revenue impact. Officials noted that tampering with the system is a punishable offense under various sections of the Customs Act 1990.
This case highlights the systemic vulnerabilities in the PSW system, as the transition from PRAL to PSW in 2022 did not address existing issues. Instead of forming a new team to enhance security, PSW retained many PRAL officials, allowing the fraud to continue.
Sources emphasised the need for a forensic audit of the entire system to identify all potential revenue leaks since the system’s implementation in 2015.
