PARCO and PAPCO evade Rs73m in taxes

Firms did not pay customs duty and petroleum development levy.

LAHORE:

An internal audit team of the Customs department has detected tax evasion of Rs73 million on dutiable petroleum products such as High Speed Diesel (HSD) of Pak-Arab Pipeline Company (Papco) and Pak-Arab Refinery Company (Parco) at the time of ex-bonding.

Official sources said on Friday that the team audited the customs duties and other taxes at the bonded warehouses of Papco and Parco, Pakistan’s largest oil refinery, in Mahmood Kot and Muzaffargarh for the period of July 1, 2008 to April 30, 2011.

Mahmood Kot bonded warehouse receives non-duty paid imported HSD from Papco, which is the transported from Port Qasim through a pipeline from Karachi under customs safe transportation. About the Parco warehouse, it is only used in case of dual product movement (Crude and HSD) through the Kemari-Korangi pipeline. Inter-mix generated in the Kemari-Korangi pipeline is documented on the completion of the pipeline operation and is transferred through the Parco pipeline system to the Parco warehouse in 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. During a thorough audit, it was revealed that incorrect application of Petroleum Development Levy (PDL) by the Model Customs Collectorate Multan caused a huge monetary loss to the national exchequer. It was further pointed out that customs duty and sale tax was deposited but PDL was evaded on the said goods.

According to documents, oil was cleared at the rate of Rs8 per litre whereas ex-bonded rate was Rs8.53 per litre.



Published in The Express Tribune, July 30^th, 2011.