Pakistan’s customs authorities incurred revenue losses exceeding Rs. 3.56 billion due to the incorrect classification and undervaluation of imported goods, according to a new audit report highlighting widespread irregularities across multiple field offices of the Federal Board of Revenue (FBR).
The audit revealed that 16 FBR field offices incorrectly classified 7,585 import consignments under inaccurate Pakistan Customs Tariff (PCT) headings, resulting in the short collection of more than Rs. 2.35 billion in customs duties and taxes.
According to the report, a range of imported products including food items, mobile phone pouches, power cables, printing ink, auto parts, and other goods were cleared under incorrect tariff classifications, allowing importers to pay lower duties than required.
In a separate finding, auditors identified 2,246 cases across 17 FBR field offices where imported goods were declared at values below their actual worth. The undervaluation led to an additional Rs. 1.20 billion in lost customs duties and taxes.
Products cleared using undervalued import declarations included household appliances, watches, soap, cosmetics, tea, fabrics, solar inverters, and mobile phone covers.
The audit concluded that the failure to properly implement Customs Valuation Rulings significantly weakened customs enforcement and caused substantial losses to the national exchequer.
Despite the findings, the report noted that the department has recovered only Rs. 2.5 million so far, while recoveries exceeding Rs. 810 million remain under process. Cases involving more than Rs. 1.46 billion are still pending at various stages of legal and administrative proceedings.
The audit also stated that the department challenged cases worth over Rs. 1.27 billion but was unable to provide sufficient evidence to support its claims.
The Departmental Accounts Committee (DAC) has directed customs authorities to expedite recoveries, submit detailed reports on pending cases, and initiate disciplinary action against officials found responsible for the irregularities. The audit further recommended strengthening post-release verification mechanisms to prevent similar violations in the future.
The report warned that customs misclassification and import undervaluation have repeatedly appeared in audit observations over the years, describing the continued recurrence of these issues as a matter of serious concern for Pakistan’s revenue collection system.
