A Senate subcommittee investigating cigarette smuggling and tax exemption misuse has raised serious questions regarding the possible recovery of Rs 1.12 trillion from the tobacco industry, alleged leakage of Customs data to private media, corruption complaints against officials and incomplete records provided by government departments. The committee ordered strict action, sought bank and asset details, and demanded a full investigation into the possible misuse of tax exemptions and consumption certificates.
The committee strongly questioned how confidential Customs data reached private media organisations. Members observed that such information could not have been leaked without the involvement of Customs officials. The committee also questioned the conduct of media organisations regarding professional ethics.
Federal Board of Revenue officials told the committee that an investigation into the data leak was already underway. The convener directed the FBR to take strict action against any official involved in leaking Customs data to the media and to submit a complete report.
A major part of the meeting focused on the reported recovery of Rs 1.12 trillion linked to the tobacco industry’s consumption certificates. The committee questioned why complete details of consumption certificates issued for goods imported into tax exempt areas had not been provided.
Officials informed the committee that the Peshawar High Court had ordered an audit before consumption certificates could be issued and had also stopped Pakistan Customs from cashing security cheques. The convener urged the FBR to challenge the court order before the Federal Constitutional Court and report back to the committee.
The committee also reviewed the alleged misuse of tax exemptions by industries operating in tax exempt areas. Senator Talha Mahmood alleged that some industrialists were operating two or more factories, including one in a tax exempt area and another in a settled area.
He further alleged that some Customs officials helped such businesses take advantage of the system. The Federal Investigation Agency told the committee that a team had been formed to investigate the matter.
Senator Talha Mahmood said the FIA could help improve the process of issuing consumption certificates if the issue was handled seriously. He also recalled that Pakistan Customs had previously installed tracking chips on containers to check their movement and confirm whether goods reached their declared destinations.
He called for stronger tracking and monitoring systems to stop smuggling and misuse of tax exemptions. The committee directed authorities to send letters to all factories operating in tax exempt areas, demanding complete details of imported materials, materials used, brand names and taxes paid during the last two years.
Members were informed that Pakistan Customs had issued consumption certificates worth around Rs 378 billion. The committee also sought bank and account details of the companies in whose names those certificates were issued.
The Chair observed that anyone refusing to provide required records or information could face legal action. The committee also examined serious allegations of corruption and theft involving officials. Three investigating officers identified as Shahzaib Ali, Fakhar Gondal and Christopher were presented before the committee regarding corruption allegations.
The committee was informed that 22 people were allegedly involved in theft incidents and that 11 had been arrested. The committee directed authorities to provide details of assets allegedly beyond the known income of the accused officials.
It also sought forensic examination reports of their mobile phones. Senator Talha Mahmood recommended that the Senate Standing Committee on Interior also take up the corruption case. The committee further examined tobacco industry consumption data and asked departments to provide records from earlier years in addition to the data already submitted.
Officials briefed members about major raw materials imported by tobacco companies. The committee was told that around 20,002 metric tons of acetate tow had been imported. Around 97 percent of this quantity was reportedly used by two major companies, while the remaining 3 percent was linked to other companies.
Officials also reported the import of around 15,639 metric tons of tobacco paper. Of this amount, around 10,840 metric tons was imported by Pakistan Tobacco Company, while Philip Morris imported around 3,118 metric tons. Other companies imported the remaining quantity.
The committee was also told that around 533 metric tons of filter rods had been imported. Two major companies accounted for around 96 percent of this quantity, while other companies accounted for the remaining 4 percent. According to the briefing, Pakistan Tobacco Company and Philip Morris together accounted for around 94 percent of imported material consumed by the tobacco industry.
Local companies accounted for the remaining 6 percent. The Chair expressed concern that government departments had still failed to provide complete and combined information to the committee. Officials informed the committee that Pakistan Tobacco Company and Philip Morris did not fall under the jurisdiction of RTO Peshawar.
Pakistan Tobacco Company was under LTU Islamabad, while Philip Morris was under LTU Karachi. The committee directed the concerned tax offices to provide full details of taxes collected and imported material linked to both companies. The committee was also informed that four illegal cigarette manufacturing companies operating in Khyber Pakhtunkhwa had recently been sealed.
Authorities were directed to provide full details of all companies operating under RTO Peshawar. The convener also asked officials to provide the formula used to calculate taxes on cigarettes. Senator Bilal raised concerns that Balochistan was still not receiving enough industrial development.
He also complained that legal goods were sometimes being treated as smuggled items even when borders in Balochistan were sealed. Another controversy emerged over conflicting figures related to people arrested in theft cases. One briefing told the committee that 22 people were involved and 11 had been arrested.
However, the Inspector General of the National Highways and Motorway Police also reported that 11 people had been apprehended. The committee sought clarification over the figures and demanded one accurate and complete position. Members expressed serious concern over what they described as a misleading statement made before the committee.
The committee directed that a letter be sent to the Ministry of Communications and ordered that the matter also be referred to the Privileges Committee. The FBR representative told members that the department had taken several steps to control tax exemption abuse, smuggling and other illegal practices.
