An internal audit of Pakistan Customs has revealed significant shortcomings in the country’s Faceless Customs Assessment (FCA) system, which was introduced last year to curb corruption and streamline clearance procedures. According to a report cited by Dawn, the system resulted in an estimated revenue loss of Rs100 billion within just three months, raising concerns about assessment accuracy and systemic vulnerabilities.
The audit covered the period between December 16, 2024, and March 15, 2025, and examined a total of 13,140 goods declarations (GDs). Out of these, discrepancies were identified in 2,530 cases. The findings suggested that the FCA system, while intended to enhance transparency, created opportunities for revenue leakages and compliance risks. Of the declarations reviewed, 18 percent were cleared through the green channel, 76 percent via the red channel, and 6 percent through the yellow channel.
A major finding of the 161-page audit was the identification of Rs5 billion in duty and tax evasion across 1,524 GDs. Additionally, statutory fines worth Rs2.43 billion went uncollected. The clearance of restricted goods valued at Rs10.54 billion in 1,006 GDs further highlighted gaps in monitoring. These restricted items also included violations of intellectual property regulations. The report noted that the failure to frame contravention cases in instances involving evasion of Rs1 million or more added another Rs30.364 billion to the estimated loss.
The audit also uncovered instances of fiscal fraud and deliberate exploitation of the system. Cases included the cancellation of assessed or finalized GDs to evade duties and taxes, and fraudulent clearance of 54 solar panel containers processed through unauthorized tax numbers. The report stated that such practices exposed systemic lapses in the FCA system, particularly in the management of tax identities and authentication procedures.
One cited example involved the import of a used Toyota Land Cruiser, which was declared at Rs10 million, far below its actual cost. The discrepancy suggested possible trade-based money laundering, reflecting the broader financial risks stemming from weak enforcement under the FCA framework. Officials pointed out that front-end facilitation under FCA, especially the green channel, has diminished the effectiveness of pre-clearance checks. Currently, the green channel accounts for nearly 60 percent of imports and 85 percent of exports, raising concerns about unchecked clearances.
The report detailed recurring issues such as misclassification of Harmonized System (HS) codes, undervaluation of goods, misuse of exemptions, and underpayment of sales tax. Post-clearance audits revealed repeated instances of misdeclarations in GD filings, enabling importers to evade duties and fines without detection. This pattern indicated that the FCA system, instead of fully preventing malpractice, may have inadvertently created new avenues for evasion.
Further scrutiny of solar panel imports between December 2024 and February 2025 showed that 28 GDs were processed under different and unauthorized National Tax Numbers. Some importers had prior arrests in similar cases, underscoring systemic weaknesses in the customs framework.
The audit findings suggest that while the FCA system was designed to promote transparency and efficiency, its implementation has allowed fiscal fraud and duty evasion to proliferate. The report has raised serious questions about the balance between automation-driven facilitation and enforcement, highlighting the need for stronger safeguards, stricter monitoring, and corrective measures to prevent further revenue losses.
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