Karachi: Authorities Crack Down on Massive Misuse of Export Facilitation Scheme (EFS)
KARACHI: In a decisive move to curb the widespread abuse of the Export Facilitation Scheme (EFS), authorities have launched an extensive crackdown, leading to multiple arrests and the recovery of billions in lost revenue. Originally designed to support exporters by permitting duty-free import of input materials for manufacturing export goods, the scheme has been heavily misused, particularly in Gujranwala and Peshawar during 2022-23.
Major Case: M/s. Motiwala International Caught in EFS Fraud
One of the most significant cases uncovered involves M/s. Motiwala International (NTN 3655176-7), which was granted an EFS license (EFS-KEXP-3655176-367-15-03-2024) on March 15, 2024, for duty-free import of Polyester Yarn (PCT: 5402.3300 and 5402.4700) under Rule 878(1) of SRO 957(I)/2021. The imported yarn was intended for the production of Polyester Fabric for export under Rule 884 of the same SRO.
However, an inspection by the Collectorate of Customs uncovered alarming discrepancies. The company had imported 477,074 kg of Polyester Yarn worth Rs. 170,967,206, but only 16,643 kg (valued at Rs. 6,330,153) was actually used in the production of export goods.
A surprise inspection on February 13, 2025, at the company’s Karachi premises found only 13,438 kg of Polyester Yarn. The company claimed the remaining stock was stored at another registered location in Jhang, Punjab.
Shocking Findings in Jhang Premises
Upon further inspection by the Collectorate of Customs, Faisalabad, on February 15, 2025, authorities discovered that the Jhang premises contained:
- 1,860 kg of cotton yarn
- 22,140 kg of grey cloth fabric
None of the missing Polyester Yarn was found. Laboratory tests confirmed that the grey fabric was cotton-based, proving that the duty-free imported Polyester Yarn had been illegally removed.
Revenue Loss & Legal Action
Investigations revealed that M/s. Motiwala International had illicitly removed 446,993 kg of duty-free Polyester Yarn, valued at Rs. 160,291,467, resulting in a revenue loss of Rs. 72,674,097 in unpaid:
- Customs Duty
- Additional Customs Duty
- Regulatory Duty
- Sales Tax
- Income Tax
- Surcharge
The company has been charged under Rules 880(1) and 882(1) of SRO 957(I)/2021, as well as Sections 21(A), 32(1), and 187 of the Customs Act, 1969.
A First Information Report (FIR) has been registered, and further legal actions are ongoing.
Crackdown Led by Top Customs Officials
The successful exposure of this large-scale fraud is credited to:
- Collector Exports Irfan Javed
- Additional Collector Sadia Sadaf
- Deputy Collector Wasif Malik
Their dedicated efforts have been instrumental in uncovering the EFS violations and recovering lost revenue.
Widespread EFS Abuse & Government Action
The misuse of the Export Facilitation Scheme (EFS) extends far beyond this case. Reports indicate that fraudulent activities in Gujranwala and Peshawar have led to billions of rupees in lost revenue.
Authorities are now implementing:
✅ Stricter Monitoring & Audits
✅ Enhanced Enforcement Mechanisms
✅ Tighter Regulations for EFS Beneficiaries
The crackdown serves as a stern warning to those attempting to manipulate the system for personal gain. The government remains committed to ensuring the EFS supports genuine exporters, safeguarding national revenue, and promoting fair trade practices.
