Customs flags rice export weight misdeclaration amid subsidy concerns

ISLAMABAD: Pakistan Customs has identified around 150 exporters for allegedly misdeclaring the weight of rice consignments in a practice that could lead to inflated subsidy claims, according to details shared by officials familiar with the matter.

The Collectorate of Customs (Exports), Karachi, recently held a meeting with the Rice Exporters Association of Pakistan (REAP) over what customs authorities described as a recurring compliance problem in the use of subsidy facilities available on rice exports. Officials raised concern over the growing misuse of export facilitation mechanisms after detecting discrepancies between declared and actual shipment weights in multiple consignments.

Rebate scheme under scrutiny

The issue has gained significance because the Ministry of Commerce has set aside about Rs15 billion for a rebate scheme covering local taxes and levies for rice exporters. Under the scheme, exporters of basmati and brown rice can claim a 9 per cent rebate on the free-on-board value if the export price is at or above $750 per tonne. Other coarse rice is eligible for a 3 per cent rebate on FOB value where the export price stays below $750 per tonne.

According to officials familiar with the discussions, overstating shipment weight in export documents can allow exporters to show larger volumes and in turn seek higher financial benefits under incentive schemes linked to quantity or value. Officials said this not only risks increasing subsidy payouts beyond what is due, but also affects fair competition within the sector.

Meeting with exporters

REAP acknowledged that customs authorities had conveyed serious concern over the irregularities and warned exporters against such conduct. The association advised its members to strictly follow declared weights and customs rules, while making clear that it would distance itself from any company found involved in fraudulent reporting.

Exporters familiar with the issue said the manipulation usually occurs during the documentation stage, when shipment weights are recorded above the quantity actually loaded. They said weak verification at some points in the export process can allow such discrepancies to pass unnoticed unless they are identified through inspection or audit.

Officials said customs may tighten enforcement in response, including possible penalties, recovery of undue financial benefits and legal proceedings against those found in violation. REAP has also cautioned that it will not back members proven guilty of misdeclaration, placing responsibility on exporters to ensure transparent transactions.

The development has also drawn attention to broader weaknesses in subsidy oversight, particularly where claims rely heavily on documentation without strong cross-verification of the physical cargo being shipped.