FBR Seals Illegal Karachi Cigarette Factory, Seizes Rs200m Assets

KARACHI: The Federal Board of Revenue has sealed an alleged illegal cigarette manufacturing facility in Karachi's Malir area and seized machinery, raw material and finished stock valued at more than Rs200 million. Officials estimate that the operation had the capacity to cause approximately Rs1.2 billion in annual revenue losses to the national exchequer.

According to the FBR, the operation was carried out by Regional Tax Office-II Karachi as part of enforcement efforts against illicit cigarette manufacturing and the illegal tobacco trade. The raid followed intelligence received by authorities and involved the Inland Revenue Enforcement Squad, RTO-II Karachi and the Inland Revenue Enforcement Network, known as IREN.

Authorities said the factory contained an extensive production setup capable of manufacturing cigarettes on a commercial scale. Equipment taken into custody included cigarette-making machines, packaging machines, token machines, filter-manufacturing equipment, heavy-duty generators and other machinery associated with cigarette production. Around 700 kilograms of raw tobacco was also recovered from the premises.

An initial assessment cited by the tax authorities placed the plant's production capacity at approximately 700,000 cigarette sticks per day. At that rate, the facility could potentially have produced around 200 million cigarette sticks annually. The scale of the machinery and available material prompted officials to estimate a substantial potential loss of federal excise and other government revenue from unregulated production.

The enforcement team sealed the factory and took control of the plant, machinery and cigarette stock found at the location. Authorities subsequently dismantled the seized production equipment under the prescribed legal procedure and transferred the machinery, raw material and finished goods to the official premises of RTO-II Karachi for further proceedings.

The operation was led by Inland Revenue Deputy Commissioner Baqar Ali and supervised by RTO-II Karachi Chief Commissioner Zafar Rafiq, according to the official account. Coordination was handled by Dr Aslam Marri, Commissioner Inland Revenue at RTO-II Karachi and regional coordinator for IREN in Sindh and Balochistan.

Authorities have also initiated criminal proceedings against people allegedly associated with the factory. An FIR has been lodged before the court of the Special Judge Customs and Taxation in Karachi, while further investigation is under way to establish responsibility and determine the full extent of the suspected illicit manufacturing and tax-evasion operation. No final determination of criminal liability has yet been reported.

The case is significant for Pakistan's revenue enforcement because illicit cigarette manufacturing can bypass taxes imposed on legally produced tobacco products and undermine government efforts to document the sector. The FBR has said its enforcement authorities will continue taking action against illegal cigarette production, illicit tobacco trading and tax evasion, with the Karachi investigation now expected to focus on identifying those involved and completing the criminal and revenue proceedings.