Islamabad, December 13, 2025 — Pakistan is grappling with a growing challenge of illicit trade in the tobacco sector, which continues to undermine the national economy and cause heavy losses to the public exchequer. The unchecked movement, storage, and use of non-duty-paid unmanufactured tobacco— the primary raw material for cigarette production— has emerged as a major source of large-scale evasion of Federal Excise Duty (FED) and other applicable taxes.
Taking serious notice of the issue and its adverse economic impact, the Prime Minister has issued firm directives to eliminate illegal practices in the tobacco and cigarette industry and ensure strict enforcement of tax laws across the entire supply chain, including raw materials.
In line with these instructions, the Federal Board of Revenue (FBR) has rolled out a comprehensive, multi-tier enforcement strategy to curb the production of non-duty-paid cigarettes. The initiative focuses on intelligence-based monitoring, dismantling illegal manufacturing networks, and strengthening coordination with law-enforcement agencies and key stakeholders to protect government revenue.
As part of this nationwide crackdown, the Regional Tax Office (RTO) Peshawar conducted a major enforcement operation in District Mardan. The operation led to the seizure of approximately 2.75 million kilograms of non-duty-paid unmanufactured tobacco from the godowns of M/s Khyber Tobacco Company, a known manufacturer of cigarette brands including Kissan and Gold Street Classic. The estimated evaded Federal Excise Duty on the seized stock is around Rs1.1 billion.
Following completion of codal formalities and required approvals, RTO Peshawar sealed the company’s godowns on December 12, 2025. The operation was carried out under the supervision of the Chief Commissioner Inland Revenue, RTO Peshawar, with Assistant Commissioner Inland Revenue Shehroz Rashid Ahmad Khan leading the enforcement team. Further legal proceedings under relevant provisions of the Federal Excise Act, 2005 are underway, including actions related to sealing and confiscation of machinery.
According to preliminary estimates, had the seized tobacco been converted into cigarettes, it could have resulted in tax evasion of nearly Rs19 billion, causing a massive loss to the national exchequer. The timely seizure has therefore prevented significant revenue leakage and disrupted a major illicit supply chain.
Officials also revealed that just a week earlier, RTO Peshawar seized undeclared cigarette manufacturing machinery belonging to M/s Universal Tobacco Company. The owners of both firms are reportedly related and wield political influence in the area.
Despite intense pressure, FBR officials proceeded strictly in accordance with the law. The enforcement actions reflect FBR’s strong resolve to uphold tax laws, ensure compliance, protect legitimate businesses, and safeguard public revenue without fear or favor.