Repacking, sale of expired, smuggled cigarettes enter local markets in Pakistan

2026-02-26 - 08:04

ISLAMABAD – A large-scale irregular operation in Pakistan’s tobacco sector, involving repacking of expired and smuggled cigarettes of international brands and their resale in the local markets, has surfaced, the latest reports claimed on Thursday. The repacking of expired and smuggled cigarettes of international brands took place under the cover of incentives granted to companies functioning in Export Processing Zones (EPZs). The suspected activity may have deprived the national exchequer of billions of rupees while expired and potentially unsafe tobacco products allegedly entered local markets, said the reports. According to market estimates, illicit cigarettes accounted for nearly 11 percent of Pakistan’s total cigarette sales in 2025, leading to significant annual tax losses due to evasion and smuggling. The case surfaced after FBR enforcement teams conducted a raid at a company located in the EPZ, Karachi. During the operation, authorities reportedly seized approximately 4.5 million sticks of foreign-brand cigarettes believed to have been smuggled into the country. The confiscated brands included Marlboro, Camel, Benson & Hedges (Nero Blue and Red variants), and Cleopatra. In addition, officials recovered large quantities of cigarette filters, acetate tow, cigarette paper and expired sheesha flavoring materials. Expired or near-expiry cigarette consignments are acquired from international grey markets at heavily discounted prices and then smuggled into Pakistan. Such products are often rejected by authorized distributors abroad due to limited shelf life but can be purchased in bulk at nominal cost. Industry representatives explain that cigarettes typically remain fresh for three to six months, depending on storage conditions. After that period, tobacco may dry out, lose flavor, and undergo chemical degradation, increasing the risk of mold formation and making the product unsuitable for consumption. Investigators suspect that these outdated stocks were repackaged and relabeled within EPZ premises, with original production and expiry details allegedly altered or concealed before redistribution into the market. The controversy centers on the alleged misuse of EPZ-related tax concessions. Under various statutory regulatory orders (SROs) issued in 1980, 1981, 1982, and 2021, goods brought into and shipped out of EPZs are exempt from customs duties and sales tax. These incentives were introduced to boost exports and attract foreign investment. However, experts believe the same framework may have been exploited to import expired cigarette stocks, process them inside EPZ facilities, and divert them into Pakistan’s domestic market—actions that would contravene EPZ rules. Trade data reportedly indicates that the same business group exported consignments to countries including Ghana, Colombia, Vietnam, and Syria, where regulatory enforcement may be comparatively weaker. Sources have urged authorities to examine the full scale of alleged repackaging operations across all factories linked to the group. It is also alleged that substantial quantities were channeled into the local market without payment of excise duty and sales tax. Sources claim that the company which was raided in Karachi unveiled the operations involving repackaging expired foreign cigarette brands imported under EPZ facilities, allegedly in coordination with other two companies. Repackaging and marketing expired cigarettes is prohibited in most jurisdictions. Tobacco products must carry mandatory graphic and textual health warnings, tax stamps, banderols, and manufacturer identification. Altering original packaging disrupts regulatory compliance, rendering the goods illicit and untaxed. Unauthorized repackaging may also violate intellectual property rights and lead to civil litigation. Manipulating or concealing expiry dates amounts to consumer fraud. Pakistan already incurs heavy losses from smuggled and non-duty-paid cigarettes. The alleged abuse of EPZ concessions could further expand the underground economy. Moreover, exporting repackaged expired goods to foreign markets risks damaging Pakistan’s trade reputation. Apart from financial losses, the issue has serious public health implications. While tobacco consumption is inherently harmful, deterioration caused by expiry and improper storage may heighten exposure to toxic byproducts, increasing health risks. The Federal Board of Revenue has intensified enforcement actions against tax evasion in the tobacco industry and indicated that operations will continue despite ongoing court proceedings. The unfolding case has triggered broader concerns about regulatory oversight within Export Processing Zones and whether longstanding incentive regimes are being misused at the expense of lawful trade, public health, and the national economy.