An export-oriented apparel company winds up operations from Bangladesh allegedly availing duty-free facilities and evading around Tk 7.0 billion in duty-taxes.
Officials said World Ye Dress Pants Ltd, which started off as a joint-venture company and later became independent through acquisitions, folded up business three years ago leaving behind the tax liabilities.
Sources now say the company had skipped customs audit for 14 years of its operation taking advantage of the customs authorities' "reluctance or with connivance".
Poor governance of the customs authorities is blamed by the sources for the gross irregularities along with non-cooperation of relevant entities and involvement of influential quarters.
From 2004 to 2018, the company had allegedly forged electronic export data (e-exp), sold machinery and raw materials after importing under the bonded-warehouse facility and siphoned money through export proceeds.
They said the export-oriented company was first established with joint investment of Bangladesh, the USA and China.
Later, the sources said, it changed ownership through the exchange of shares and became a 100 per cent Chinese-invested company.
However, the company is not a member of the Bangladesh-China Chamber of Commerce and Industry (BCCCI).
Finding the gross abuse, the customs bond commissionerate, Chattogram, sent six show-cause letters to the Managing Director of the company. Customs officials said they had received non-cooperation from the Bangladesh Export Processing Zones Authority (BEPZA) and banks concerned during investigations.
World Ye Dress Pants Ltd had refrained from auditing its annual export-import activities since obtaining bonded-warehouse licences on December 28, 2004.
"Despite several letters, they did not extend cooperation to the customs authority" by way of providing required documents for auditing its activities, customs officials alleged.
However, during their operation in Bangladesh, the customs authority did not take any legal action against the company despite having such provision in the Customs Act 1969.
In 2015, customs bond commissionerate, Chattogram, approved the application of the company named M/S World Ye Dress Pants Ltd, located in Chattogram Export Processing Zone (CEPZ), to store its duty-free raw materials under another company named M/S World Ye Apparels Ltd located in Karnaphuli EPZ.
The approval was given on a temporary basis, until completion of the construction of the company in KEPZ, and on condition of furnishing all required documents for auditing in two months and obtaining final approval.
However, the company did not obtain the final approval nor set up any industry named M/S World Ye Dress Pants Ltd in KEPZ.
Sources alleged that the company changed its ownership to a company in Karnaphuly EPZ in 2018 registering it in name of the wife and daughter of the owner of the closed company.
However, customs officials said the company did not officially close its activities and was still holding the bonded-warehouse licence.
Customs Bond commissioner of Chittagong A.K.M Mahbubur Rahman said the company surprisingly escaped audit despite several warnings from the customs authority.
During the investigation, customs cross-verified data from BEPZA and BB websites, he said.
"We will give enough scope to the company to furnish documents of self-defence," he added.
Mesbah Uddin, General Manager of Chattogram EPZ, said the required documents of the customs authority were in a manual form that BEPZA did not preserve usually that time due to the absence of automation.
"We have submitted the documents available to us. Customs has three functional departments here to maintain those documents," he added.
Escaping audit of customs was a regular phenomenon in EPZ companies in Chattogram that the customs is dealing with seriously now, sources said.
A vested quarter is involved in abusing the bonded-warehouse facility evading thousands of millions worth of government tax revenue.
Sources expressed doubt over the realisation of the evaded tax as the company no longer exists in Bangladesh.
Al Mamun Mridha, joint secretary of the BCCCI, said the company is not a member of the chamber to ensure or monitor its compliance.
He said most of the EPZ companies are not members of the chamber body.
Representative of the company Shimul Datta was not available for comment on the allegation of duty evasion.
Fake e-exp caused Tk 5.55 billion revenue loss: Some 358 electronic export data of the company were not available in the Bangladesh Bank (BB) database while some 34 pieces of e-exp have s been issued in favour of the other company.
According to data of BEPZA, CIS and BB, the customs officials verified data with the Asycuda world and Bangladesh customs website.
It has been alleged that the company has illegally shifted or sold duty-free products through those 381e-exp to other companies abusing the duty-free benefit.
Banks that issued e-exp to the company include Bank Asia, Standard Bank, HSBC, Arab-Bangladesh Bank etc.
Concealed export-import documents to evade Tk 1.06 billion: According to collected information of Bangladesh Export Processing Zones Authority (BEPZA), the Central Information Cell of the NBR and Bangladesh Bank, it has been found that the company has used excessive import products to manufacture finished products that its import data showed in 2008 to 20011 and 2013.
The raw materials the company used have been imported illegally and the company failed to give any satisfactory answer to the customs authority.
Mismatch between use and import of raw materials proves that the company illegally imported the duty-free products abusing bonded- warehouse facility. It refrained from providing export-import documents non-cooperating with customs authorities in conducting audits of its annual activities.
Following the irregularities, the customs bond office of Chattogram sent a show-cause notice to the company on October 24 last asking it to explain the reason in the next 30 days.
Sale of duty-free machinery, raw materials and vehicles: The apparel-exporting company shifted or sold some 798 machinery imported under duty-free benefit involving US$ 3067275.07 without approval from the customs authority.
The applicable duty taxes on the machinery ranged 37 per cent, 26.20 per cent, 11.35 per cent and 58.60 per cent, customs findings said.
It shifted duty-free raw materials evading Tk 53.59 million taxes. The customs found some 146839 kilograms of left-out stock of raw materials after the company had exported its products using the imported raw materials.
The company has also sold out two duty-free vehicles worth $5,345,800 evading Tk 2.6 million in duty. It could not show the vehicle to the investigation committee of customs.
Alleged siphoning of money: Customs officials alleged that the export-oriented company did not repatriate export earnings worth Tk 73.90 million.
In a verification of e-exp in the BB online Proceed realisation certificate (PRC), it has been found export earning against 33 e-exps was not repatriated in 205, 2006 and 2007 calendar years. Through the State Bank of India, and HSBC Ltd, Chittagong branch, the company opened the e-exp.
