Tk3,184cr duty evasion by 44 RMG units unearthed

Highlight: 

• Garment manufacturers imported raw materials duty-free under the bond facility but they did not re-export their finished products
• Customs authorities have already issued notices to the companies to recover the evaded duty
• Chittagong Asian Apparels evaded the duty three times, while Legacy Fashion Ltd, Selim and Brothers Ltd, Lemond Apparel and Textile have committed the same violations two times
• BGMEA has called the issuance of claims one-sided

The customs authorities have unearthed duty evasion of more than Tk3,184crore by 44 Chattogram-based 100% export-oriented readymade garment manufacturers.

According to the customs, the garment manufacturers had imported duty-free raw materials under the bond facility but did not re-export the finished products.

The Customs Bond Commissionerate found such information while auditing the garment factories for fiscal 2021-22 from 1 July 2021 to 30 June 2022. Customs has already issued notices to the companies to recover the evaded duty.

In some companies, tax evasion also came up in the audits from 2010 to 2020, according to sources in the bond commissionerate.

The government provides duty-free facilities for the import of raw materials to encourage the country's export-oriented garment industry. This facility is known as the bond facility. According to the rules, imported raw materials should be made into garments and exported.

But some garment companies import raw materials using the bond facility and sell them in the local market. Also, they export less than what they should have exported compared to the amount of imported raw materials.

AKM Mahbubur Rahman, a commissioner of the Customs Bond Commissionerate, Chattogram, told The Business Standard, "Initially, the companies have been served with show cause notices – some have already responded and several others sought time extension. The final decisions will be given after hearing from the garment owners."

The companies in question include Lemond Apparel and Textile, A&B Outwear Limited, Cold Play School Products Ltd, Water Tech Limited, Young An International BD, JP Sweaters Ltd, Asian Apparel Limited, Zil Wares Limited, PRM Fashions Pvt Ltd, Hela Clothing (BD) Ltd, Legend Textile Ltd, Sea Blue Textile Limited, World Ye Dress Pants Ltd, Towels Bangladesh limited, HHH Accessories Industry Limited, ATS Pearl Limited, Al Galeb Fashion Ltd, Cottonex Fashions Ltd and Apollo Sewing and Garments Ltd.

Rhythm Fashion Ltd, Selim and Brothers Ltd, Chittagong Asian Apparels, Super Packaging, Global Specialized Garments, Bayozid Apparel, Al Amin Garments, Baridhi Garment, Wink Co Ltd, Mithun Knitting and Dyeing Ltd, Legacy Fashion Ltd, Padma Wears Ltd, Dream Knitting Ltd, Appes Limited, Hasib Apparel, Naba Export Ltd, Bayozid Dresses. Hong Kong Denim (Pvt), Saz Fashion, Siam Superior, Peninsula Garments, Thianis Apparels Ltd, Authentic Garments, Asif Fashion Industries, Idus Fashion Ltd are the other companies facing duty evasion allegations.

According to the bond commissionerate, Chittagong Asian Apparels evaded the duty three times, while Legacy Fashion Ltd, Selim and Brothers Ltd, Lemond Apparel and Textile have committed the same violations twice.

Thianis Apparels, located in the Chattogram Export Processing Zone, evaded duty of more than Tk689.54 crore from 1 January 2018 to 31 December 2020, according to an audit report of customs in May this year.

This correspondent called repeatedly on the mobile number given in the company's contact details for the comment of Anisur Rahman Khan, managing director of Thianis Apparels Ltd, but nobody answered.

However, officials at several companies facing duty evasion allegations said on the condition of anonymity that it is illogical to issue a show cause notice alleging duty evasion in the name of audits.

They said that if officials concerned were not provided with financial benefits during an audit, they serve notices of duty evasion for harassment.

Meanwhile, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has called the issuance of these claims one-sided.

BGMEA Vice-President RakibulAlam Chowdhury said the repatriated export proceeds of the companies concerned were showing overdue on the server of the Bangladesh Bank as the short-shipped product consignment information was not updated in the Chattogram Customs House's system.

And claims are being issued against the information of the overdue value of the said short shipment by the bond authorities, he added.

The BGMEA leader said, as directed by the National Board of Revenue (NBR), that the matter has been placed before the Chattogram Customs House for updating in the system, which is under process. It is necessary to give time without making claims in this regard.

He also said that the garment factories have used locally purchased fabrics and accessories for export. But they did not mention it in the Utilization Declaration (UD). In this case, a claim letter is issued by the bond authorities.

Later, it is learnt that the companies have included it in UD by 30 June under the guidance of the NBR. Hence the claims issued in this regard may be adjusted, Rakibul added.