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6 May, 2019 12:34:13 AM / LAST MODIFIED: 6 May, 2019 07:21:05 PM
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BSRM draws Tk110cr thru ‘false’ claims

duty drawback facilities
SHAMSUDDIN ILLIUS, Ctg
BSRM draws Tk110cr thru ‘false’ claims

In a glaring example of misinterpretation of duty drawback facilities meant for only exporters, Bangladesh Steel Re-Rolling Mills Ltd (BSRM), Bangladesh’s one of leading steel makers, has allegedly illegally drawn over Tk 110 crore from the government exchequer over a period of two and a half years.

Chattogram-based BSRM drew the money illegally from June 2016 to November 2018 through ‘false’ claims under the provision of duty drawback facilities provided in Value Added Tax Act 1991.     

In a blatant violation of the law, the company sold mild steel (MS) rod to infrastructure development projects such as Mongla Port in Khulna, Kanchpur, Meghna and Gumti bridges, Akhaura-Laksam rail lines, Rampal Power Plant and Karnaphuli tunnel but claimed the steels were ‘deemed to have been exported’, claiming the duty that it paid during import of raw materials for MS rod.

Under the provision of sub-section (2) of section 13 of The Value Added Tax Act 1991, an exporter of goods or services-cum-supplier of goods or renderer of services is allowed to adjust duties and taxes refundable to him/her as drawback against duties and taxes payable by him/her for supply of goods or services rendered.

BSRM illegally drew the money meant for duty drawback and evading VAT on tariff value of the steel, totalling Tk110.56 crore against the sale of 88,986 metric tons of steel from June 2016 to November 2018. For importing raw materials of MS rods a company has to pay customs duty of around Tk 13,000 per metric ton. When contacted, Enamul Haque, commissioner, Customs, Excise and VAT Commissionerate Chattogram, told The Independent, “In a blatant violation of existing VAT law the company has taken the money under ‘drawback’ policy. BSRM has embezzled the government fund.”

“Many mega development projects are going on in the country and more projects are in the pipeline. If such fraudulence continues the government has to pay the company a huge amount of money,” warned Haque.

“A nexus, which includes bank officials, is behind the malpractice. If anyone buys anything in dollars in the country how come it will be counted as export,” Haque added.

When contacted, Karnphuli Tunnel Project Director Harunur Rashid Chowdhury, said, “I don’t know how they are showing these goods have been exported. The tunnel is in our country, it is not abroad. After holding repeated meetings with the China construction company, which is building the tunnel, we convinced it to use our local materials, which go with their specification and quality.”

As per VAT Act 1991 section two (Sha), the sale and supply of goods and service to such hundred percent export oriented industry as well as to foreign contractors under international tender are defined as “deemed to have been exported’ and under the section 13 of the law the company will be entitled to “duty drawback” of all the VAT, supplementary duties, customs duties, excise duties, including other duties and tax paid for the goods sold to the 100 percent export oriented industry during importing raw materials.

A clarification issued by National Board of Revenue (NBR) on 29 November last year said the law is only applicable to primary contractors. For example in case of the foreign company that is building Karnphuli tunnel will get duty drawback facilities for collecting steel and cement from local companies. But the local companies, which are secondary contractors in this case, that are supplying steel and other inputs to the Chinese company in no way, will get the duty drawback facilities.

Moreover, BSRM has not exported the goods and has not sold to the 100 percent export oriented companies. It has sold the products in local markets.   

According to the documents of Customs Excise & VAT Commissionerate Chattogram, from June 2016 to December 2016 BSRM sold 2,459.86 metric tons of MS rod to some ongoing development projects and drew Tk 3.57 crore while evaded VAT Tk 14.31 lakh showing it as exportable.

In the same way from January 2017 to March 2017 and October 2017 to December 2017 BSRM sold 9,863.98 MT of MS rod and drew Tk 11.93 crore and evaded Tk 44.19 lakh in VAT.

In 2018 from January to November, BSRM sold 76,662 MT of MS rod and drew Tk 91.03 crore and evaded Tk 3.45 crore in VAT, totalling Tk106.52 crore in duty drawback and Tk4 crore in VAT.

Challenging the Customs, Excise and VAT department’s demand a writ was filed with High Court in April this year. Subsequently, the High Court has asked an explanation from the NBR as to why NBR decision in this regard would not be declared unlawful.

When contacted, BSRM Deputy Managing Director Tapan Sengupta told The Independent, “The matter is now with the court. We have taken the duty drawback facilities following the law. All other companies also enjoyed the facilities.”

“If we do not supply the products to the development projects, the contractors will import those and the money will go abroad. The government will lose VAT and taxes as well,” Sengupta added.

When contacted, Enamul Haque said, “We will explain the matter to the High Court.”

Hearing on the writ challenging the Customs, Excise and VAT department’s demand is likely to be held in the High Court on Wednesday (May 8).

MK

 

 

 

 

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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