Half of goods clearing agents involved in duty dodging

A Dhaka-based importer, NBM Corporation, had declared in documents that it had imported machinery from China in July.

However, when the customs officials opened the consignment, the "machinery" turned out to be cosmetics, a product with much higher customs duty.

By making false import declarations, the NBM Corporation had attempted to evade duties of around Tk1 crore. Machinery is subjected to 58-89 percent duty while cosmetics, a whopping 127 percent.

The Chottogram Customs House (CCH) said clearing and forwarding (C&F) agent JJ Associates organised the plan to make false declarations in order to dodge duties.

Earlier, on February 4, another Dhaka-based importer, Fatema International, with the connivance of C&F agent OSL Trade Private Limited, evaded Tk1.5 crore in duties by importing cosmetics in the name of detergent, according to the CCH.

The CCH has recently found that around 48 percent of the active C&F agents are involved in dodging duties by various methods.

Allegedly, these C&F agents are also involved in smuggling contraband goods.

False declarations, tampering to evade duty

The CCH examined documents from July 1, 2018, to June 30, 2019, and found that 238 out of 500 active C&F agents were errant.

There are around 2,000 C&F agents working with the CCH, and 500 of them are operating actively.

From July 2019 to June this year, the CCH identified 2,995 consignments suspected of dodging duties. After examining 2,622 consignments till June, the CCH found 1,448 – 55 percent – had dodged customs officials by making false import declarations, tampering with LCs, and changing the names of items.

The CCH opened 1,448 departmental case files and realised Tk142.5 crore from the agents concerned.

The list of errant C&F agents made by the Audit, Investigation and Research section revealed that many C&F agents have dodged the CCH up to 10 times in a year and evaded duties of several hundred crore taka.

The team also found that these agents had even forged the signatures of customs and lab officials, tampered with bank documents and made false import declarations.

Political ties help many agents get off lightly

But the customs took stern actions against only a handful of C&F agents. While they found 238 errant firms in a year, they suspended licences of only 68 C&F agents on charges of making false import declarations, forgery and money laundering during a period of over six years, from February 18, 2014, to July 30, 2020.

In most cases, C&F agents got off by only paying fines.

For instance, SN Trade Limited dodged the CCH 22 times from October 2015 to June 30, 2019. But it just paid fines every time, and faced no other action. 

A high official of the customs said on condition of anonymity, "In most cases, we cannot take action as C&F agents are politically influential."

However, C&F agents have always denied such allegations, saying they are not involved in forgery as they do not know the contents of the consignments. They only process tax documents to clear the goods from the port and the customs custody. 

Proprietor of C&F agent JJ Associates Zaved Ibne Quadir told The Business Standard, "We do not know what the importers actually have in their consignments. We just process the documents to clear the goods but the customs blames us for anomalies."

When asked about his firm's involvement in NBM Corporation's attempt to evade duties by importing cosmetics in the name of machinery, he said, "One of my employees did it in collusion with the importer. I have informed the customs of the matter."

Chattogram Customs C&F Agents Association's first Joint General Secretary Quazi Mahmud Imam Bilu told The Business Standard some importers and C&F agents are involved in anomalies.

"There are some C&F agents who rent their licences to others. They are mostly involved in this. We appreciate the customs for taking action against them," he said.

Misinvoicing causes revenue collection shortfall

CCH Commissioner M Fakhrul Alam told The Business Standard misinvoicing was one of the main obstacles to achieving revenue collection targets.

He said some C&F agents and importers repeatedly commit offences like trade misinvoicing and money laundering by tampering with documents. 

"We have made a list of errant firms. Based on their crimes, we are taking action against them."

20 percent consignments misinvoiced

CCH officials also mentioned the shortage of manpower for anomalies. The Chattogram port is the principal seaport of Bangladesh, handling about 92 percent of the country's export-import trade. For this, the CCH has to handle around 7,000 bills of entry every day.

On average, the CCH earns Tk120 crore in revenues per day.

However, it does not have enough manpower to carry out its duties, which is creating a scope for errant importers and C&F agents to exploit the situation.

The CCH is running with the manpower structure approved back in 1982. Now, it has 650 people against 1,258 approved posts.   

Its officials said they cannot physically examine around 95 percent of the consignments that come to the port. They do not have enough scanners, and hence cannot scan 60 percent of consignments.

Errant importers and C&F agents use this to their advantage and misinvoice around 20 percent of consignments, and thus launder money.

According to a Global Financial Integrity report, Bangladesh lost on average $7.53 billion per year since 2008 due to falsified trade.