The National Board of Revenue has asked its field offices to conduct audit on use of materials imported taking duty benefits to find out whether importers violated the conditions of the benefits and evaded tax.
In an instruction, the NBR asked its customs and value-added tax intelligence and other VAT offices to inspect business premises or factory sites of importers and check fulfilment of conditions applicable for availing the benefits.
Customs audit, modernisation and international trade wing of the NBR issued the instructions on April 22 in this connection as per decisions of the NBR taskforce on VAT audit and intelligence.
Officials said that the revenue board issued the instructions sensing duty evasion through misuse of conditions imposed under various statutory regulatory orders.
Importers, mainly manufacturers, enjoy duty and tax concessions on import of different types of materials, such as capital machinery, spare parts, factory safety equipments and raw materials under the SROs.
The NBR allows the benefits to boost export competitiveness of local manufacturers as well as protect domestic industries.
One of the major conditions for availing the benefits is to install the machinery and other relevant equipments in the factory within a specific period of time, they said.
In case of raw materials imported by export-oriented industries, importers must complete export procedures and bring back the export earnings by export of goods produced using the raw materials, they added.
In case of any violation of the conditions, importers must pay duty and other taxes applicable on regular imports of the products.
Duties and taxes are applicable at higher rates on commercial imports of those products.
The NBR has the authority to take other legal actions, including suspension of business identification numbers, against importers for violation of the conditions.
The NBR letter signed by its member (customs audit, modernisation and international trade) Khondaker Muhammad Aminur Rahman said that the NBR was informed that recently the volume of goods imported under the benefits had increased significantly.
Importers are misusing the benefits through obtaining more than one VAT registration number from the VAT online system, it said.
NBR officials said that some traders were believed to have obtained e-BINs declaring themselves as manufacturers to enjoy the benefits and then to sell the imported goods in the local market.
Even real manufacturers possibly could obtain the second e-BINs to claim duty benefits on imports of products and eventually to sell those in the local market to evade duties and taxes, they said.
As per the NBR decisions, Customs Intelligence and Investigation Directorate and VAT Audit, Intelligence and Investigation Directorate of the NBR will crosscheck the imports of goods under the tax benefit scheme.
All the 12 VAT commissionerates of the NBR will also prepare compliance reports after visiting the factory sites and send the reports to the customs houses.
The NBR will take departmental actions against its officials if any of them submits a false compliance report, according to the letter.
It also asked the VAT commissioners to issue letters warning the officials on the issue.
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