RANGS Ltd is a dealer of Japanese car brand Mitsubishi Motors, and the company imported the Mitsubishi Attrage sedan model in October of 2022.
The bill of entry submitted to the Chattogram Customs House shows ¥7,25,000 as the 1,193cc vehicle price, but the car was assessed at ¥18,04,834. Even though the declared price for vehicle shipment was ¥21,75,000, the customs assessment was ¥54,14,502.
So, the pricing was reduced by around ¥32,39,000 in just one shipment. The difference is two and a half times lower than the actual vehicle price. So, in just one shipment, the government could have lost Tk 22 lakh in revenue.
RANGS, in October 2022, declared the import price for the 1,488cc Mitsubishi Eclipse Cross Jeep as ¥15 lakh. The vehicle was assessed at ¥28,59,516 following an internet price verification. The move increased the government revenue by 90.63 per cent.
Customs officials say RANGS, for years, have been importing luxury cars declaring very low prices, but selling those in the local market at inflated prices. The company is committing tax evasion, and laundering money using this tactic, the officials believe.
The customs houses are assessing imported brand new luxury cars on the declared prices. So, the NBR order issued on October 16, 2020 is not being followed. Customs Intelligence & Investigation Directorate (CIID) probe report also indicates that customs assessment is not being conducted properly.
Sources say RANGS Ltd, RANCON British Motors Ltd, and RANCON Motors Ltd import luxury vehicles from USA, Germany, Japan, Thailand, South Africa, Spain and Indonesia for the local market.
The imported vehicle brands include - Mercedes Benz, MG MCE ZS, Mitsubishi Eclipse Cross Jeep, Mitsubishi Xpander Cross SUV, and Mitsubishi Attrage sedan car. These cars are usually used by the wealthy people of the country.
Though consumers are buying these cars at inflated prices, those are being imported by showing lower rates. The government is losing a large amount of revenue due to customs assessment through under-invoicing.
Money laundering through under-invoicing
Sources say the CIID had received a tip off that some companies are under-invoicing while importing luxury cars. They are evading taxes, and laundering money through the process.
The importers and customs houses are not following the NBR order issued back in 2020 to curb tax evasion. The CIID had formed a committee to investigate the matter back in April of 2023.
The six-member committee scrutinised data of cars imported through the Chattogram, Mongla and Dhaka ICT Customs in the last year. This investigation led to the discovery of vehicles being imported showing reduced pricing to facilitate tax evasion.
This committee submitted a 44-page probe report to CIID director general in September last year. Customs intelligence director general sent this report to the NBR chairman on November 26.
The committee prepared the report putting four criteria under consideration – was customs assessment completed using the NBR order issued in 2020; if not, find the reason behind this violation; identify any ambiguity in this order; and recommend legal action in case of duty evasion.
CIID report findings
This report showcases irregularities found in the process of vehicle imports through Chattogram, Mongla and Kamalapur ICD customs.
It mentions that the vehicles were imported by four dealers and nine commercial importers through Chattogram Customs House, four dealers and a commercial importer through Mongla, four dealers through Dhaka ICD.
Sixty-one case studies have been highlighted, including five cases from RANGS Ltd in Chattogram Customs; one from RANGS and three from RANCON British Motors Ltd in Mongla; and six from RANCON Motor Ltd in Dhaka ICD.
Following scrutiny, the committee submitted a six-point recommendation to stop tax evasion. It should be noted that by regulation, vehicle prices should have been assessed by Bangladeshi embassies in car manufacturing nations.
But the ICD sent letters to the missions of car manufacturing nations in Dhaka, which did not verify the actual vehicle prices.
Half price declared for Mitsubishi Xpander sedan car
RANGS Ltd, a Mitsubishi dealer in Bangladesh, imported the 1,499cc Mitsubishi Xpander Cross SUV. The company had declared the price as ¥14,28,000 on the bill on entry submitted to the Chattogram Customs House on February 19, 2023, while releasing the vehicle.
However, the car was assessed at ¥24,43,091. This increased the government revenue by 71.08 per cent. The company had also declared half pricing for importing Mitsubishi Xpander sedan car.
Insiders say, some importers are declaring low pricing while importing luxury cars, but not selling these vehicles at the declared prices. Some are assessing the imported vehicles misrepresenting the vehicle cc and model numbers.
There are also irregularities in the import process through third countries.
RANGS is importing Japanese Mitsubishi cars from Thailand and Indonesia. This process should involve submission of manufacturers’ invoice and letters of credit (LCs) opened under the mother company.
However, it was seen that LCs are being opened in the name of a third country. It is not clear whether the Mitsubishi vehicles are being imported through local or foreign dealers.
If the NBR order had been followed for customs assessment of luxury cars, the dealer would not have been able to declare prices as they wish. They are not submitting manufacturers' invoices and self-price declaration forms. Customs assessment rules are not being followed.
What does Ctg customs commissioner say?
Acknowledging the under-invoicing issue, Chattogram customs commissioner Mohammad Faizur Rahman said, “The manufacturers do not export cars under their own names. The LCs are opened under a third company, so manufacturer invoices are not available.
“However, we cannot take any action in this regard, because when seeking information from the embassies, they say the commercial invoices are correct. This issue will be resolved if the submission of manufacturers’ invoices are made mandatory.”
However, CIID officials say letters are supposed to be sent to Bangladeshi embassies in exporter countries, but those are being sent to exporter countries’ embassies in Dhaka.
Besides, Glass Guide can be utilised to conduct customs assessment, as it has information about all brand new cars manufactured by every country every year.
What does BARVIDA president say?
Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA) President Habib Ullah Dawn also acknowledged the under-invoicing issue, saying, “For imports of reconditioned vehicles, customs assessment is done using the yellow book.
“Customs assessment of new cars should be easier. The Glass Guide should be made mandatory in this regard. This move will help curb irregularities.”
