Bangladesh Steel Re-Rolling Mills Ltd (BSRM), Bangladesh’s one of the leading steelmakers, has swindled Tk 35 crore through false claims under the provision of duty drawback facilities meant for exporters. In a blatant violation of the VAT act, BSRM drew the money without engaging in export of goods during the period from July 2014 to July 2018. 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 claimed it sold mild steel rods to 100 percent export-oriented garments factories and the products were "deemed to have been exported", claiming the duty that they paid during import of raw materials for those products.
In an investigation, Chattogram Customs, Excise and VAT Commesionerate found that from July 2014 to July 2018 BSRM did not sell the MS rods to factories located in Export Processing Zones (EPZs) or hundred percent export-oriented garment factories. BSRM sold the goods in local market and outside the EPZs but illegally took the money from the government as export incentives.
From December 24, 2018 to December 31, 2018 Chattogram Customs, Excise and VAT Commesionerate issued three letters asking BSRM to refund Tk 34.79 crore to the national exchequer.
BSRM appealed with Chattogram Customs, Excise and VAT Commesionerate challenging those three letters. However, BSRM lost the appeal lodged with Chattogram Customs, Excise and VAT Commesionerate in all the three cases. On February 14 this year a hearing was held in the presence of BSRM"s Deputy Managing Director Tapan Sengupta and Chief Financial
Officer Shekhar Ranjan Kar. After the hearing, Customs, Excise and VAT Commesionerate Chattogram commissioner Syed Golam Kibria gave the verdict. In the verdict, he said, “It is undoubtedly proved that BSRM Steels Limited illegally drew the money.”
On February 27, this year Customs, Excise and VAT Commesionerate Commissioner Syed Golam Kibria ordered the Chittagong-based BSRM to refund all the money the steelmaker illegally drew meant for exporters under duty drawback facilities.
Drawback is the refund of duties and taxes paid on inputs/raw materials used for the manufacture of exported goods and services. The term “drawback” is used exclusively for refund of duties and taxes against export.
In March this year, Syed Golam Kibria was posted to NBR (National Board of Revenue) as a member.
BSRM, however, is yet to deposit the money to state exchequer.
Contacted, BSRM Deputy Managing Director Tapan Sengupta told The Independent, “We have taken the drawback facility here following sale of goods to the garment factories, which have registrations with Bangladesh Investment Development Authority (BIDA) along with 100 percent export-oriented certificates. In this case, as per the law the products will be considered "deemed export" so we will get the duty drawback.”
“The RMG factories have BIDA certificates and the transitions were done in dollars. If the transactions are done in dollars and the factories are 100 percent export-oriented, the law is applicable and we will get the duty drawback,” added Tapan Sengupta.
But the current Commissioner of Chattogram Customs, Excise and VAT Commesionerate Enamul Haque also does not agree with BSRM interpretation. Haque told The Independent, “BSRM has taken the drawback facilities in a blatant violation of law. The company also has offered misinterpretation of the law. It is illegal.”