Cigarette paper imported under false declaration seized at Ctg port

Chattogram Customs have found that a racket has been importing cigarette paper under false declarations of paper ribbon and straw paper through non-existent and little-known firms.

Recently, the Chattogram Custom House seized two consignments of RM Enterprise and Smart Move after laboratory tests by Bangladesh University of Engineering and Technology, Dhaka University, and Khulna University of Engineering and Technology confirmed that the shipments contained cigarette paper. The Daily Star obtained the reports. 

In mid-July, Dhaka-based RM Enterprise imported a 16-tonne consignment from Hong Kong under the declaration of straw paper through Chattogram port.

Later that month, Smart Move declared its consignment as paper ribbon, but tests revealed it contained about 10 tonnes of cigarette paper.

Customs officials said the importers are lobbying senior NBR officials to have the consignments released under the declared product names despite laboratory confirmation.

If cleared without reclassification, RM Enterprise's consignment would cause a revenue loss of around Tk 1 crore in import duties and Tk 85 crore in VAT from cigarettes made using the raw materials.

Smart Move's shipment would cost the government about Tk 70 lakh in duties and Tk 50 crore in VAT.

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Customs and NBR records show RM Enterprise previously brought in eight consignments worth Tk 27.09 crore involving 489 tonnes of cigarette raw materials, including cigarette paper.

Officials suspect these shipments also contained cigarette-making materials, often brought in using non-existent firms.

A VAT official, seeking anonymity, said the raw materials could generate at least Tk 4,000 crore in VAT revenue.

The official added that collecting these taxes is uncertain as the company's address was found non-existent during inspections.

Records from Islami Bank Bangladesh's Wari branch in Dhaka show RM Enterprise transacted Tk 82 crore between February and June this year. The Daily Star could not find previous import or banking records of Smart Move.

Both RM Enterprise and Smart Move got VAT registration between January and February this year.

A senior official of Japan Tobacco, requesting anonymity, said each kilogramme of cigarette paper can produce nearly 10,000 cigarettes, with wastage below 2 percent.

"Besides paying import duties, cigarette manufacturers must pay 83 percent VAT on the retail price. For a premium pack of 20 sticks, that's at least Tk 307 in VAT," he said. 

He also said that companies which illegally manufacture cigarettes often commit such fraud using smaller firms, as clearing goods under false declarations makes it easier to evade VAT at the sales stage."

RM Enterprise owner Khorshed Alam could not be contacted by phone. His cousin Mohammad Joy, who said he currently manages the business, claimed the company imported straw paper.

"The earlier consignments contained straw paper and acetate tow, which is used to make cigarette filters as well as 42 other products. We did not sell to any cigarette manufacturer," he said.

Smart Move owner Kamrul Islam admitted that although the shipment was imported in his company's name, the actual owner was a man named Rubel.

"I allowed him to use our company for the LC based on a Chinese supplier's advice. He paid all LC and customs clearance costs. I met him only once in his Mirpur office," Kamrul said.

Leasing or renting licences is prohibited under trade licence and VAT regulations, and registered owners remain liable for any tax evasion.

Regarding the seized consignments, Additional Commissioner of Chattogram Customs Tafsir Uddin Bhuiyan said the goods cannot be released under the declared product names.

"If the importers want them released, they must pay duties applicable to cigarette paper and fines for false declaration. Initially, the companies were pursuing clearance, but they have not contacted us in the past week. We will take further steps as per the rules if there's no response," he said.

He added that the concerned VAT office would be formally requested to examine the companies' previous import and sales records to determine the government's dues.