How an enterprise “slipped” and processed raw materials worth more than VND 6 billion into inland for consumption?

Fabric (enterprises imported for export processing) were "slipped" into inland under the cover of scrap and by-products in the case seized by the Anti-Smuggling and Investigation Department at Hai Duong in 2019. Photo: T.Bình.

On October 15, a representative of the Customs Enforcement Team (Hai Phong Customs Department) said Hai Yen Production & Trading Co., Ltd. (Hai Duong province) imported raw materials to manufacture garment and textile for export processing subject to a tax exemption.

In December 2019, the company suspended operations and did not settle the processing contract with the Hai Duong Customs branch (Hai Phong Customs Department).

Through conducting on-site inspection, goods were found to be imported raw materials and auxiliary materials, which have not finalised settlement with the customs authority, did not store at the registered address of the enterprise.

"The amount of backlogged raw materials was worth more than VND 6.1 billion, equivalent to the total tax amount of more than VND 1.4 billion," a customs official of the Customs Enforcement Team said.

According to the customs authority's verification, the enterprise showed signs of selling imported raw materials for export processing to the domestic market, and had signs of smuggling.

After consolidating the case dossier, on October 12, Hai Phong Customs Department issued Decision No. 1828/QD-HQHP dated October 12on prosecuting a criminal case of "smuggling" related to violations that happened at Hai Yen Production & Trading Co., Ltd. and transferred the case dossier to the investigation agency (Hai Duong Police) to investigate.

Regarding the violation of bringing raw materials for export processing to domestic consumption, the General Department of Vietnam Customs also issued a warning.

According to the provisions of Circular 38/2015/TT-BTC and Circular 39/2018/TT-BTC, customs authorities did not deploy supervision force at the entrance and exit gate of the export processing zone and export processing enterprises. This has greatly facilitated import and export activities, exchange, purchase and sale of goods between export processing enterprises and domestic firms.

However, besides businesses that have complied with the regulations, the Anti-Smuggling and Investigation Department found some enterprises took advantage of the regulations that did not deploy the customs force to supervise directly at the gate of entrance and exit of export processing zones and export processing enterprises to bring goods as imported raw materials of the export processing enterprises that subject to tax exemption to the domestic market for consumption.

To prevent the above violations, the leaders of the General Department of Vietnam Customs recently requested local customs departments direct the Customs Enforcement Force and affiliated customs branches to strengthen professional measures in clearance and post-clearance, ensuring strict management of the use of raw materials of export processing enterprises, especially export processing firms opening declarations under the type of export business (B11) to sell to domestic enterprises (open import declaration by type of business import - A12 or A11).

In addition, local customs departments have applied professional measures of customs control in accordance with current regulations to detect, promptly prevent and strictly handle violations of enterprises.

In particular, noting the tricks of domestic enterprises to purchase goods in export processing zones (under type A12 or A11), have not paid taxes, have not completed customs procedures but still transport goods out of the warehouse of the processing enterprise, export and use the import declaration to transport goods many times out of the export processing enterprise.