Business Times

Sri Lanka Customs probes empty fertilizer bag scam

By Bandula Sirimanna

Sri Lanka Customs is investigating a massive revenue loss due to not charging customs duty on empty bags brought along with fertilizer shipments, last year, a senior official of the Department of Customs said. Fertilizer is shipped to Colombo in bulk with empty bags from exporting countries like China to reduce the cost of freight and high bagging costs overseas. According to investigations carried out by Sri Lanka Customs, fertilizers brought in bulk are bagged alongside the berth by a shore bagging facility in Colombo port, helping importers to get cheaper freight rates.

A Singapore based fertilizer supplier, Valency International Private Limited has shipped 11,406.8 MT of TSP fertilizers in bulk with 228,136 empty bags and the ship MV ‘Haeun’ carrying the stock of fertilizer arrived at the Colombo port on April 23, 2010. No customs duty was charged on the empty bags brought in this shipment for the Ceylon Fertilizer Company Ltd (CFC), investigations revealed. In this instance the customs duty was amounting to Rs 2.09 million .

Similarly no customs duty was charged on empty bags in another shipment of 11,400 MT of fertilizer sent by the same company to Colombo Commercial Fertilizer Ltd in April 2010 and this was amounting to Rs. 2.33 million. Thus the Customs incurred a loss of Rs. 4.42 million due to this irregularity. A senior Customs official said that they charge duty on empty fertilizer bags to protect and promote the local bag industry.

He asserted that an inquiry is underway to find those responsible for allowing these empty bags without paying customs duty. An inquiry was held by the Customs in respect of cargo MV ‘Haeun’ sent by Valency International in April 2010. But no action has been taken so far as the customs investigations are still pending, he said. The file of Case No: CIBINB/13/2011 is being kept open, he revealed.

Meanwhile the Customs charged duty from Ceylon Fertilizer Company Ltd amounting to Rs. 2.1 million for empty bags shipped by Swiss Singapore Overseas Enterprises Private Ltd, along with 11, 697.5 MT of fertilizer on May 4, 2010. Another sum of Rs. 2.39 mllion had been recovered as customs duty from Colombo Commercial Fertilizer Ltd for empty bags sent by the same company along with 11,697 MT of fertilizer.

Fertilizer importers questioned as to why the Customs are treating the two companies in a discriminate manner. They were of the view that the probe against Valency International Private Limited will end up in the dustbin, although the Customs Ordinance enacted by the British centuries ago, clearly provides severe punitive measures against the government revenue fraudsters. Officials of the Valency International Private Limited were not available for comment.

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