There are allegations that several feed mills are importing raw material through the Hili port using the tax exemption system, but then selling the goods in retail market for a profit, instead of using it in their factories.
Commercial importers of oil cake (a vital component for cattle, poultry and fish feed), have nearly halted imports because these mills are selling the material for much lower prices.
Under the circumstances, commercial importers have submitted written complaints to authorities concerned such as the National Board of Revenue (NBR).
According to sources from the customs station, a number of feed mills are importing raw material under Mushak 7, a special provision of VAT law that allows tax exemptions. However, commercial importers are paying 3% tax to import the same material.
These commercial importers used to import 25-30 trucks full of oil cake every day, but due to the abuse of the VAT law, this rate has dropped significantly.
Some of the mills that are accused of abusing the tax exemption system are- Grameen Feeds, Alal Agro, Purobi Agro Feeds, Progoti Agro Based Industries and Al Riyadh Fish and Poultry Feed.
‘Rampant abuse of tax exemption’
Addressing the issue, commercial oil cake importer Mamunur Rashid said: “A rampant abuse of tax exemption is going at Hili port. A racket comprised of importers, customs clearing agents and officials is abusing Mushak 7, causing the government to miss out a lot of revenue.
“This practice is severely harming the commercial importers. These mills are supposed to use the raw material to produce animal feed, but they are selling it in retail market. Their actions are saturating the market, because we cannot compete with their prices.”
Under the Mushak 7 provision, raw material importers are paying 40 paisa as tax for per kg of oil cake, while commercial importers are paying Tk3.
Mamunur further said: “We, the commercial importers are on the verge of leaving this business. The government is also losing a lot of revenue. This practice of abusing the tax exemption system must be put under scrutiny.”
Echoing the same opinion, another commercial importer Rezaul Islam said: “Some mills are importing oil cake as raw material, and selling them at prices so low that it is impossible to compete with them.
“We want the government to level the playing field, so that we can do business properly. The revenue flow will also increase if more people pay taxes.”
‘Stern action’
Responding to query, Hili port importers group General Secretary Mostafizur Rahman said: “We, the commercial importers, import good by paying due taxes to the government and then market them.
“Holders of feed mill licenses can import oil cake and corn through duty-free facilities, to use as raw material in their factories. However, some mill owners are importing a large number of oil cake through Hili port, and selling them in retail market.”
He continued: “This malpractice is simultaneously causing the government to lose revenue in taxes, and financially harming the commercial importers. We have sent letters to organizations that use the Mushak 7 provision.
“The commercial importers have sent letters to the NBR, and the customs commissioner to take action against the abuse to import tax exemption facility.”
Hili port customs station Joint Commissioner Mir Abu Abdullah Al Sadat confirmed receiving letter from the NBR addressing this issue and added that departments concerned have been asked to collect information about these feed mills.
“Those who are abusing the Mushak 7 system will face stern action. We are imposing elevated scrutiny against firms that import oil cake through Hili port,” he said.
