NBR uncovers over Tk 102 crore in revenue evasion at two garment factories

Two readymade garment factories evaded Tk 102,57,13,128 in government revenue through various frauds, including illegally selling duty-free imported fabric in the open market and manipulating export prices. The huge amount of tax evasion was uncovered in an intensive investigation by the Central Intelligence Cell (CIC) of the National Board of Revenue (NBR).

The NBR shared the information in a press release sent on Monday. The two companies involved in the irregularities are Riaz Knitwear Limited and Lisha Tex (Pvt) Limited.

According to the investigation, clear evidence of duty and tax evasion worth Tk 94,73,87,720 was found against Riaz Knitwear alone, and Tk 7,83,25,408 against Lisha Tex.

A special CIC investigation team raided the factories and bonded warehouses of the two companies and identified the discrepancies by matching the actual stock of raw materials against import and export documents.

According to the investigation details, Riaz Knitwear Limited had cleared 2,862 tonnes of woven polyester fabric under the duty-free facility against 41 utilisation declarations (UDs). But a search of the factory warehouse found only 25,533 kg of fabric, just 0.89 percent of the total imports.

The remaining 2,237 tonnes, or about 78 percent of the fabric, was removed from the warehouse and sold directly in the local open market. The dutiable value of that fabric stands at Tk 134.29 crore.

No trace of this huge quantity of woven fabric was found in the export documents either. The investigation found that even for the UDs against which no exports took place at all, most of the fabric was sold through illegal channels.

Lisha Tex, meanwhile, evaded Tk 6.90 crore in duty by removing about 174,000 kg of polyester fabric, brought in under the duty-free facility, from its bonded warehouse and selling it in the local market.

Lisha Tex was also found to have shown larger export volumes than approved while declaring less money than the contract price, violated the mandatory 20 percent domestic value-addition condition, and sourced raw materials outside the UDs.

The company bought more than 400,000 garment accessories from the open market without paying VAT. It also evaded VAT by supplying kit bags worth Tk 3.23 crore to an unapproved institution.

The NBR said CIC's crackdown of this kind against those who abuse the bond facility will continue in order to protect state revenue.