Customs exposes smuggling tricks of over 78,000 tons of cashew nuts

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Cashew smuggling causes huge losses to the state budget. Photo: N.H

Arbitrarily selling 78,000 tons of cashew nuts

By reviewing customs control operations and analyzing risk management data on the electronic customs declaration system, the Customs realized that D.P.T Import-Export Trading Services Company Limited (referred to as D.P.T Company), located in Binh Duong province, opening a customs declaration at the Customs Branch of Binh Duong Province Customs Department showed signs of violation in importing raw materials for export production for raw cashew nuts. Team 3 has made Plan No. 08/KH-D3 dated May 23, 2022, and submitted it to the leader of the Anti-Smuggling Investigation Department for approval to conduct an investigation and verification.

After more than one year of investigation, Team 3 discovered that, for more than 4 years, from January 1, 2017, to May 31, 2022, D.P.T Company opened 515 import declarations for raw materials for export production (type E31) to import 112,698 tons of raw cashew nuts valued at over VND 3,606 billion. During the above period, the Company opened 420 declarations for export production products (type E62) to export over 6,886 tons of cashew kernels (equivalent to more than 34,433 tons of raw cashew nuts under the production ratio 5/1), with a value of over VND1,253 billion.

According to customs declaration, inventories were over 78,264 tons of raw cashew nuts in raw form at the time of inspection. However, at the time of inspection, the Director of D.P.T Company confirmed that the actual inventories were only 50 tons of finished cashew nuts, equivalent to 250 tons of raw cashew nuts. Thus, according to the customs declaration, the difference between actual inventories and inventories is over 78,014 tons.

Working with the Customs agency, the Director of D.P.T Company admitted that from 2018 to 2022, the Company sold over 78,014 tons of raw cashew nuts imported to produce goods for export to the domestic market to a person residing in Binh Phuoc province. The Company neither opened a customs declaration to change the purpose of use according to type A42 nor declared and paid taxes. The value of sold goods is over VND2,496 billion. The consumption of raw cashew nuts into the domestic market was not declared, and paid taxes.

Over 124 billion VND of taxes appropriated

At meetings with the Customs and by a written explanation about the inventory data of D.P.T Company, the Director of this Company confirmed the difference between actual inventories and inventories according to the customs declaration as of May 31, 2022, is over 78,014 tons. The company director said that due to the prolonged pandemic situation, the Company had difficulty exporting, so the Company sold over 78,014 tons of raw cashew nuts to domestic partners. The Company does not open an import customs declaration and changes the purpose of use according to type A42 - Transfer to other domestic consumption.

To validate sales activities and the number of raw material inventories, the Director gave the accountant the data showing the export of raw cashew nuts for processing, requesting the accountant to show it in the accounting books and books, keeping track of raw materials in the warehouse to report to management agencies.

The leader of Team 3 said that raw unshelled cashew nuts have a tax code (HS code) 08013100. According to the provisions of the Import and Export Tariffs from 2017 to 2022, goods such as raw cashew nuts (unshelled) imported in the form of average preferential import (allowed for sale for domestic consumption) have a tax rate of 5%.

The Company declared the import tax for this item upon import as 5%. However, because the Company imported in export production (not allowed to sell for domestic consumption arbitrarily), it was exempt from tax. Therefore, the Company illegally benefited from avoiding the 5% tax on raw cashew nuts illegally sold into the domestic market, with over VND124 billion.

Criminal prosecution for smuggling

According to Team 3's investigation, D.P.T Company Limited, established on September 17, 2013, specialized in trading raw agricultural and forestry materials, peeling, and preserving cashew nuts...

During the operation, the company director hired an employee to open customs declarations without a labour contract; the Company signed an accounting service contract with another company. The Company's workers range from 15 to 20 people with labour contracts. In addition, when there are many goods, the Company hires about 10 to 15 seasonal workers to perform loading and unloading but directly producing cashew nuts.

Since its establishment, the Company has changed its business registration 9 times; The last change was in April 2023. The Company also changed its business registration address often in Binh Duong province. The Company rents these addresses as headquarters.

In addition to the headquarters, the Company also established two branches in Binh Duong to build factories and one in Binh Phuoc. However, these factories do not have factory construction licenses and do not have completion records.

Employing workers in a production process requires 40-42 workers. The factories' productivity (including overtime of 2.5 hours/day) produces about 30 tons of raw cashew nuts per day. The annual capacity is about 10,000 tons of raw cashew nuts.

The Company's Director also confirmed that the Company's actual number of workers, 15 to 20, cannot guarantee the cashew production process. Most workers on the Company's salary list are responsible for sorting, loading and packaging cashew nuts for export. Upon production, the Company hires more workers. However, the Customs agency checked the salary payment on the accounting books and salary list provided by the Company. There were no salary payment activities and the names of these seasonal workers.

Based on the investigation results and collected documents, Team 3 determined that raw materials imported for export production under type E31 cannot be arbitrarily consumed in the domestic market. The act of arbitrarily consuming imported raw materials for export production into the domestic market without completing customs procedures according to regulations of D.P.T Company is an act of illegal consumption - smuggling of goods into the Vietnamese market with signs of smuggling as stipulated in Article 188 of the 2015 Penal Code. The consumption of this material took place continuously in 2018, 2019, 2020, 2021 and 2022, demonstrating an intentional act violating the law.

One more case of smuggling cashew nuts prosecuted VCN – Binh Phuoc Customs Department issued a decision to prosecute a criminal case of smuggling occurring ...

Based on analysis and assessment from the customs department where the Company carries out import and export procedures for cashew nuts and direct checking at the Company's factory, warehouse and admission of the company director to his violation, the Anti-Smuggling Investigation Department issued Decision No.: 13/QD-DTCBL dated December 17, 8/2023, prosecuted a criminal smuggling case specified in Article 188 of the 2015 Penal Code for smuggling in Binh Duong province and transferred all case files to the Police for further handling.