What did director of company involved in cashew smuggling declare about arbitrarily selling over 78,000 tons of raw materials?

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Cashew nut processing chain. Illustrative photo

Only 15-20 workers!?

In just over four years, D.P.T Import-Export Trading Service Company Limited (referred to as D.P.T Company), specializing in importing raw cashew for export production in Binh Duong, has arbitrarily sold more than 78,000 tons of raw cashew nuts, worth VND2,500 billion, which was investigated by the Southern Region Anti-Smuggling Control Team (Team 3) under the Anti-Smuggling and Investigation Department, General Department of Customs and prosecuted for the crime of smuggling by the Anti-Smuggling Investigation Department. Working with the Customs, the director admitted that D.P.T Company was established in 2013, 100% invested by the director, and was not a joint venture nor associated with anyone.

Despite importing large quantities of cashew raw materials, D.P.T Company did not implement production for export. The company established two branches in Binh Duong to build factories; and one factory in Binh Phuoc. However, these factories do not have factory construction licenses and do not have completion records. In addition, the director of D.P.T. admitted that at the end of 2021, D.P.T. received donated real estate and used this place as a warehouse to store raw cashew nuts when imported from abroad to Vietnam. Storing raw cashew nuts and producing and peeling cashew nuts at this warehouse was not notified to the Customs. By 2022, D.P.T. sold the above warehouse, but could not present the sale contract.

The director of D.P.T. said that the production process of 1 unit of cashew nut product from raw cashew nuts to packed cashew nuts included the following steps: screening to classify nuts, steaming raw cashew nuts (about 15 workers); splitting raw cashew nuts, drying raw cashew kernels, moistening, re-drying cashew kernels, peeling, and coloring (about 12 workers); sorting, spraying, packaging (about 15 workers). This process takes 6 to 7 consecutive days and requires 40-42 workers. Production output of the entire factory of D.P.T Company (including overtime of 2.5 hours/day) produces about 30 tons of raw cashew nuts/day, 10,000 tons / year.

From the above reality, the director of D.P.T. admitted that the company's number of workers is 15 to 20 people, which is not enough to carry out the cashew production process. Most of the company's workers are in charge of sorting, loading and packaging cashew nuts for export. Upon production, D.P.T. hire more workers. However, when comparing with payment activities on the accounting books and salary list issued by D.P.T Company, there is no payroll activity and no names of these seasonal workers!

There are no sales books

According to the provisions of Article 6 of Decree No. 08/2015/ND-CP dated January 21, 2015, amended and supplemented in Decree 59/2018/ND-CP dated April 20, 2018 of the Government, goods as imported raw materials for the production of exported goods are supervised by the customs from the time of import until the completion of export or transfer for domestic consumption until the completion of customs procedures.

At the same time, according to the provisions of Clause 5, Article 25 of Decree No. 08/2015/ND-CP: "... imports are raw materials used for processing or manufacturing exports that have been released or cleared under customs procedures but then their use purpose has changed for domestic consumption, new customs declarations must be submitted instead. Policies on management of exports and imports and policies on taxes levied on exports and imports shall be implemented in the time when new customs declarations are registered”. According to the provisions of Article 21 of Circular 38/2015/TT- BTC dated March 25, 2015 of the Ministry of Finance, amended and supplemented in Circular 39/2018/TT- BTC, stipulating: "Goods whose purposes of use have been changed or transferred to domestic consumption, taxpayers must declare and fully pay taxes and fines (if any) according to regulations”.

However, D.P.T. do not comply with regulations. Director of D.P.T Company confirmed: the company sold over 78,014 tons of raw cashew nuts imported to produce exports to the domestic market to Ms. T.T.Q.T. (residing in Binh Phuoc province). The company failed to make customs declaration for the domestic consumption and open customs declaration for change of use according to type A42, as well as failed to declare and pay taxes.

The sale was paid in cash and bank transfer. Specifically, direct payment was paid in cash or in goods. For cash payment, the director of D.P.T. required the buyer to give cash, this payment was not recorded in receipt and accounting books.

Regarding payment in goods, at some times, the director of D.P.T. needed cashew nuts so he sold raw cashew nuts to Ms. T.T.Q.T. and bought back cashew kernels from Ms. T. For payment by bank transfer, Ms. T. used her personal account to transfer payment to two personal account numbers of Director of D.P.T Company and an account number of D.P.T Company. The sold goods as calculated and confirmed by the director of D.P.T Company was valued at nearly VND2,500 billion.

Regarding production reports, Director of D.P.T. confirmed that the production process of goods at the company's factory was not recorded to monitor the production activities of D.P.T Company. 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 account 1521 - keeping track of raw materials in the warehouse to report to management agencies.

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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 a sign of smuggling. The Anti-Smuggling Investigation Department issued Decision No. 13/QD-DTCBL dated August 17, 2023 to prosecute the criminal case of smuggling specified in Article 188 of the 2015 Penal Code occurring in Binh Duong province. The case has been the Police for further handling.