February 28, 2020 06:15

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Bonded warehouse – Potential risks

09:41 | 18/01/2020

VCN – Bonded warehouse operation is a common regime in international trade. In Vietnam, this operation has developed with many bonded warehouses which have been established and licensed, especially in targeted economic areas and some provinces along the northern border. In addition to compliant enterprises, there are many enterprises abusing imports and export in the bonded warehouse regime to commit to act of violations which requires authorities to introduce measure for more strict and effective management.

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Part 1: goods in bonded warehouses but consignees are inland

Principally, goods in bonded warehouses carry out import procedure in accordance with the bonded warehouse regime (C11) then are exported abroad. However, some recent seizures by Customs authorities found extremely unexpected information that the consignee’s addresses were in Hanoi, Hai Phong or Hai Duong.

bonded warehouse potential risks
Cigars in consignments originating from Germany carrying out C11 procedures seized by the Anti-smuggling and Investigation Department in coordination with Customs Branch of Noi Bai International Airport at May 22, 2019. Photo: T. Binh

Taking advantage of bonded warehouses to import thousands of kilograms of goods for tax fraud and evasion.

Carrying out the work plan in 2019 for the air route at Noi Bai International Airport, Working Group No. 2 of the Northern Anti-smuggling Enforcement Team - Team 1 (under the Anti-Smuggling and Investigation Department, General Department of Customs) found that MMI Trading Vina Co., Ltd (address: Yen Hoa Ward, Cau Giay District, Hanoi) had registered to open an import declaration for bonded warehouses (C11) for consumer goods from Europe and Asia to Vietnam to commit fraud and evade taxes and avoid controls of the authorities.

A civil servant in charge of the case said that although MMI Trading Vina Co., Ltd. was established in February 2019, only in a short time (until the end of July 2019) the company opened many declarations with the same bill of lading in two branches of Lang Son Customs Department. MMI Trading Vina Co., Ltd took advantage of the bonded warehouse regime to import goods to commit fraud and evade taxes and avoid the control of authorities, and then took goods into the domestic market and did not open declarations to export them.

After collecting information and conducting verification, Team 1 inspected 12 consignments of which declaration were opened under C11 regime by MMI Trading Vina Co., Ltd. Notably only two among 12 consignments were declared correctly, while the remaining 10 were declared incorrectly, with a total weight of thousands of kg. In particular, there were many types of foreign consumer goods. After the Customs authorities inspected and identified violations and invited the company’s representative to the customs office, the representatives did not come to provide documents related to the goods.

The case was transferred to Hanoi Customs Department for handling. According to the Customs Branch of Noi Bai International Airport, all infringing goods at border gate were forced to be re-exported and were subject to administrative sanctions.

Abnormal signs of consignments from Germany

On May 22, 2019, at the customs supervision area of the NCTS warehouse at Noi Bai International Airport, Team 1 worked with the Customs Branch of Noi Bai International Airport (Ha Noi Customs Department) to inspect a consignment sent by air from Germany to Noi Bai International Airport.

The consignment was opened declaration by APT Vietnam Import Export Trading Co., Ltd. - tax code 4900810300 (headquartered in Dong Kinh ward, Lang Son city, Lang Son province) according to the bonded warehouse regime at a branch under Lang Son Customs Department.

Goods were declared as Aktiv-branded toothbrush; Loves shampoo of 350 ml / bottle, 100 percent new; DIORRO-branded felt clothing for men, 100 percent new.

Team 1 detected signs of doubt and coordinated with the Customs Branch of Noi Bai International Airport to stop allowing goods through the customs supervision area for physical inspection of the entire consignment in the above declaration.

A Customs Newspaper reporter who was present at the scene and witnessed the inspection said hundreds of boxes packed in seven pallets contained many goods that were not in compliance with the customs declaration such as induction cookers, dishwashers, electronic autoclaves; cookers and many household goods of German brands. There were also many famous brand cigar boxes such as Cohiba, Habanos and Magnum, especially many boxes containing cigars up to 48.3 cm long. As results, there were 4,402 cigars, worth about VND 500 million. Meanwhile, import duty, special consumption tax and value added tax on this item are 60 percent (equivalent to VND 300 million), 70 percent (equivalent to VND 560 million), and 10 percent (equivalent to VND 136 million) respectively. Thus, the company sought to evade about VND 1 billion of taxes. Currently, the goods are being held by the customs for further investigation, verification and settlement.

Unusually, the goods followed the procedure of importing KNQ, but the reporter found most of the small packages inside were written with the names of Vietnamese receivers with addresses in many districts.

Abnormally, the goods were imported under the bonded warehouse but the receivers of almost all these goods were Vietnamese people who live in many districts.

A civil servant of Team 1 said each consignment in the seven pallets showed the full name of the consigner in Germany and the consignee in Vietnam with sufficient information (address, phone and amount payable). Team 1 contacted the phone numbers of the consignees listed on the packages and most of them said they made an order on a website and would receive the ordered goods next week (from the order date) and then make the direct payment to the shipper.

Another remarkable piece of information is that when the Customs authority looked up the information on the enterprise registration system, identifying that APT Vietnam Import Export Trading Co., Ltd was established on June 16, 2017 in Dong Kinh Ward, Lang Son city and is led by Director is Nguyen Xuan Canh, with the main business of trading electronic equipment and components. But when Team 1 verified the above address in Lang Son, there was no APT Vietnam Import Export Trading Co., Ltd. as registered.

bonded warehouse potential risks General checking goods deposited in bonded warehouse which were at risk of fraud

VCN – To strengthen the management and prevention of violations from the operation of depositing goods in ...

Why are goods carrying out customs procedures under the bonded warehouse regime to be delivered to an inland address ? How does the real operation of bonded warehouses run? The Customs Newspaper reporters will study in some areas where many bonded warehouses are located in the northern region such as Quang Ninh and Lang Son.

Not only for tax fraud and evasion, but many enterprises also taking advantage of bonded warehouse regime to transport banned goods. That is the case of Hoa Binh International Logistics Co., Ltd. (headquartered in Hanoi). On March 22, 2019, the company opened an import declaration under bonded warehouse regime at a customs branch of Lang Son Customs Department. Goods were declared as 100 percent new plasticised PE pellets, weighed 16,000 kg. Goods were transported to Hai Phong port area.

However, through doubtful information, Team 1 worked with authorities of Hai Phong Customs Department to inspect the consignment at the border gate and discovered that more than 8 tonnes of African pangolin scales were camouflaged in sacks containing cassiatora Linn.

Part 2: Out of bonded warehouse, where are goods delivered to

Reporters/ Huyen Trang