Potential risks of smuggling cashew nuts

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Smuggling thousands of tons of raw cashew nuts, businesses cause losses of billions of dong for the State budget. Photo: ST
Smuggling thousands of tons of raw cashew nuts, businesses cause losses of billions of dong for the State budget. Photo: Internet

Thousands of tons of raw cashews disappeared

Based on the investigation results of Binh Phuoc Customs Department, the Investigation Police Agency of Binh Phuoc Province issued a decision to prosecute Anh Thi One Member Co., Ltd and arrest the director to investigate the smuggling of cashew nuts.

According to Binh Phuoc Customs, from June 2017 to October 2020, Anh Thi Company opened 23 import declarations under customs regime E31 (importing raw materials for export production) with 3,233 tons of raw cashews worth VND140.5 billion. Then, in 2018, this company opened five export declarations under customs regime E62 (exporting products manufactured for export) with 79.38 tons of cashew kernels, worth VND17.28 billion.

Based on the records and documents provided by Anh Thi Company at the time of inspection and the information declared on the customs system, the inventory of imported raw materials under the customs regime of export production by the end of October 28, 2020 is 2,836 tons.

However, at this time, the company’s warehouse no longer has an inventory of raw materials, finished products, and semi-finished products, which are cashew nuts under the export production regime.

Binh Phuoc Customs Department said all raw cashew nuts in the form of export products have been produced into cashew kernels and sold to the domestic market but have not been declared to the Customs agency without going through procedures on food safety inspection as prescribed.

Thus, Anh Thi Company violated the regulations on changing the purpose of use for imported raw cashew nuts in the form of export production specified in Decree 08/2015/ND-CP and Circular 38/ 2015/TT-BTC.

Besides, under Resolution 103/NQ-CP dated December 5, 2016, imported cashew nuts for export processing and production after December 5, 2016 will be exempt from food safety inspection but when changing the purpose of use for domestic consumption, the customs declarant must register a new customs declaration and undergo a food safety inspection.

However, Anh Thi Company arbitrarily changed the purpose of use (for domestic sale) without carrying out customs procedures as prescribed and food safety inspection.

Currently, the company is still operating at the registered address and has notified the case to Customs.

Binh Phuoc Customs Department said that Anh Thi Company showed signs of infringing on state management on export and import. The company’s violations showed signs of smuggling specified in Article 188 of the 2015 Penal Code, as amended and supplemented in 2017. Accordingly, the amount of raw cashew nuts belonging to the import declarations for export production that are no longer in stock is 2,836 tons, worth about VND123.27 billion with an import tax amount of VND6.16 billion.

Smuggling in disguise of export production enterprises

The situation of taking advantage of preferential policies in the field of export production to smuggle cashew nuts is becoming alarming when in January 2022, Binh Phuoc Customs Department prosecuted three cases and transferred to the investigation police agency of Binh Phuoc province to investigate the smuggling of three companies, namely Nhat Linh Saigon Import-Export JSC, Nhat Linh Ben Thanh JSC and QNM Investment, Trade and Service Co., Ltd. Binh Phuoc Customs Department is also working with the police to investigate many other companies for similar acts.

Accordingly, the quantity of raw cashew nuts imported for export production, which arbitrarily changed the purpose of use at Nhat Linh Saigon Company is 5,030 tons, worth VND80.86 billion; Nhat Linh Ben Thanh Company is 9,974.85 tons, worth VND340.4 billion; and QNM company is 3,651.8 tons, worth VND131 billion.

Binh Phuoc Customs Department has verified the situation of the above companies at the registered addresses as notified to the Customs office. As a result, Nhat Linh Saigon Company is no longer operating at the registered address, the production facility does not have cashew nut production machinery and equipment, and does not have raw cashew nuts and cashew kernels. The District 1 Tax Branch (HCMC) also confirms that Nhat Linh Saigon Company does not operate at the registered address.

Similarly, QNM Company is no longer operating at the registered address. The legal representative of QNM Company, Mr. Le Truong Hai and the person who signed a contract for this company to rent the warehouse, Mrs. Nguyen Thi Ha, were also not present at the residence.

For Nhat Linh Ben Thanh JSC, the District 1 Tax Branch said, the company is operating and has not been checked for tax finalization, the company is owing tax and declared no revenue in 2015, 2018 and 2019 and has been sanctioned for administrative violations for late submission of reports on the use of invoices, VAT declarations, and finalization of personal income tax.

Notably, the two companies Nhat Linh Saigon and Nhat Linh Ben Thanh have the participation of Mr. Tran Van Suong (born in 1972, living in Binh Duong) and Ms. Ngo Hoang Cat Tien (born in 1974, living in Ho Chi Minh City) as legal representatives.

Working with Binh Phuoc Customs Department, Suong said more than 5,000 tons of raw cashew nuts in the import declarations of export production as inventories at Nhat Linh Saigon Company, which was sold domestically by Ms. Ngo Hoang Cat Tien. Currently, the local government has confirmed that Ms. Tien is not present at the registered residence.

For nearly 10,000 tons of raw materials at Nhat Linh Ben Thanh Company, Mr. Suong explained, after manufacturing finished products, the rest have been mortgaged at some enterprises in Dong Nai province and Ho Chi Minh City to get money to maintain operations.

So far, they have not been recovered because the company’s financial situation faces many difficulties. However, Mr. Suong has not provided documents proving that.

In general, the tricks of the above companies are to import raw materials according to the customs regime of export production to enjoy tax incentives and specialized inspection.

After that, only a small part of imported raw materials are produced for export and the majority are processed for domestic consumption. This creates unfairness in the business environment, affects genuine businesses, infringes on State management on export and import; and poses potential risks of food safety when the imports have not undergone a quality inspection.

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Therefore, it is necessary to set stricter regulations to control imported materials for export production in order to prevent taking advantage of the openness of management policies to commit smuggling.

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