Rajesh Rai | Phuentsholing

Police and Anti-Corruption Commission (ACC) officials intercepted four vehicles carrying areca nuts and betel leaves consignments that were under-declared but cleared from the Mini Dry Port (MDP) in Phuentsholing on December 14.

It was seized in a surprise inspection.

The inspection was conducted with the suspicion that the vehicles were carrying undervalued and undeclared consignments, which is believed to be prevalent in the import of these two items.

ACC found two vehicles carrying betel nuts declared lesser weight by more than 1,000kgs and also valued at Nu 250 per kg, a possible undervaluation.

According to ACC, the discrepancies in weight and price may result in a reassessment of the tax and attract fines and penalties of more than Nu 670,000.

The inspection also discovered that each consignment belonged to more than 18 importers that were sent by several suppliers in Jaigaon, India. However, they declared it in the name of just one importer.

Two vehicles carrying areca nuts with declaration issues are still detained and are handed over to the Regional Revenue and Customs Office (RRCO) for valuation and imposition of fines and penalties.

The ACC found from the ongoing investigation that areca nuts, which is taxable at 20 percent are “invariably” declared at Nu 250 per pon for shelled betel nuts and Nu 100 for unshelled nuts based on the valuation price set by the RRCO in March 2021.

Further, for the ease of assessment, each bag is considered as 60kg and one kg being equal to one pon, which means importers declare Nu 15,000 per bag on which 20 percent (Nu 3,000) is applied, irrespective of whatever may be the transaction price or the actual weight.

The investigation revealed that “this benchmark price has become like an open secret to suppliers in Jaigaon and has been taking full advantage to evade tax since the customs don’t object or check if they are declared at these rates.”

“The RRCO had reportedly done the valuation in line with the authority vested in the Customs Act of Bhutan 2017 in order to curb under-declaration and overvaluation problems,” an ACC official said.

The actual price paid by Bhutanese buyers to suppliers in Jaigaon ranged from Nu 350 to Nu 550 per pon (80 pieces) and each bag weighed more than 70kg, in some cases, even more, than100kg.

Since the consumption of betel nuts and betel leaves spikes in winter, the demand drives the market price of betel nuts even higher. The government is losing revenue from both the price and weight.

It is estimated that a single mini DCM carrying 60 bags of shelled betel nuts would result in a combined revenue loss of more than Nu 570,000.

The ACC official said that the problem of revenue leakages is further exacerbated by the existence of collusive arrangements between transporters and customs inspectors who facilitated the non-declaration of areca nuts in exchange for bribes.

“One of the transporters who had a setting with one custom inspector admitted to having brought between four bags to 20 bags of betel nuts without declaration. The transporter made huge gains in such cases,” the official said.

It has been learned that areca nuts and betel leaves also are a source for importers to play around for sending Real Time Gross Settlement (RTGS). Since the areca nuts are taxable at 20 percent and the betel leaves are zero taxed items, the suppliers undervalued the taxable item and overvalued the non-taxable one, thereby, maintaining the overall value of the import as it is.

In this way, the importers were able to send full RTGS without having to resort to other fraudulent practices, the official said.