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Copper wire duty fraud probe continues

by Manjula Fernando

The Indian businessmen allegedly mixed up in a major Customs duty fraud involving copper wire imports worth millions of US dollars are still pressurising the Customs investigating officers demanding the release of their containers, a senior official at the Customs Department told the Daily News yesterday.

"These people are trying to convince the local authorities that their industries have created jobs for youth. The entire job creation involving the chain of companies is around 120. All of them are minor jobs. Besides, their offence is far more greater to be ignored," the sources said.

The Customs uncovered this duty fraud which openly violated the 1998 Free Trade Agreement between Sri Lanka and India, early this month when one of their officers accidentally noticed a false declaration on a copper wire container imported from Europe.

This led to the uncovering of a major fraud involving import and export of 'copper wire' by a group of Indian nationals based in Colombo. They have been importing copper wire to India from several countries including Korea, Australia and the United Kingdom to evade high import duties involving direct imports.

These companies set up as BOI enterprises enjoy full tax concessions from the Sri Lankan government. Thanks to the FTA re-exports to India cost them just freight charges.

The racket carried out with the help of their counterparts in India has deprived millions of US dollars in revenue to the Indian Government, sources said.

"We have suffered very little through these dealings but the Sri Lankan Government is under obligation to ensure the FTA is not exploited by unscrupulous businessmen," he said.

Since the detection of this large consignment of copper wire imported violating Customs regulations the investigating officers are allegedly being pressurised by various groups demanding that the investigations be dropped.

To qualify for this concession under the FTA, the racketeers had brought the material down under a false classification (copper rods) and re-exported as copper wire to show that the material has been sufficiently processed before re-export.

But the investigating officers have found that they were only converting the imported 'wire' to a different diameter using a simple technique. The racket is alleged to have been carried out since early 2001.

"Between December 1 to 11, they have imported copper wire worth US$ 2.76 million (2270 metric tonnes) from Australia, Korea and the United Kingdom declared as copper rods."

Investigations also revealed an under valuation by the consignee to show a sufficient value addition to qualify for the full duty free concession by India. 

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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