NBR allowed, but now orders probe

The revenue authority has ordered probe and seizure of four luxury vehicles imported by the Bangladesh office of budget airline Flydubai on allegations of duty evasion of Tk 34.13 crore.

Alarm bells were raised when two of the four vehicles -- one Rolls-Royce and one Mercedes Benz -- arrived at the Chittagong port in December last year and were released without any payment of duty.

Subsequently, early this year the Customs Intelligence and Investigation Directorate conducted a preliminary investigation and detected loss of revenue in the import of the vehicles.

The findings prompted the National Board of Revenue to revoke in February the zero-duty import privilege extended to the Dubai-based airline.

In January 2013, Flydubai's Dhaka office applied to the NBR for duty-free import of four cars -- two four-wheel drives and two sedans. In April the same year, the revenue authority gave the permission.

The NBR said the benefit was given to Flydubai as a result of 'wrong interpretation' of the Air Services Agreement between Bangladesh and the United Arab Emirates. The revenue authority said the benefit was provided under the article 6 of the agreement, which allows duty exemptions for items available for in-flight shopping or consumption by passengers while on board the aircraft, catering and communication equipment, staff uniform, spare parts of aircraft, fuel and lubricants.

It categorically does not allow the import of vehicles free of duty.

Subsequently, in an order on March 6 the revenue authority, based on an instruction from Finance Minister AMA Muhith, directed an investigation into the matter, which has to be completed within 15 working days.

It also instructed confiscation of the vehicles during the period of investigation.

Moinul Khan, director general of the Customs Intelligence and Investigation Directorate, said they asked Flydubai's Bangladesh office to surrender the cars voluntarily.

NBR Chairman Md Nojibur Rahman said steps will be taken based on the recommendation of the investigation report.

When raised the issue of granting permission without proper verification in the first place, he said: “Those who were involved in it in the past did not do their job properly. For this, there will be a probe now.”

In the order issued in April 2013 that granted Flydubai the permission, the engine capacity of the vehicles that can be imported duty free was not specified.

The ambiguity created the scope for Flydubai's local agent to import a Rolls-Royce of 6,600cc engine capacity and a Mercedes-Benz of 4,663cc, both ultra luxury brands, said revenue officials.

The other two vehicles imported were a Land Rover and a Range Rover, again luxury makes. They were imported in 2014.

Rahman said the privilege of duty-free import of cars is usually extended to the members of parliament, but even in those cases the type and the model of vehicles are clearly mentioned. “There is no right awarded to anyone to give a blank cheque,” he said.

Contacted, Saiful Haque, chairman of Sky Aviation Services Ltd, the general sales agent of Flydubai in Bangladesh, denied the allegation of duty evasion and said the cars were imported by taking permission legally.

“I am a consumer and I can seek NBR permission. I would not have been able to bring the cars by force had they not given me permission. They granted the permission and I brought the cars by complying with customs formalities.”

He said they had applied for permission in the same manner that other foreign airlines had in the past but acknowledged the fact that unlike others, the cc or engine capacity limits of the vehicles were not mentioned in the application.

For instance, in 2009, the NBR allowed another Dubai-based airline Emirates to import three vehicles free of duty in line with the article 6.

“What the difference here is that there were mentions of cc limit in the permissions granted in favour of other airlines. For my case, it was not mentioned.”

Since there was no mention of cc limit, the local office of Flydubai took the liberty to bring in the Rolls-Royce as a top official of the airline was supposed to visit Bangladesh in January, according to Haque.

When raised the issue that article 6 of the Air Service Agreement did not provide the scope of duty-free import of cars, he said: “Why did they grant me the permission then?” “I would not have imported if they told me so. There is no ground to give me punishment now,” Haque said.

Asked how duty-free import permissions were given to Flydubai and others despite there being no such provision in the agreement, NBR Chairman Rahman said they will investigate all the cases.

He said Flydubai's local agent brought the cars 'unlawfully'.

“They wanted to take advantage by creating pressure on the NBR through various ways. The NBR does not bow down to any pressure. The approval given earlier has been cancelled and these vehicles are illegal now,” he added.

Haque, however, said the customs were aware that the two luxury cars are being imported.

“The cars arrived at the port on December 10 and had been there for six days. They did not raise any objection that they cannot be released.”

He said he wanted to re-export the cars and sought permission from the NBR and the finance minister in this regard.

“I wanted to re-export the cars because there was objection from the customs and the top official of Flydubai did not come to Bangladesh,” he added. Asked on the re-export issue, Rahman said the cars will be seized for the time being.

The Anti Corruption Commi-ssion had earlier opened a probe into the allegation of duty evasion by Flydubai but later discarded the plan, knowing that the NBR has already initiated investigations, according to Ritwik Saha, deputy director of the anti-graft watchdog.

Md Ghulam Hussain, then NBR chairman, declined to comment, saying he cannot remember anything about the matter.

Flydubai operates two daily flights from Dhaka and 10 weekly flights from Chittagong to Dubai.