Ceylon Agro accused of tax fraud

Ceylon Agro Industries Ltd, a subsidiary of Prima Company, has reportedly violated an agreement signed for receiving Board of Investment concessions and used same to defraud over Rs. 100 million of revenue to the state. Customs Department sources say its Automatic Data Processing Division came across this scam, and that it has detained six containers of hybrid maize seeds imported duty-free by the company from Thailand.

Ceylon Agro has used an agreement signed in 2001 with the BOI for the import of raw material to defraud more than Rs. 100 million of government revenue, the sources said.

Under this agreement, the company can import hybrid maize seeds free of duty for development and to assist farmers in the commercial cultivation of maize to be used as animal feed.

Instead, it has been importing palm oil and 20 other raw materials duty-free and producing noodles, Kottume noodles mixture, meat balls, sausages, bread, pastries and processed chicken, according to Customs sources.

In addition, Ceylon Agro has allegedly been selling the imported palm oil in the local market.

However, as per regulations in Section 17 of the BOI agreement, no approved company could sell its production in the local market without paying customs duty for the raw material imported.

According to estimations, the company had evaded the payment of customs duties and other taxes of more than Rs. 01 billion.
Its annual turnover exceeds Rs. 01 billion, Customs sources said.

A letter to grant concessions with reference no: EC/4/1047/92 has not been approved by the BOI, said the sources.

When media spoke to the A.M.C. Kulasekara, then Executive Director (Investment) at BOI, he maintained the company has been approved for duty-free concessions, including for the import of palm oil.

Meanwhile, the sources added that Customs officers investigating the alleged scam are under intense pressure to release the detained maize seed consignment.