Soap noodles import: under-invoicing depriving exchequer millions of rupees

Another scandal has been surfaced under which not only the national exchequer is being deprived of millions of rupees through under-invoiced import of soap noodles from Malaysia and Indonesia but also hindering the growth of the local toilet soap industry.
Under-invoicing in the import of soap noodles from Malaysia and Indonesia is not only depriving the national exchequer of million of rupees under the Pakistan Customs Tariff Code; 3401.1900 and 3401.2000 but also depriving the local toilet soap industry a level playing field, industry sources told Business Recorder here on Thursday.
Though, multinational companies are importing soap noodles to manufacture toilet soap at the actual price from Malaysia and Indonesia, most of the Lahore and Karachi based traders are involved in under invoicing.
Besides, almost all traders are importing A-grade soap noodles under the cover of low grade to avert import duty, sources said, adding about 80 percent soap noodles is imported from Malaysia and 20 percent from Indonesia, which is mainly produced from refined bleached and deodorized (RBD) Palm Oil & Palm Stearin.
The Palm Oil & Palm Stearin which as raw materials are used for manufacturing of soap noodles are presently being quoted at $880 - $900 per metric tone C&F in the international market. It is pertinent to mention that import of finished product ie soap noodles is being under-invoiced quoting a price of $200 per metric tone which has been assessed at $250-$300 per metric tone by the Customs staff, the sources claimed.
Now the question arises if the raw material is costing around $900 per MT in the international market, how is it possible to import finished product at $250 per MT, the sources mentioned. The sources further revealed that the prices of these two raw materials have never been below $700 per metric tone since April 2007. Presently the price of these two raw materials is being quoted at around $900 per metric ton where as the actual international price of the soap noodles is over $1000 per MT.
The government imposes 25 percent duty on the import of soap noodles which according to data so far available with the sources, has been imported to the tune of over 6,000 metric tone under these two PCT Codes (3401.1900 & 3401.2000). The importers involved in under-invoicing usually pay the quoted price by documentation and remaining balance of the actual price is paid through non-banking channels.
According to them, as a result of under-invoicing, the selling price of soap noodles in the local market is much lower that the cost of production due to which indigenous industry is badly suffering and is on the verge of collapse.
The industry people demanded of the government to immediately intervene, order probe into the matter so that the national exchequer is saved from huge financial losses and the local industry from total closure.