Auto Museum fined Tk13cr for importing 2 luxurious cars

Hybrid cars are more environment-friendly and enjoy tariff benefits compared to oil-run cars. As a result, the import of luxury hybrid cars has increased significantly over the last four years.

However, complexity has suddenly arisen over the import of both hybrid and non-hybrid cars and the customs office has been blamed for the complication.

Meanwhile, two luxurious mild hybrid cars, imported by Auto Museum Ltd, have been branded as non-hybrid by the National Board Revenue (NBR). And, the NBR has also fined the Auto Museum over Tk 13 crore in this connection.

But NBR, showing the terms and references of the World Customs Organisation (WCO), branded the mild car as non-hybrid.

However, the traders said the NBR has neither issued any circular nor introduced any HS code. Following the complexities, at least 30 to 35 similar vehicles are currently lying at the Chattogram port.

According to the NBR source, Auto Museum imported a 'Brand New Range Rover P400 Auto Biography Hybrid Jeep' from Britain on November 26, 2023.

The 2996 cc, 2023 model car was exempted a bill of entry was submitted, exemption was suspended. Later, officials of the Central Intelligence Cell (CIC) of AIR and NBR conducted a 100 percent manual check at Chittagong Custom House and claimed to have found the car had six cylinders.

It was a petrol-run engine combined with 48V mild hybrid technology. This mild hybrid system helps start and stop the car engine, boosts the engine during acceleration, and improves the car's fuel consumption.

As a result, it was found that the vehicle was imported under a false declaration according to its classification.

The customs officials said that as per the WCO guidelines, this vehicle is non-hybrid and its taxable value is Tk 1, 57, 81,995.

Considering it a non-hybrid, the potential customs evasion for this car amounted to Tk 3,63,61,616.

A show-cause notice was issued to the Auto Museum for submitting false declarations. After completing all procedures, the Chittagong Custom House Commissioner recently delivered the judgment.

The importer has been fined Tk 7.32 crore and an additional Tk 40 lakh. This is because the import duty on hybrid cars is almost half that of non-hybrid cars.

For example, the duty on a 2996 cc hybrid car is 221 percent, while the duty on non-hybrid vehicles of the same engine capacity is 430 percent.

On the other hand, the same importer imported a 'Brand New BMW X-7 X-Drive 40i Hybrid Jeep' from the USA on November 4, 2023.

This is a 2998 cc and 2023 model car. Similarly, AIR and CIC have suspended the release of this vehicle.

After a 100% physical assessment, this car was reported to be non-hybrid, similar to a mild hybrid car.

It is alleged that the importers declared hybrid vehicles but imported non-hybrid vehicles. The taxable value of this car is Tk 1,11,55,892.

An attempt was made to evade customs duty amounting to Tk 2,57,03,177 and a show-cause notice was issued to the importer.

After completing the process, the Chittagong Custom House Commissioner recently delivered the judgment. The importer has been fined Tk 5.15 crore and an additional Tk 30 lakh.

An official of the Chattogram Custom House, requesting not to be named told the reporter, that the importer had incorrectly stated the same duty rate for all types of hybrid vehicles in the written statement.

This is inaccurate because the duty rate is primarily determined by the car's CC and the functioning of its electric motor.

Both vehicles are classified as non-hybrid according to the WCO guidelines, and this misclassification has led to the evasion of customs duty.

These cars have been released as hybrids for the last four years. When questioned about why these vehicles are now being labeled as non-hybrid without any formal order, the official said that they operate according to the instructions provided by the NBR.

For further clarification on the matter, the NBR would be the appropriate authority to address it, said the official.

While talking to Business Insider Bangladesh, Md Habib Ullah Dawn, owner of the Auto Museum Ltd, mentioned that NBR indicated that importers of hybrid cars would receive more tariff benefits compared to those importing conventional oil cars.

“Since then, at least 30 to 35 importers, including myself, have been importing hybrid cars of various models. So far, around 500 vehicles have been imported under the NBR offers,” said Dawn, also president of the Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA).

Dawn, also a member of Gulshan Club of elite society, said that there are three types of hybrid cars. Mild, plugging, and full. However, the NBR did not mention that mild cars have not been under the hybrid category over the last four years.

Since last year, customs have been saying that the mild car will not be released as a hybrid one and it halted releasing our imported vehicles under the terms and conditions of the WCO, said Dawn, who is also chairman of Flight King Ltd. (GSA China Southern Airlines).

Showing respect to the country’s existing law in this regard, he said, “We, the importers, urged the NBR to issue an SRO to provide the HS code. However, it has not issued the HS code yet.”

"Now without valid grounds, the NBR claims I imported the vehicles under a false declaration. I went to court, and the court observed that if the NBR does not issue any order then, the car should be considered a hybrid as per the previous order. However, customs did not agree with the court's observation. It would have been a false declaration if it was an oil-run car. They did not inform us of this before importing the cars," Dawn, also a Managing Director of Alpha Holdings Ltd, said.

“After importing the cars, it says it is non-hybrid. At least 30 to 35 cars of other importers like me are lying at the port with the same complications,” he said.

“I have been a victim of harassment by customs. They plan to deliberately impose a fine of around 200 to 400 percent on me,” alleged the trader.

Dawn is engaged in multidimensional business ventures and holds several prominent positions. He is the director of Haroon Engineering Ltd. (Otis Lift BD.), a sponsor director of EXIM BANK Limited, and a director of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI). Additionally, he serves as the President of the Commonwealth of Independent States-Bangladesh Chamber of Commerce & Industry (CIS-BCCI), an Executive Committee Member of the South Asian Association for Regional Cooperation (SAARC) Chamber of Commerce and Industry, and the Chairman of both BARVIDA FOUNDATION and Atlanta Enterprises Overseas Ltd. He is also the former joint general secretary of the Dutch-Bangla Chamber of Commerce.

Additionally, he is a member of many prestigious and dignified organisations, including the Japan Bangladesh Chamber of Commerce & Industry, Dutch Bangla Chamber of Commerce & Industry, Bangladesh German Chamber of Commerce & Industry, Dhaka Club Ltd., Kurmitola Golf Club, Banani Club Ltd., Army Golf Club, and a lifetime member of the SAARC Chamber of Commerce and Industry.