Large-scale tax evasion on cement imported from Pakistan is causing a substantial shortfall in the State’s revenue collection, according to Vigilance and tax enforcers.
“Pakistan cement” costs considerably less than local products despite the import duty. It arrives in large shipments at the Tuticorin port in Tamil Nadu and can be procured for Rs.300 (for 50 kg) compared to the locally manufactured cement that costs Rs.425. The price difference has made Pakistan cement particularly attractive to hundreds of “hollow brick” units that cater to the burgeoning construction sector in Kerala. According to a government estimate there are 350 such units in Thiruvananthapuram alone and apartment builders are their major clients. Officials say Pakistan cement is smuggled into Kerala much the same way as illicit spirit is, to evade the 14.5 per cent duty the State levies on all cement imports.
The State’s tax collection target for the last fiscal year fell short by an estimated Rs.8,000 crores. The fall in rubber prices was one major reason. Unchecked smuggling of consumer durables and building material are the other cases.
Modus operandi
Check-post corruption lubricates the smuggling racket. Corrupt enforcers accept false declarations and fake bills and allow the consignments to pass unchallenged. Inter-State criminal networks have discovered that smuggling Pakistan cement is more profitable and less legally risky than illicit spirit.
Officials complain that watchdog agencies such as the Sales Tax Intelligence and Vigilance and Anti-Corruption Bureau have been hamstrung by the high political patronage enjoyed by the smugglers. Lack of intelligence and the problem of policing the vast and porous inter-State border with skeletal staff have also hampered their operations.
Imported cement smuggled into Kerala is stocked in large quantities in warehouses adjoining certain defunct hollow brick making units. The stockists sell the smuggled cement to functioning units as hollow bricks, on which there is only a 5 per cent duty.
