Vitis fined K2.6m by Customs

News that matter in Papua New Guinea

Vitis fined K2.6m by Customs

PORT MORESBY: PNG Customs has fined local alcohol manufacturer Vitis Industries Limited a total K2.59 million for failing to maintain proper stock records, Customs chief commissioner David Towe says.

“Vitis was given a 14-day working day notice, starting last Friday to pay up,” he said.

The Port Moresby-based firm was alleged to have stocked a variety of alcohol and cigarette brands (without proper stock records).

The news break was reported by The National:

Vitis hit with K2.6m fine

March 23, 2022The NationalMain Stories

By GYNNIE KERO
PNG Customs has fined local alcohol manufacturer Vitis Industries Ltd a total K2.59 million for failing to maintain proper stock records, Customs chief commissioner David Towe says.
“Vitis was given a 14-working day notice, starting last Friday to pay up,” he said.
The Port Moresby-based firm was alleged to have stocked a variety of alcohol and cigarette brands (without proper stock records).
Towe described the act as “an attempt to defraud the State”.
He said the fine included K2.47 million for not keeping proper records and accounts for 16,506 cartons of various alcohol products.
“And K113,850 was for not keeping proper records and accounts for 759 cartons of different cigarette brands,” he said.
Towe said the penalty notice was issued for breaches under the Excise Act of 1956.
“The compliance checks identified a number of very serious discrepancies within the manufacturer’s bonding facility,” he said.
According to Customs, Vitis operates an alcohol manufacturing plant at 9-Mile in Port Moresby, and was alleged to have stored the assorted alcoholic drinks in several non-approved and less secure storage facilities without notifying Customs and failing to provide the necessary documentation when requested to do so.
Towe said this was a breach of the Excise Act that regulated the licensing, production, manufacturing and taxation of excise taxable products such as alcohol and tobacco, spirituous liquors, wines and petroleum products.
He said the documentation PNG Customs required from the manufacturer would contain information such as production dates of the goods, a stock list of under bond goods and sales records.
Towe said by law, all locally produced or imported alcohol and cigarettes had to be properly registered and stored in an approved and certified bonded facility while awaiting the lodgment of a home consumption entry that allowed for the sale and taxation of the goods.
“After the goods are sold, manufacturers are required to lodge an
entry, including the relevant documentation after a week of sales and pay taxes based on the assessment provided to them by Customs,” he said.
“In this instance, the goods were not stored in the bonding facility and the manufacturer was not able to provide any documentation for the goods.
“Customs strongly suspect that the goods may have been stored away from the bonded facility with the intention of being sold without attracting any excise duty.
“It was normal practice for companies to manage their bonded warehouse operations and comply with their tax obligations voluntarily.
“We allow for voluntary compliance and require the companies to keep proper records of their operations.
“We also allow them to sell their products and pay the relevant excise taxes on a weekly basis after the week of sales.
“However, in this case, Customs has revoked the permission for self or voluntary compliance and have taken control of the supervision of the factory and the bond store.
“Where Customs finds evidence of non-compliance such as this finding in the Vitis factory, Customs will revoke the permission to have voluntary compliance and invoke enforced compliance through a bond control release arrangement.
“Under the new arrangements, Customs will supervise the operations and ensure records for the finished goods are maintained and appropriate taxes are paid first before goods are released and sold to the customers.
“The company will be required to pay taxes on a weekly basis before they supply to their customers.
“Customs officers have been rostered to be on site (9-Mile) to supervise the movement of goods going in and coming out of the bond facility.”
Towe warned companies who failed to comply with the country’s laws in doing business would face action, including the revoking of licences.
He noted that Customs was lenient with Vitis and allowed it to still operate because it provided employment for many Papua New Guineans.
“In addition to the fine, Vitis will have to pay duties on the products.”