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A 42-year-old company director, Xue Lei, has been sentenced to prison for the fraudulent evasion of duty and Goods and Services Tax (GST).
Xue, a China national, illegally diverted duty-unpaid cigarette cartons for distribution in Singapore when they had been declared for export.
According to a press release by Singapore Customs, between August 2021 and October 2021, Xue diverted 3,520 cartons of duty-unpaid cigarettes for local distribution, thereby evading S$300,600 in duty and S$24,460 in GST.
Director a company that supplies sea stores
Xue was the director of Ocean Star Duty-Free Goods, which supplies sea stores to vessels berthed within Singapore’s territorial waters.
Sea stores refer to goods supplied for consumption or usage by a vessel's crew or passengers outside Singapore's waters.
The items supplied range from food, cigarettes and liquor to other necessities. Sea stores are considered exports and exempted from duty and GST.
Xue's alleged accomplice in the case was another employee of Ocean Star named James Ngiam Song Kai, 35, who was responsible for delivering sea stores to the vessels.
Sought Ngiam's help to divert duty-unpaid cigarettes
Investigations revealed that in July 2021, Xue had been approached by an "unknown man" to purchase cigarettes.
Xue then sought Ngiam’s assistance to divert duty-unpaid cigarettes from Ocean Star’s stock held in a warehouse licensed by Singapore Customs.
Ngiam allegedly agreed to Xue's request in return for a cut of the profit made from the sale.
Declared export permits in excess of those ordered by ship masters
An export permit must be applied before dutiable goods such as cigarettes can be removed from a licensed warehouse and delivered to a vessel.
Should goods held at the warehouses be removed for local consumption, they must pay for duty and GST.
Xue instructed his employees to declare export permits for quantities over that ordered by the vessels’ masters so that the licensed warehouse would release additional duty-unpaid cigarettes from Ocean Star’s stock.
Ngiam would then allegedly retrieve the excess cigarettes and load them into a lorry for transfer, and then move the duty-unpaid cigarettes from the lorry to a van, leave its keys on its tyres and inform Xue.
Xue would then inform the unknown man of the van's location to collect the duty-unpaid cigarettes.
Accomplice arrested in November 2021
Ngiam was eventually arrested during an operation conducted by Singapore Customs officers on Nov. 5, 2021.
His arrest followed the discovery of a van that contained 488 cartons of duty-unpaid cigarettes and was parked at a multi-storey carpark in the vicinity of his residence at Ghim Moh Link.
Pleaded guilty to five charges
Xue was eventually arrested and pleaded guilty to five charges of fraudulent evasion of duty and GST, with another 13 similar charges being considered.
He was sentenced to 27 months and four weeks in jail on Jun. 14, 2023.
Court proceedings against Ocean Star and Ngiam are ongoing.
In the press release, Singapore Customs emphasised that any person who is in any way concerned in any fraudulent evasion of, or attempt to evade fraudulently, any duty shall be guilty of an offence and will be liable on conviction to a fine of up to 40 times the amount of duty and GST evaded.
Vehicles used in committing such offences are also liable to be forfeited.
Members of the public with information on smuggling activities or evasion of duty or GST can call the Singapore Customs hotline on 1800-2330000 or email customs_intelligence@customs.gov.sg to report these illegal activities.
Top image from Singapore Customs/Facebook