A local textile firm, Qingshang Investments (Pvt) Ltd, misclassified imported goods in underhand dealings, prejudicing the tax collector of millions of dollars, the Zimbabwe Revenue Authority (zimra) has said. zimra is locked in a fierce legal battle with Qingshang Investments over non-payment of duty amounting to $2 million. The case, which exposes massive corruption, spilled into the High Court early this month, with Qingshang Investments suing the tax collector for impounding its goods.
The matter has been set for hearing today at the High Court.
zimra was sued after it seized Qingshang Investments goods worth $600 000 in November last year, demanding that the textile company meets its statutory obligations. In its urgent application, Qingshang Investments is seeking an order compelling zimra to release the goods it seized, pending the determination of the case.
The firm claims that the goods on which zimra is demanding tax, had been in the country for more than two years, which rendered them not liable for seizure.
It also denies owing zimra the amount claimed or any amount.
But zimra, which is cited as respondent, in opposing the application, argues that the matter is not urgent.
"Respondent acted lawfully in seizing the goods in question for which incorrect custom duty had been paid," said zimra acting Commissioner-General Mr Happias Kuzvinzwa in his papers filed in the High Court last week.
"It must be noted that applicant misclassified their goods contrary to the provisions of Section 174 (1) of Customs and Excise Act, which makes such misclassification a criminal offence."
zimra is also contesting the legal basis of Qingshang Investment driver Mr Davison Farao to represent the firm at the High Court.
Mr Farao, who deposed an affidavit, claimed to be the company's managing director.
zimra argues in its papers that Mr Farao has no authority to represent the textile company in the case because there is no board resolution to that effect. Qingshang, argues Mr Kuzvinzwa, is a juristic person in terms of the law and anyone who seeks to represent the company should be armed with a required board resolution.
Qingshang claims that it has been manufacturing blankets, duvets, batting, sheets and pillows since 2011, but it has since emerged that the company does not have a manufacturing plant.
Poly knitted fabric is currently imported in semi-processed form, hence it undergoes very limited local value addition before transformation into a blanket, which competes with locally manufactured ones.
Investigations in the operation of the firm recently established that last week, Qingshang received a container, which was loaded with polyester fabric.
zimra allegedly carried out a physical inspection and found that the quantity of the fabric was under declared and the price was understated, costing the revenue collector. The container was seized by zimra.
It is also alleged that another container arrived on January 7 this year and up to date, the container is still held at Bak Port. The container was found to have been loaded with blanket fabrics, as well as finished blankets, which were not declared.