Crooked importers could be dodging thousands of dollars worth of Customs duty, according to the Island's financial watchdog.

And even imported bait could be classed as one that got away -- ruled exempt from duty despite not being listed as duty-free.

Official Auditor Larry Dennis warned: "Legislation requires Customs duty to be levied on the true value of goods.'' He added: "H.M. Customs should have procedures to ensure that the true value of imported goods is assessed consistently and in accordance with the Revenue Act 1898.'' Mr. Dennis quoted the case of a boat brought into the Island "where H.M.

Customs procedures failed to detect that the true value on which duty was levied was significantly understated.'' The importer claimed the boat was worth $200,000 -- a valuation supported by information obtained from the boat-builder by the importer.

Mr. Dennis said that Customs agreed the value was reasonable, based on experience.

But he added: "H.M. Customs was aware that a non-arm's length relationship existed between the boat-builder and the importer and the case file contained a prior insurance policy which valued the boat at $2,030,000.

"There was also correspondence indicating that the boat was worth between $750,000 and $1 million.'' The boat was finally assessed for tax at the $200,000 value -- meaning duty of $110,000.

The official Customs response said bosses accepted the invoiced cost of goods as the customs value, as specified in the legislation.

The response added: "However, in order to improve the consistency with which the rules of customs valuations are applied, H.M. Customs has taken steps to include a chapter regarding the rules of valuation in the Customs Operational Procedures Manual when the invoice value is not accepted or not available.'' Mr. Dennis said his audit also uncovered cases where goods not listed as exempt or without approval or evidence to support exemption, were allowed into the Country duty-free.

His report added: "Goods previously imported by a company were subsequently sent away for repair. When they were re-imported, the value of the repair work was exempted from duty, even though repairs are not covered...

"In another case, imported bait was deemed exempt...even though bait is not listed as an exempt supply.'' Customs officers -- in their official reply -- said: "A post-entry audit and verification programme will be re-established with a mandate to post audit bills of entry.'' And the response added spot-checks on goods listed as exempt would be carried out.

CUSTOMS CUS