Belgrade, September 4, 2001 - The Serbian Finance Ministry refuted accusations that it supported tobacco smuggling and insisted that the Decree on tax accounting with Kosovo-Metohija prevented the smuggling of goods with excise tax labels because "a deposit in the amount of total entrance duty for the goods is charged when entering the FRY."

According to the Decree, a deposit or a bank guarantee for excisable goods for Kosovo must be provided at the entrance to the FRY. The deposit is returned on the border between Serbia proper and Kosovo, said Serbian Deputy Finance Minister Dejan Popovic at today's news conference.

Popovic said that this was the third decree of the Serbian government that dealt with settling public revenues with the Autonomous Province of Kosovo-Metohija. He stressed that this decree only supported cigarette trade between Serbia proper and Kosovo, and that its aim was not to define the status of Kosovo inside the FRY.

- In recent months, the number of smuggled cigarettes has dropped markedly. A legalization of the cigarette market is clearly evident - production in the domestic tobacco industry has risen for 40%, and the "DIN Nis" tobacco factory, after 12 years, has now begun to work a third shift - stressed Popovic, adding that the Ministry's estimates are that some fifty percent of tobacco products were smuggled last year.

- It is estimated that this year 17 percent of cigarettes on the market were smuggled - said Popovic, reiterating that the fight against cigarette smuggling and other excisable goods was a priority of the Government.

The Serbian Finance Police, according to its chief Stevan Vujakovic, inspected 19,100 retail shops from May to September 1, confiscating 105,000 packs of cigarettes and temporarily seizing about 1.4 million.

The greatest advance, as Vujakovic claims, has been in the field of uncovering dozens of so-called "phantom enterprises" which deal illegally.

The Finance Police have begun to intensify their activities since May and performed 19,130 inspections of retail shops. The Police have taken appropriate punitive measures, from bringing criminal charges to closing down shops.

Speaking on cooperation with the Customs Administration, Vidakovic said that violations were easier to track due to improved access to information on the entrance of excisable goods.

- About 1.3 million packs of cigarettes worth some YUD34 million have been confiscated - Vujakovic pointed out.

Serbian Finance Ministry advisor Ljubisa Dimitrijevic noted that Market inspections had closed some 509 retail shops for illegal activities.

Great attention has been focused on battling the black market for cigarettes, according to Dimitrijevic. This is evidenced by the heavy emphasis on this sector, while only 12.000 inspections were performed for other excisable goods.