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MISUSE OF ADVANCE AUTHORIZATION SCHEME
The “Advance Authorization” scheme enables exporters to import raw materials without payment of Customs duties. Diversion of imported goods into domestic market is observed in many cases. In a specific case, an exporter of pharmaceutical products had adopted high input-output norms and the excess duty free inputs were diverted into local market. During the course of investigation, the exporter had deposited Rs. 35 crores towards Customs duty involved. DRI has detected misdeclaration even in cases where the exporters have obtained redemption certificates from DGFT.
MISUSE OF DRAWBACK SCHEME
It is noticed that misclassification of CTH and overvaluation of export goods are standard modus operandi involved in misuse of Drawback scheme. It is also observed that in many cases non-realisation of export proceeds is an usual feature of Drawback fraud.
In a specific instance, DRI unearthed a modus wherein three entities having the same Proprietor had exported garments totally valued at Rs. 605 crores to Nigeria, filing multiple shipping bills under “Drawback and Rebate of State Levies” scheme, and keeping the value of drawback claimed under Rs. 1 lakh per shipping bill. It was found that the goods were actually personal effects of Nigerians as per delivery documents in Nigeria though declared as “Garments for commercial purpose” with Indian Customs.
MISUSE OF MEIS/SEIS/SFIS SCHEME
The MEIS and SEIS scrips are freely transferable, and may be utilized for payment of Customs duties. Misclassification of export goods and services are characteristic of frauds observed under these schemes. For instance, an exporter of “scented” candles was misdeclaring the goods as
“handicraft” candles and fraudulently availed over Rs. 10 crores of MEIS benefit.
DRI also detected a case wherein various exporters of marketing and IT services, which are ineligible for SEIS benefit, have availed the SEIS scrips to the tune of over Rs. 100 crores by misdeclaring the services as “Management consultancy services”.
In another instance, DRI booked 5 cases with respect to freight forwarders, steamer agents, airport operations and ground handling services where scrips amounting to Rs.63 crores were wrongly claimed and availed by the service providers.
DRI also unearthed a SFIS case (the earlier avatar of SEIS) wherein a mining company tampered with the “Foreign Inward Remittance Certificates” (FIRCs) in connivance with the local bank and misdeclared the actual service rendered to claim ineligible scrips. The exporter admitted the misdeclaration and voluntarily deposited over Rs. 5 crores towards such fraudulent SFIS scrips.
VISIBLE RESULTS
DRI, being the top ranking investigating agency par excellence, has been vigilant and very effective in curtailing the menace of export frauds. The detection of various export frauds over the years is a telling testimony to the dedicated action by DRI, thus securing the economic frontiers and the national exchequer. It is undisputed that the quality, consistency and integrity in investigation defines the standards of any law enforcement agency. DRI’s detections and investigations have a resounding effect in the market as not only the fraudster and their modus is exposed but also fence sitters would be deterred from indulging in any such fraudulent activities. DRI has struck a fine balance between trade facilitation and fraud detection by way of precise intervention, thus living upto DRI’s legacy of “invisible presence and visible results”.
56 SMUGGLING IN INDIA REPORT 2019-20