Page 151 - SMUGGLING IN INDIA REPORT FOR 2020-2021

Overview
India’s merchandise imports witnessed a decline of 16.9 % during the FY 2020-2021 compared to the previous year owing to COVID-19 pandemic induced supply chain constraints. Notwithstanding the lockdown for most part of the financial year, when it was difficult to even venture outside, DRI rose to the occasion true to its formidable reputation in protecting the country's economic frontiers. DRI exceeded the previous year’s detection figures by 77% in respect of import commercial frauds. While the duty involved in import commercial frauds
was Rs. 1591 Crore in 500 cases during FY 2019-2020, it went up to Rs. 2810 Crore in 722 cases during FY 2020-2021.The import commercial frauds include misdeclaration to customs in the form of mis-classification of imported goods, under valuation, concealment, mis-use of Free Trade Agreements (FTAs), avoidance of additional duties of Customs like Anti-dumping duty/ Countervailing duty etc. Multiple modalities are adopted by importers to illegally reduce tax incidence. Main areas of import commercial fraud are depicted in the chart below:
CHAPTER 8: COMMERCIAL FRAUDS-IMPORTS 105
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Undervaluation: Duty Evasion, Suppression of value through forged documents/ related party status with foreign suppliers
Misuse of Bilateral & Multilateral/Free trade Agreements : Mis declaration of Country of origin & Value addition norms for evasion of duty
Misuse of End use & Exemption notification : Violation of Post import conditions, Mis classification/mis declaration of goods/description to avail exemption benefits
Overvaluation : Money laundering and Illicit transfer of funds
Misdeclaration : Misdeclaration/Mis-statement/Mis-classification of goods / description /quality to evade duty or smuggle goods
Evasion of ADD/CVD :Routing of goods through third country & Misuse of High Sea Sale mechanism to evade ADD/CVD
Evasion of IGST : Wrong availment of reduced rate through mis- statement