Page 156 - SMUGGLING IN INDIA REPORT FOR 2020-2021

110 2020-2021 SMUGGLING IN INDIA REPORT
Major cases of undervaluation have been detected in the import of : (i) machinery; (ii) electronic goods; (iii) textiles; (iv) toys; and (v) plastic articles; which account for nearly three-fourth of the undervaluation cases detected in India. In most of the undervaluation cases unearthed by DRI, it was gathered that importers were involved in fabricated /forged/ parallel invoices, suppression of certain
expanses & non- disclosure of related party transactions.
Cases have also been registered for ‘overvaluation’. Black Pepper was found to be overvalued, while being imported into India to circumvent the “minimum import price” imposed by DGFT. Overvaluation of imports is generally done for money laundering purposes.
Undervaluation and Money Laundering in Imports
DRI detected one of the case, where importer was engaged in undervaluation and mis-declaration of mobile phone accessories, parts and other miscellaneous electronic goods imported from China. Mumbai based importer traders were actively engaged in `carrying' business i.e., functioning in the capacity of an agent to transport imported goods belonging to third party in India from China in lieu of a 'carrying fee' per item. The actual Indian buyer, in collusion with the carrying agent and certain Customs brokers would use fake/bogus IECs to import these goods at undervalued rates. Indian passport holders were found as Directors of Hong Kong based suppliers, who admitted to have allowed the use of their firm as a 'front' for funnelling remittances to China-based actual suppliers. The total duty evasion is estimated to be approximately Rs. 150 Crore.