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PNB scam: DGFT to examine violations by Nirav Modi, Mehul Choksi firms

The DGFT grants an advanced licence to companies for availing of benefits under duty exemption schemes

Somesh Jha  |  New Delhi 

PNB fraud case
Illustration: Binay Sinha

The (DGFT) has initiated an internal probe to examine whether companies belonging to Nirav Modi and Mehul Choksi, the prime accused in the Rs 114 billion (PNB) fraud case, followed foreign trade guidelines while taking loans from

Director-General Alok Vardhan Chaturvedi has directed officials to examine if the two groups of companies enjoyed benefits of any export promotion schemes.

“The will examine whether duty exemption and remission schemes have been violated, enabling duty-free import of raw materials for export production,” an official said on condition of anonymity, adding that companies were required to meet some commitments towards export of goods after availing of the facility.

The DGFT, which functions under the Ministry of Commerce and Industry, grants an advanced licence to companies for availing of benefits under duty exemption schemes.

Under the Reserve Bank of India (RBI) guidelines, overseas are required to conduct due diligence on requests by importers to see if genuine trade transactions are taking place in accordance with norms.

“If violations are found, the importer-exporter (IE) code of the companies will be suspended under the Foreign Trade (Development and Regulations) Act, 1992,” the official quoted above said. The move will bar these firms from export and import of goods.

An importer-exporter code is a prerequisite for firms dealing with import and export of goods.

Employees of PNB had issued fraudulent letters of undertaking (LoUs) on behalf of the group of companies promoted by Nirav Modi and for import of fresh pearls.

In a letter sent to 30 earlier this month, PNB had said the foreign branches of Indian to which the fraudulent LoUs were issued had not shared the documents that companies produced for availing of buyer's credit.

First Published: Thu, February 22 2018. 06:50 IST