Customs unearth drawbacks fraud of Rs 510 million by UP carpet exporters

In the backdrop of corporate frauds and loan defaults hitting headlines, the Central Board of Indirect Taxes and Customs (CBIC) has exposed duty drawback frauds of over Rs 510 million by four Uttar Pradesh based carpet exporters.

Duty drawback is the scheme to incentive exporters by indirectly waiving the incidence of duties through refunds. However, the exporters have to complete follow up formalities to establish the authenticity of the export transaction and remittance of income to the country.

According to Chief Commissioner Customs (UP, Uttarakhand, Bihar & Jharkhand) K C Gupta, four carpet exporters from the carpet hub of Bhadohi in UP had availed of duty drawbacks of over Rs 501 million.

“However, they failed to submit the requisite papers pertaining to the remittance of income generated from the respective export consignments within the stipulated period. On further investigation, the addresses provided by the exporters were found bogus indicating the fraud,” he said.

Now, the department would coordinate with UP Police for taking further action against the phony exporters, he added.

Gupta said while most of the exporters availing of the duty drawback scheme were genuine, there was always the possibility of black sheep trying to defraud the system for a quick buck.

Meanwhile, during the current fiscal, the customs also seized smuggled goods, including gold, worth over Rs 280 million in UP and Uttarakhand at airports and railway terminals, against total seizure worth Rs 140 million during 2016-17.

The impounded goods included 45 kg gold estimated at Rs 135 million, of which almost 20 kg gold had been seized at the Lucknow airport, he informed.

CBIC is the nodal national agency mandated for administering Customs, GST, Central Excise, Service Tax & Narcotics in India.

Replying to a question, Gupta said while the implementation of Goods & Services Tax (GST) had no direct bearing on exports, yet the rigid compliance under the new tax regime was expected to make it increasingly difficult for such frauds to occur.

Last month, the Bank Securities and Fraud Cell of CBI had arrested Kanpur-based industrialist and promoter of Rotomac Vikram Kothari and his son Rahul for alleged cheating a consortium of banks of Rs 37 billion. His several movable and immovable properties and bank accounts in Delhi and Kanpur were later attached by different central agencies even as the probe is on.

Another Kanpur-based company Shri Lakshmi Cotsyn Limited has also been in news over its failure to repay loans of over Rs 39 billion borrowed from a consortium of 16 banks led by Central bank of India and comprising Syndicate Bank, Union Bank, Canara Bank, Bank of Baroda, Punjab National Bank, Indian Bank, State Bank of India, Exim Bank, Oriental Bank of Commerce, IDBI Bank, Vijaya Bank, Corporation Bank, Saraswat Bank and Andhra Bank.