Gems, jewels exports fail to rise despite Rs 68K-cr sops: CAG

Premier auditor the Comptroller and Auditor General (CAG) today slammed the government for its failure to translate a Rs 68,192-crore exports duty sop to the gems and jewellery sector from 2005-06 onwards into greater shipments.

"...Despite foregoing substantial revenue on imports and extending various benefits to this sector, the exports have not yet been able to catch up with the imports," the CAG said in a report tabled in Parliament.

While imports grew 16 per cent, the expansion in exports was only 13 per cent through 2005-06 to 2007-08.

The CAG said that as a result of exemptions, which were given to bolster exports, the estimated duty forgone by the government on gems and jewellery during the three years amounted to Rs 68,192 crore.

Talking about the inadequacies in different government policies and control mechanism, CAG said the Central Board of Excise and Customs has not fixed any norms for physical examination of goods during import or export by a SEZ unit, to adhere to the RBI requirement.

It said 10,010 consignments valued at Rs 198 crore were cleared for export from SEZ Surat, between 2005-06 and 2007-08, without any physical examination.

It said the absence of any physical examination implies that there is no check on the risk of undervaluation or overvaluation of goods in imports and exports.

"We recommend prescription of norms for physical examination of goods cleared by the SEZ units adhering to RBI requirements and to prevent any loss of revenue," CAG said.

As per a RBI circular of July 2006, customs authorities are required to examine and certify the value of goods exported in the guaranteed remittance form to be submitted by the exporters to their respective banks.

Besides other recommendations, the CAG has also suggested that database of international trade be kept updated, especially with the Diamond Plaza Customs Clearing Centre (DPCC)in Mumbai.

"This can also enable sharing of data with other tax authorities for detection of cases of duty evasion," it said. The bulk of imports and exports of diamonds, gems and jewellery is handled by the DPCC.

CAG also found many instances where the exporters did not fulfill their obligations and other mandatory conditions after availing the benefit of duty free imports.

In a bid to increase exports from the sector that employs 1.3 million people, the government provides several incentives such as duty free imports of machinery, precious metals and gems.