DRI may be authorised to probe export frauds in SEZs

The Directorate of Revenue Intelligence may soon be authorised to probe export-import frauds in Special Economic Zones.

At a recent meeting of intelligence agencies, the DRI raised the issue of misuse of SEZ units to commit import and export frauds worth crores of rupees and suggested empowering a central agency to probe such offences.

Various SEZ units are under the scanner of intelligence agencies for alleged misuse of incentives and grants for committing such fraud, official sources said.

The Directorate General of Foreign Trade (DGFT) has received a "self-contained proposal" from Directorate General of Export Promotion regarding operationalisation of relevant provisions of the Special Economic Zones Act, 2015 dealing with notification of offences, enforcement authorities and modalities thereof, the sources said.

At a recent meeting of Economic Intelligence Council headed by Finance Minister Arun Jaitley, the DGFT has been asked to examine the proposal and "issue appropriate notifications to enable officers to investigate offences", they said.

Sources said it has been decided to authorise a central agency to probe offences in the Special Economic Zones, which are designated areas created for promotion of exports and to attract foreign investment, among others.

The SEZs get special incentives and tax benefits including exemption from sales tax and service tax.

According to the latest Commerce Ministry data, there are 330 notified SEZs across the country. The export by these units in 2015-16 stood at Rs 3,41,685 crore.

"There are reports that some people are misusing SEZs for committing import and export fraud. The agencies are facing problem in the absence of relevant provisions to check such activities," a source said.

He said the government is considering authorising officers of the DRI, the lead agency under the Finance Ministry to check customs duty fraud, to take action in cases of misuse of SEZ units to commit fraud.

Various central government departments are adopting a coordinated approach to check cases of tax evasion, black money and fraud.

As much as Rs 50,000 crore of evasion in indirect tax - comprising service tax, excise and customs duty - has been unearthed by the government agencies in the last two years.