DRI arrests two in ₹115-crore export incentive fraud

The anti-smuggling intelligence agency arrested an exporter, the alleged mastermind of the fraud, and a private Customs broker who allegedly received commission for processing such exports, officials said, without disclosing their names.

Mumbai: The Mumbai unit of the Directorate of Revenue Intelligence (DRI) arrested two people on Tuesday for their alleged roles in a ₹114.74-crore fraud involving the availment of export incentives through misdeclaration and overvaluation of garment exports.

DRI arrests two in ₹115-crore export incentive fraud

The anti-smuggling intelligence agency arrested an exporter, the alleged mastermind of the fraud, and a private Customs broker who allegedly received commission for processing such exports, officials said, without disclosing their names.

The DRI’s probe was based on specific intelligence it had received about an alleged syndicate that was fraudulently availing duty drawbacks and Rebate of State and Central Taxes and Levies (RoSCTL) benefits by exporting misdeclared and highly overvalued garments to several African countries, officials said.

To perpetrate the fraud, the syndicate was allegedly utilising several dummy importer-exporter codes (IECs) from the Inland Container Depot (ICD) at Talegaon, Pune. Acting on the tip-off, the DRI intercepted two such consignments on Monday, officials added.

Duty drawback is an export incentive that allows the rebate of Customs and central excise duties on imported inputs used in the production of exported goods. The RoSCTL scheme benefits garment exporters by reducing their costs and increasing their competitiveness through rebates of embedded state and central taxes.

An IEC is a mandatory, 10-digit identification number for businesses involved in importing or exporting goods and services. An ICD is an inland dry port serving as a customs-controlled hub for handling, storage, and customs clearance of import/export cargo containers transported to and from seaports by rail or road.

An examination of the intercepted consignments revealed that misdeclared and inferior-quality goods were being exported at highly inflated rates, officials said. The DRI, thereafter, conducted simultaneous searches on Monday and Tuesday at eight premises in Mumbai. The searches led to the recovery of crucial digital evidence, including fake invoices, officials added.

The DRI’s preliminary investigation into the case so far has revealed that the accused syndicate allegedly obtained at least 14 IECs in the names of fictitious individuals. The arrested mastermind allegedly prepared all the export-related documentation that is under the agency’s scanner.

The arrested mastermind allegedly admitted to the DRI in a voluntary statement that the syndicate had procured low-quality goods from local markets in Mumbai, Kolkata, West Bengal, and other cities without invoices and exported them, while overvaluing them by up to six times their actual value, officials said.

“Using this modus operandi, the accused syndicate fraudulently availed drawback benefits of around ₹18.74 crore and RoSCTL benefits of around ₹96 crore,” an agency official said.