Circular No. 19 dated 14^th March 2000

It is brought to the notice of the field formations that an alleged fraud has been committed at Chennai wherein a CHA has defrauded the department by way of evasion of Customs duty by misusing the bond facility.

2.      Available report indicates that the CHA would clear the imported raw material from Customs on the pretext of bonding. The raw material would then be taken to the CHA premises wherein they would be substituted with material of no value. The imported material would then be sent to the importer with fabricated B/ E's for home consumption. Based on the fabricated Bill of Entry the importer would take MODVAT credit. Meanwhile the substituted material (packed in original packing) would be deposited in the warehouse for bonding.

3.      Since the aforesaid case involves substantial amount of revenue, the matter has been referred to CBI for a thorough enquiry. The field formations may like to undertake and initial stock challenge of all bonded goods lying in the public bonded warehouses beyond 1 year and also to direct the bond section of Customs House, to reconcile the records with the record of the warehouse.

4.      SIIBs and Preventive Branches may also be asked to profile the high risk bonded goods/ importers and to selectively draw out samples of suspect cases in order to rule out similar frauds.

5.      The Board may kindly be kept informed of the outcome of this exercise.