The Central Board of Excise and Customs (CBEC) has recommended to the Director General of Foreign Trade (DGFT) that the norms for issuing export/import licenses be more stringent.
The recommendation followed the findings of an investigation by the Directorate of Revenue Intelligence (DRI). “The DRI findings, report inconsistencies in exports of textile and gems and jewellery, to specific destinations, especially to the Middle East,” an official said.
The report revelaed that export and import codes have been misused to transfer items to sister companies, to claim export promotion benefits, duty drawback benefits and duty concessions, among others.
In some cases, it was found that licence holders were involved in a couple of genuine exports and imports but then the code would be used for fraudulent transfers. Revenue department estimates put the loss at around 2 per cent of the total revenue due to such frauds.
According to an official, there are more serious issues than the loss of revenues. “Such frauds have implications on security of the country. It also promotes smuggling, misdeclaration of information and overestimating figures of exports and imports in the economy.”
The CBEC has recommended the GFT to make physical verification of the place and conduct periodic reviews through sample checking. Regular data should be sourced from the customs department to monitor the pattern of foreign trade on the basis of items, amount/volume and destination. This would help in alerting the customs department in case of any divergence.
The board is also of the view that norms should be enforcement friendly with minimum bureaucratic interference so that the customs department can keep a close watch on the consignments. The DGFT has also been asked to prepare a dossier of the directors and management of the companies and put in place an effective process to verify details provided by exproters and importers. The dossier should then be sent to the customs department.
The DGFT has recommended banning the fraudulent exporters and importers for at least a year.
Source : business-standard.com