DRI Arrests Future Enterprises’ CFO Dinesh Maheshwari For Alleged Customs Duty Evasion
Customs duty implication of the misuse of the facility for duty-free imports from Bangladesh is Rs 14.58 crore, says DRI.
The Directorate of Revenue Intelligence arrested Future Enterprises Ltd.’s Chief Financial Officer Dinesh Maheshwari for allegedly being the “main person responsible” for customs duty evasion to the tune of Rs 14.58 crore by the company. Maheshwari is also an executive director on the company’s board, along with Managing Director Vijay Biyani and Vice Chairman Kishore Biyani.
Maheshwari was arrested for the “misuse” of duty-free imports facility from Bangladesh under the South Asian Free Trade Area, according to a statement issued by the Ministry of Finance on Saturday.
Future Enterprises—part of the Kishore Biyani-led Future Group—imported readymade garments from Bangladesh without paying basic customs duty, DRI alleged, adding that the investigation found the value of goods shown in the certificate furnished to be much less than the actual value. The exemption is available only if the importer proves that the goods being imported are of the origin of the SAFTA country.
DRI said the probe found that garments were supplied by third-country suppliers based in Dubai and Singapore, but were delivered from Bangladesh after some “minimal processing”, which the agency said was not enough as per the norms for the product to be called as of “Bangladeshi origin”. “The value declared in the bill of entry submitted before the Indian customs was the value charged by the third-country suppliers to M/s Future Enterprises Ltd., whereas, the value mentioned in the SAFTA certificate was the charge paid by the third country suppliers to the Bangladeshi manufacturers.”
The third-country suppliers, according to DRI, had supplied some raw materials and accessories free of cost to the Bangladeshi manufacturers, and their value was not included in the final value of the goods manufactured by the Bangladeshi manufacturers.
This, the agency said, was done to avail the benefits of SAFTA.
If the value of the free-of-cost materials is included in the total value, then Future Enterprise would not be eligible to avail the SAFTA benefit, as the threshold limit of the third-country content would be more and the value addition that occurred in Bangladesh would fall below the minimum acceptable as per the rules.DRI Statement
Future Group is yet to respond to BloombergQuint’s query on the arrest and the customs duty case.
The consignments were imported between the period June 2017 to January 2018, the anti-smuggling agency said, adding that the total value of the goods imported under 83 consignments stood at Rs 35.91 crore and customs duty liability is Rs 14.58 crore. “After the difference in value was pointed out to M/s. Future Enterprises Ltd., they tried to mischievously get the SAFTA certificates of origin revised from Bangladesh.”
The company procured 22 revised certificates of origin from Bangladesh which were re-issued more than six months after import of the garments, the agency said, adding that only those certificates were picked up for a fraudulent revision which accounted more than 90 percent of the duty liability in order to circumvent the same.
The SAFTA norms state that the certificate of origin needs to be issued at the time of exportation or within three working days from the date of shipment, or in exceptional cases, the certificate of origin may be issued no longer than 45 days from the date of shipment. In this case, since it was reissued after six months it has no legal validity and is in violation of the prescribed rules, the agency said.
The DRI recorded a statement with the company’s sourcing head who said all financial and taxation matters pertaining to the imports were looked after by the financial and commercial vertical of the company, headed by Dinesh Maheshwari as the CFO.
The department’s statement claims despite being confronted with the allegations over repeated summons Maheshwari was evasive and didn’t offer any explanation. Hence, he appears to be guilty of an offence punishable under Section 135 of the Customs Act and has been arrested under Section 104 of the Customs Act, 1962 on July 12.
“These kind of cases involving abuse of Free Trade Agreements directly affect the ‘Make in India’ campiagn of the country and distort the level playing field for genuine Indian manufacturers,” the DRI statement said.