Drawback - Large  scale misuse of  Drawback  Scheme  on exports of  cotton knitted  garments  through ICDs   in Tamil Nadu   by willful and  gross  over-invoicing  and  manipulation  of  documents  by  dubious  exporters  of  garments  - Circulation of  modus  operandi  adopted.

Document Text

Circular No. 92 /20003-Cus 17th October, 2003 F.No.609/133 /2003-DBK Government of India Ministry of Finance Department of Revenue Central Board of Excise & Customs Sub: Large scale misuse of Drawback Scheme on exports of cotton knitted garments through ICDs in Tamil Nadu by over- willful invoicing and manipulation of documents by dubious expor ters Circulation - of modus operandi adopted - regarding. garments gross and of Commissioner of Customs, Trichy , has informed that they have fraudulent exports of cotton come across certain cases of over- garments where knitted invoicing of goods to avail of higher unintended duty drawback benefits by adopting the following modus operandi. exporters indulged the in and opened bank accounts dubious persons floated companies 2. Some in the name of known persons who hail from economically poor families and are illiterates. Such persons ( Benamis ) were lured by the fraudsters to become namesake owners of such bogus companies (“The exporters”) in whose name the shipping bills were filed. In most of the cases, it was noticed that such “exporters” did not have factories and they were only obtained I.E. Code, got PAN merchant exporters. The fraudsters No. of front persons. They arranged purchase orders/contract for the exports exorbitant of non- to value quota Dubai like and African countries. The purchase orders were cryptic and vague specifications, contain and technical characteristics and other details. They only mentioned the rate per piece and elements quality from procured readymade banians to the market and declared 20 times the present market value of the garments. The unscrupulous inferior always made exports were the quantity. Singapore, garments the f.o.b. countries almost name Value of size, and not the the did at 15 in Special 3. Investigation Brach at the Gateway Ports of Cochin and Tuticorin on had consignments, re-examined detained Officers some and the of the and stuffing sensing trouble, . The exporters the basis of specific intelligence received from the Trichy Customs Commissionerate fabricated /manipulated letters, addressed to ICDs to give the impression that the lower value had been accepted at the time of assessment, examination on of occasions, subsequent to the detention of the cargo at the Gateway Ports, bills declared were revised downwards in order to reflect a far lower f.o.b. value for claiming drawback. Endorsements to this effect were made on all the copies of the Shipping Bills available in the ICDs except the transference copies of the shipping bills (which is sent along with the clearly reflected manipulation of the documents to evade penal action and on the original inflated value declared in the Shipping Bill, from the ICDs . consignment sanctioned drawback Shipping Gateway Ports). goods. value Also, f.o.b. also This the the get the on to at of of India as well exporters investigation, it also came the Reserve Bank 4. During to light that for such exports GR forms are not being filed with the banks. Consequently, such transactions do not get reflected in the records in the XOS(Exports outstanding) statements sent by the RBI to the respective ports to monitor the foreign inward remittances. These books not of accounts for purchase/sale, etc. in spite of huge volume of trade such in domestic purchase as well as exports. Also, both exporters open their accounts in foreign banks and private sector banks and withdraw money mainly in the form of cash while the deposits are through drawback cheques . This is owing to the fact banks, do not that insist on foreign for forms, inward remittances. the nationalised filing of shipping bills and GR these banks, unlike maintain any do as ensure 5. All the field formations are hereby directed to be alert and vigilant to avail of higher unintended duty drawback by resorting to the above mentioned modus operandi. unscrupulous elements that not do 6. Suitable alert may be issued to Customs field staff. 7. Receipt of this Circular may be acknowledged. S.S. Renjhen Joint Secretary to the Government of India

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