The Government has reversed a contentious policy of tax-free imports of missile parts, says a report by Reuters. The policy lies at the centre of an investigation against the Adani Defence, which is under scanner for an alleged Rs 77 crore import tax evasion
Earlier in September, the government announced that it would exempt all such parts, whether for long- or short-range missiles, from import taxes.
The Reuters report pointed out that the latest October 9 “corrigendum”, or correction notification, dropped the word “missiles” from its previous policy without providing any reason, thereby reinstating older rules that exempt only certain parts used in long-range missiles.
The September notification was the first time the government had put a blanket exemption on all such missile parts from customs duty. The latest October 9 order has reversed the policy to the older regime, where parts of small-range missiles were not specifically exempt from import duties.
The Adani tax evasion investigation
Earlier last week, Reuters reported that India’s Directorate of Revenue Intelligence is investigating Adani Defence since March for evading tariffs of Rs 77 crore for importing some missile components by wrongly claiming that they were exempt from customs duties and tax.
According to the report, the parts imported by Adani for the manufacture of short-range surface-to-air missile systems were subject to a 10 per cent import tax and an 18 per cent local tax. However, the company misclassified them as components of long-range missiles, which were exempt from tariffs.
Adani statement
As per a Reuters report, Adani Group said the directorate had “sought clarifications” on its imports based on their interpretation of the customs rules and the “clarifications have been provided with supporting documents.”
“The issue stands closed from our end,” an Adani spokesperson added, without elaborating or explaining if the company made any payments to settle the matter, Reuters added.