The Supreme Court recently issued notices to the managing director of Adani Enterprises Ltd, Rajesh Adani and others, following a petition filed by the customs department that challenged a recent order by the service tax tribunal, which quashed the department’s show cause notice and related proceedings against the company.
“Rajesh Adani, Managing Director of M/s AEL and Samir Vora, Vice-President of M/s AEL, by their acts of omission and commission, indulged in fraudulent and manipulative practice and involved themselves in misdeclaration of export value…” the customs department said.
What does the petition say?
In its petition the customs department alleged that Adani Enterprises had engaged in manipulative practice and had used duty-free credit entitlement certificates from the Directorate General of foreign Trade (DGFT), Ahmedabad to import gold and silver without paying customs duties under the erstwhile incremental export promotion scheme.
The department stated that between 2008 and 2010, Adani Enterprises imported around 31,219.79 kg of silver and 25,432.84 kg of gold bars without paying customs duty, which led to a duty loss of approximately Rs 49.77 crore.
Appearing for the department, Additional Solicitor General N Venkataraman submitted before the apex court that the tribunal, which had previously quashed proceedings against the Adani corporation, had erred in its judgment.
As per a report by The Informist, Venkataraman further argued that Adani had falsely obtained duty-free credit entitlement (DFCE) certificates from the DGFT body under the 2003-04 Incremental Export Promotion Scheme by “wilful misstatement, suppression of facts, misrepresentation/misdeclaration”.
Why is Adani accused of violating the export promotion scheme?
The DGFT introduced the Incremental Export Promotion Scheme in 2003-04, where exporters were entitled to a credit of duty to the extent of 10% of the total incremental exports made by them, provided they recorded at least 25% growth in exports when compared to the previous year.
These credits were used by Adani Enterprises to import goods duty-free through Duty-Free Credit Entitlement (DFCE) licences, with the condition that imports must be linked to exported products.
The Customs Department argued that Adani Enterprises holds no merit to import gold and silver bars without paying relevant duty fees under the scheme, as their export products, which include cut and polished diamonds, bore no connection with items like gold and silver.
The department further added that such bars should not be treated as inputs or replenishment for diamond exports, as the company has exported diamonds in the same form and not as jewellery items, the Informist reported.