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  1. DRI slaps notices for over-invoicing of cap goods imports

DRI slaps notices for over-invoicing of cap goods imports

Adani Power and Essar Power have been slapped with notices by the DRI for allegedly over- invoicing of capital goods imports in a bid to charge higher power tariffs or siphon off money abroad.

By: | New Delhi | Published: September 12, 2016 10:36 PM
Adani Power and Essar Power have been slapped with notices by the DRI. (Reuters) Adani Power and Essar Power have been slapped with notices by the DRI. (Reuters)

Adani Power and Essar Power have been slapped with notices by the DRI for allegedly over- invoicing of capital goods imports in a bid to charge higher power tariffs or siphon off money abroad.

The fresh notices are in addition to a Rs 5,500 crore May 2014 notice on Adani and Rs 2,600 crore notice on Esar in March 2015. The new notice slapped on Adani is said to be for Rs 3,000 crore and that on Essar for Rs 1,100 crore, sources said.

While Adani did not respond to emails seeking comments, an Essar spokesperson said: “We have received a show-cause notice by DRI, where the agency has sought our ‘clarification’ in context of invoicing issues. We are responding to the concerns raised in the notice.”

“We strongly refute and deny the allegation. All our procurements stand the strictest scrutiny of law. Our project cost compare favourably with similar projects built in India,” he said.

Besides capital goods, the Directorate of Revenue Intelligence (DRI) is also investigating about 40 energy companies and traders, including some in the state sector, for alleged over-invoicing of imported coal including through a tax haven to siphon off money abroad and charge higher power tariffs.

Sources said notices on the issue of over invoicing of coal are also being issued to firms ranging from GMR to Reliance Power.

The agency is said to have found that certain importers of Indonesian coal were artificially inflating its import value against the original price, the sources said.

The objective of over-valuation appears to be to siphon off money abroad and to avail higher power tariff compensation based on artificially inflated cost of the imported coal, they said.

The Essar spokesperson said: “This is only a Show Cause Notice and we are confident that during the proceedings, the explanations provided will be considered satisfactory by the adjudicating authorities.”

Essar group, he said, is strongly committed in adherence to law of the land.

“We wish to point out that all the procurements are from overseas suppliers and were made at arm’s length price which were not only at the lower quadrant compared to peer projects built in India but also certified to be reasonable by reputed technical consultants.

“The so called margins or the excess payments as the case may be, worked out by the DRI do not take into account all the costs incurred by the overseas supplier thereby resulting in highly inflated margins as against the normative net margins made by the supplier, thus leading to erroneous conclusions.

“As the supplies are in the nature of project imports, suppliers had provided substantial services to the importing companies by expediting services, ensuring quality standards, timely monitoring and inspection/ testing, providing the performance guarantee to the Indian importing companies, and would have incurred substantial financial and other costs in providing these services. The net margin earned by the supplier are reasonable and in line with similar supplier margins,” he said.

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