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Shipbreakers face raid by Economic Intelligence Wing
DGCEI has unearthed a multi-crore duty evasion at Alang. The ship breakers have been hiding value addition to scrap and were inflating the quantity of items exempted from excise duty.
Alang has been under the scanner of the DGCEI for massive evasion of excise duty and issuing fake Cenvat invoices.
The industry has been involved in this scam along with furnace units. Its a scam of Rs 150 crore - 200 crore a year.
A search operation was conducted by Ahmedabad zonal unit of DGCEI at 18 premises belonging to 11 major industrial groups engaged in ship-breaking in Alang. The operation resulted in recovery of incriminating documents pointing towards large-scale under-valuation of excise duty as well as issuing of fake Cenvat invoices. Alang for long has reputation of being a fake document factory.
DGCEI estimates that the ship-breaking units evade excise duty and other taxes by undervaluing their scrap by over 30%. Fake Cenvat invoices were issued without actual movement of scrap to enable their buyers avail fraudulent Cenvat credit of duty. The scrap recovered from ship-breaking is mostly used by re-rolling units, which avail SSI exemption, and do not require Cenvat invoices. Many induction furnace units across the country do not avail SSI exemption and require Cenvat invoices for input credit of duty.
"The invoices and goods of ship-breaking units of Alang are traded separately and that too at a premium. The scrap generated is delivered to re-rolling units, while Cenvat invoices are sold to furnace units without movement of goods," explained DGCEI officials.
The notification has been enforced after officials at Director General of Central Excise Intelligence noticed that except for a few units, most ship-breakers were ready to comply with the new rule.
Directorate General of Central Excise Intelligence (DGCEI) is the apex intelligence organization functioning under the Central Board of Excise & Customs, Department of Revenue, Ministry of Finance, entrusted with detection of cases of evasion of duties of Central Excise and Service Tax. The Directorate General is headed by Director General. The role of the Directorate General in tackling the menace of duty evasion is manifold. It develops intelligence, especially in new areas of tax evasion through its intelligence network across the country and disseminates information in this respect, by issuing Modus Operandi Circulars and Alert Circulars to appraise field formations of the latest trends in duty evasion. Wherever found necessary, this Directorate General on its own, or in co-ordination with field formations, organises operations to unearth evasion of central excise duty and service tax. In 2004, DGCEI was entrusted with the work of detecting evasion in service tax.
Directorate General of Central Excise Intelligence (DGCEI) was earlier known as Directorate General of Anti-Evasion (DGAE). It was established in the year 1979 as an independent wing under the control of Directorate of Revenue Intelligence, New Delhi with regional units located at Chennai, Delhi, Kolkata and Mumbai. It became a full-fledged Directorate in 1983 headed by a Director. In 1988, the Directorate was upgraded to Directorate General under a Director General with four Zonal Units located at Chennai, Delhi, Kolkata and Mumbai headed by Additional Director General.
The Directorate General was expanded in the year 2000 with the setting up of a number of Regional Units under the respective Zonal Units and was renamed as DGCEI. DGCEI was re-strengthened in the year 2002 with the addition of two more Zones at Ahmedabad and Bangalore. At present DGCEI, with its Headquarters at New Delhi, has 6 Zonal Units and 18 Regional Units.
Directorate of Revenue Intelligence functions under the Central Board of Excise and Customs in the Ministry of Finance, Department of Revenue has taken note of "problems such as import of hazardous substances that will occupy centre stage in the future as the emerging global threats."
Directorate of Revenue Intelligence in its present form is a lean organisation charged essentially with the collection of intelligence, its analysis, collation, interpretation and dissemination on matters relating to violations of customs laws, and to a lesser extent, anti-narcotics law. In order to ensure effective discharge of its responsibilities, DRI maintains close liaison with all the important enforcement agencies in India like the Central Economic Intelligence Bureau, Income-Tax department, Enforcement Directorate, Narcotics Control Bureau, Directorate General of Foreign Trade, Border Security Force, Central Bureau of Investigation, Coast Guard, the State Police authorities and also with all the Customs and Central Excise Commissionerates. It also maintains close liaison with the World Customs Organisation, Brussels, the Regional Intelligence Liaison Office at Tokyo, INTERPOL and foreign Customs Administrations.
Directorate of Revenue Intelligence functions under the Central Board of Excise and Customs in the Ministry of Finance, Department of Revenue. Headed by Director General in New Delhi, it is presently divided into seven zones, each under the charge of an Additional Director General, and further sub-divided into Regional Units, Sub-Regional Units and Intelligence Cells with a complement of Additional Directors, Joint Directors, Deputy Directors, Assistant Directors, Senior Intelligence Officers and Intelligence Officers.
More information about the raid by DGCEI, New Delhi on shipbreakers of Alang to follow shortly.