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Customs Circular No. 92 /20003 dated 17.10.2003
Sub: 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 - regarding.
Commissioner of Customs, Trichy, has informed
that they have come across certain cases of fraudulent exports of cotton knitted
garments where the exporters indulged in over-invoicing of goods to avail of
higher unintended duty drawback benefits by adopting the following modus
operandi.
2. Some dubious persons floated companies 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
merchant exporters. The fraudsters obtained I.E. Code, got PAN No. and opened
bank accounts in the name of front persons. They arranged purchase
orders/contract for the exports of garments at exorbitant value and the exports
were always made to non-quota countries like Singapore, Dubai and African
countries. The purchase orders were cryptic and vague and did not contain size,
specifications, technical characteristics and other details. They only mentioned
the rate per piece and the quantity. The unscrupulous elements procured
readymade banians of inferior quality from the market and declared the f.o.b.
value almost 15 to 20 times the present market value of the garments.
3. Officers of the Special Investigation Brach at the Gateway Ports of Cochin
and Tuticorin had detained and re-examined some consignments, on the basis of
specific intelligence received from the Trichy Customs Commissionerate. The
exporters sensing trouble, fabricated /manipulated letters, addressed to ICDs to
give the impression that the lower value had been accepted at the time of
assessment, examination and stuffing of the goods. Also, on occasions,
subsequent to the detention of the cargo at the Gateway Ports, the f.o.b. value
declared on the Shipping bills 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
consignment at the Gateway Ports). This clearly reflected manipulation of the
documents to evade penal action and also to get drawback sanctioned on the
original inflated value declared in the Shipping Bill, from the ICDs.
4. During investigation, it also came 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 of the Reserve Bank of India as well as in the
XOS(Exports outstanding) statements sent by the RBI to the respective ports to
monitor the foreign inward remittances. These exporters do not maintain any
books of accounts for purchase/sale, etc. in spite of huge volume of trade both
in domestic purchase as well as exports. Also, such 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 that these banks, unlike the nationalised banks, do not insist on
filing of shipping bills and GR forms, for foreign inward remittances.
5. All the field formations are hereby directed to be alert and vigilant to
ensure that unscrupulous elements do not avail of higher unintended duty
drawback by resorting to the above mentioned modus operandi.
6. Suitable alert may be issued to Customs field staff.
7. Receipt of this Circular may be acknowledged.
Yours faithfully,
Sd/-
(S.S. Renjhen)
Joint Secretary to the Government of India