New Delhi: Amid the dubious role played by jewellers and diamantaires in the past and the CAG naming and shaming them in its reports, no heed was paid to their shenanigans where they were clearly found to be in contravention of existing rules and regulations.
The CAG had identified the epicentres of chicanery then too - asserting that 63 per cent of exports of jewellery were to the UAE and Hong Kong. For UAE very clearly, CAG averred that in 2015, 15 per cent of the total goods imported were from UAE and 29 per cent of the total like goods were exported to the UAE.
It found repeated transactions in gold, diamond, CPD (cut and polished diamonds) and jewellery between each of these four categories with the modus operandi showing a shadowy world of related party transactions, inverted duty structure, facilitation measures and re-export transactions.
Such was the blurring of lines and level of opacity that it wanted a distinction to be made between imports and exports from an economic, trading and revenue perspective. The CAG’s well-documented report, replete with a litany of acts of commission and omission, if taken seriously could have prevented the big scams that have come to light now.
The Customs Act 1962, according to CAG’s report No 6, empowers the department to confiscate goods on account of improper importation or mis-declaration and to initiate action to adjudicate the cases after issuing show cause notice.
The Directorate of Revenue Intelligence (DRI) is functioning to prevent smuggling activities of prohibited goods and goods prone to evasion of customs duty which includes gold, silver, diamonds and other precious stones.
The CAG pointed out that in Cochin SEZ two instances of unauthorised removal of gold were reported which involved non-accountal of 10.5 kg of gold by Ashwin Gold Pvt Ltd noticed by the Preventive Wing and 900 gms of gold seized from a staff of Rajesh Exports by the DRI which was taken out of SEZ premises with authorisation.
Highlighting the loopholes in the security grid, CAG stated that SEZ rules provided freedom to SEZ units by way of self declaration and routine examination of these goods, prescribed thereby restricting Customs officials from exercising their normal functions.
The CAG recommended ministry of commerce and industry to introduce a mechanism to prevent clandestine removal/smuggling of gold/diamonds as in the case of any other scheme where duty exemption is extended under stroict customs supervision/ scrutiny by virtue of various notifications and orders issued by ministry of finance. CBEC in its reply (December 2015) while admitting audit observation said that after cadre restructuring, sanctioned strength had been increased in various grades.