From China to India: DRI Foils Massive Anti-Dumping Duty Heist

Chennai:

Port Wings News Network:

The Directorate of Revenue Intelligence(DRI) has unearthed a massive scam involving the import of Chinese-made hydraulic rock breakers and chisels, mis-declared and routed through Malaysia to evade thousands of crores in anti-dumping duty (ADD), according to a news report published in leading English-language daily The New Indian Express.

According to the report attributed to “official sources,” as part of the probe, DRI’s Gandhidham unit in Gujarat arrested Rajiv Hosamane Jayaprakash, partner of Mahaveer Distributors, on 16 September. He is suspected to be the key operator, beneficial owner and mastermind behind the conspiracy to evade customs duties amounting to Rs 28.24 crore. The consignments were likely routed through a major port in western India, sources added.

Rajiv HJ, also known as Rajiv Jain, was arrested under provisions of Section 104(4)(b) and 104(6)(a) of the Customs Act. Three consignments of the imported goods were seized by the DRI.

Hydraulic rock breakers and chisels are integral tools in the construction and mining industry, typically used in excavators. To safeguard domestic manufacturers, the Central Board of Indirect Taxes and Customs (CBIC) on June 27, 2024, imposed steep anti-dumping duties on such imports. Chinese-made products attract around 162% duty.

Industry sources said the scam had two layers. Firstly, consignments were routed through Malaysia to avoid scrutiny and the ADD. Secondly, consignments were grossly undervalued.

“For instance, a product worth USD 10,000 is declared as another item valued at only USD 2,000, thereby reducing the duty payable,” said an official source from the Indian industry.

The official estimated that around 500 containers carrying tools worth over Rs 2,000 crore had been imported through this modus operandi at ports in Kolkata, Mumbai and Gujarat over the past year, causing the exchequer losses running into several thousand crores. “Indian manufacturers are also directly impacted by this illegal import,” the official added. According to DRI sources, the practice involves misuse of Free Trade Agreements. “Documents are forged. Agents of importers in Malaysia arrange forged Certificates of Origin and fake letters authenticating them. Consignments are also undervalued at 20%–25%,” the DRI noted in its 2021-22 annual report.

About The Author