Import of Timber - Fraudulent claim of 4% SAD by unscrupulous importers - Big Scam?
A concerned Netizen informs us,
Almost 80% of timber imports in India is made through Kandla Port. Most of the imports are done in the form of Round logs falling under CTH 44039929. These Round logs are sawn in the sawing mills located in around Kandla and sold subsequently to various buyers. These sawn woods have distinct classification in Customs Tariff and they attain separate identity. Since the identity of the goods sold and that imported are different and no co-relation between the imported goods and sold goods could be established, refund of 4% SAD in such cases is not permissible.
Knowing fully well that sawn woods are not eligible for refund of SAD, an ‘idea' was floated by one ‘sharp minded' senior officer to select group of importers and CHA to file claim of SAD refunds on the basis of forged documents showing sale of sawn timbers as round logs. After this, refund were sanctioned on break neck speed. In this entire game, everybody was in a win-win situation: importers were getting undue benefit, brokers / CHA were getting 15% to 20% of the refund amount while about 20% was being distributed by the officers. (Major chunk-10% being gulped by the Senior most officer in the racket). The only loser in the entire game was Govt. Revenue.
Since this racket was going on such a high speed and so many parties were involved that it could not remain a secret. All the investigating agencies of CBEC got smell of this. It remains a mystery why DRI did not take up this case. However, DGCEI took up this case and started investigating. When the SIIB of Kandla Customs got hint of enquiry being done by DGCEI, they started their own investigation.
As per conservative estimates made by DGCEI, the amount of fraudulent refund is not less than Rs. 100 Crores.
CBEC had issued Circular No. 15/2010 dated 29.06.2010, almost agreeing with the above allegations - anyway clarifying that refund was not eligible for sawn timber.
However according to the Timber Association, the imported timber is huge – about 80 ft long while the trucks used for transportation are only 40 ft long. So the imported timber had to be invariably cut to facilitate transport. Just by cutting the timber, (for transport), does it become a new product, ineligible for SAD refund?
Timber Merchants draw strength from the judgement of the Supreme Court in Collector of Central Excise v Kutty Flush Doors – , wherein the Supreme Court held that no new product emerges by sawing timber into several sizes. The Supreme Court judgement which we are carrying today also may help the timber trade. But now the Board having ruled that no refund is to be granted, there is a big scare and efforts are being made to recover the refunds already granted.
As you saw, so you reap!