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DRI authority strikes down proceedings against Adani Group firms

“I do not agree with the case of the department that the noticees APML (Adani Power Maharashtra Ltd) and APRL (Adani Power Rajasthan Ltd ) along with their related entity i.e. EIF (Electrogen Infra Holdings Pvt Ltd) had connived to over-value the value of the impugned goods,” said Singh in his 280-page adjudication order passed on August 22.

Written by Khushboo Narayan | Mumbai | Published: August 25, 2017 6:17 am
Queensland Premier, Queensland Premier Annastacia Palaszczuk, Gautam Adani, Adani Group, Queensland Premier Adani Group, Business News, Latest Business News, Indian Express, Indian Express News Gautam Adani (Reuters Photo)

THE adjudicating authority of the Directorate of Revenue Intelligence (DRI) K V S Singh has passed an order striking down all proceedings launched by the DRI against the Adani Group firms. These were accused of allegedly inflating the total declared value of goods imported under power and infrastructure heads, which attracts zero or less than 5 per cent duty to the extent of Rs 3974.12 crore.

“I do not agree with the case of the department that the noticees APML (Adani Power Maharashtra Ltd) and APRL (Adani Power Rajasthan Ltd ) along with their related entity i.e. EIF (Electrogen Infra Holdings Pvt Ltd) had connived to over-value the value of the impugned goods,” said Singh in his 280-page adjudication order passed on August 22.

READ | September 13, 2016: DRI notices to ADAG, Essar, Adani for alleged violation of norms

Singh is Additional Director General, Adjudication, with the DRI in Mumbai.

Sources said the adjudication order passed by Singh will be reviewed by a committee of Chief Commissioners of Customs – Ahmedabad and Mumbai.The review order will have to be passed in 30 days and the DRI will not have any role in the review process.

However, the DRI can challenge the decision in the Central Board of Excise and Customs before Member (Legal).
In 2014, The Indian Express had reported that the DRI had issued a show-cause notice to a few firms of the Adani Group alleging over valuation of imported power equipment and “siphoning off of money abroad”.

READ | July 24, 2014: SIT, CBI to look into Adani Group case

The notice said that while “the goods (power generation and transmission equipment) are being shipped directly to India by the original equipment manufacturers (based in China and South Korea), the documents are routed through an intermediary entity (M/S Electrogen Infra FZE, UAE) created in Dubai . The actual invoice value of the Original Equipment Manufacturer (OEM) is remitted to the supplier while the inflated extra amount is sent to accounts held in subsidiary/holding company established by Adani Group in Mauritius.” The notice also said that Mauritius entity Electrogen Infra Holdings Pvt Ltd, is allegedly “controlled and managed by Vinod Shantilal Shah, alias Vinod Shantilal Adani”. Vinod Shantilal Shah is the eldest of the Adani brothers.

Subsequently, the DRI issued two more show-cause notices to seven other Adani group firms alleging similar overvaluation of imports in their transactions with EIF.

Dropping all charges against the Adani Group, Singh said that Adani Power Maharashtra Ltd, Adani Power Rajasthan Ltd, Electrogen Infra, Vinod Shantilal Adani and two officials of Electrogen Infra Jatin Shan and Moreshwar Vasant Rabade are “not liable to penalty under Section 112(a) and 114AA of the Customs Act, 1962”.

Singh’s order, sources said, is a big setback to the DRI investigation against the Adani Group and other top Indian firms that, according to the agency, have collectively over-valued such power equipment imports using an identical modus operandi to the extent of Rs 10,000 crore.

In fact, after DRI findings against the Adani Group firms, the CBI and the Supreme Court-appointed special investigation team (SIT) on black money had also begun looking into alleged over-invoicing of imports by these firms.

Overvaluation of power equipment is considered to artificially raise tariff values fixed by the Central Electricity Regulatory Commission (CERC) or the respective state regulatory commissions. This, ultimately, affects consumers as they end up paying a higher cost for power.

The latest order of the adjudicating authority has quashed DRI’s contention that Adani Group firms transacted with EIF, a related party, in order to inflate the cost of the capital goods from OEMs to siphon off money abroad.

“….even though I find that EIF and APRL to be related entities through Shri Vinod Shantilal Adani @ VinodShantilal Shah I have come to the conclusion that the said relation has not affected the price and that the same was at arms length and have accepted the transaction value. Thus I find that the allegation that the impugned goods were over-valued does not hold water,” said Singh in the order.

Singh has based his order on submissions made by Adani Group firms that a December 30, 2016 order of the Income Tax department, Ahmedabad, did not add to the total income of APRL and APML in the assessment of financial year 2012-13 and 2013-14, the year when the transactions with EIF took place.

Singh did not seek any further comments from the DRI on this issue. Before the adjudicating authority, the Adani Group firms denied all allegations made by DRI in its show-cause notice. Email and phone calls to the official spokesperson of Adani Group did not elicit any response.

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  1. P
    pmshah
    Aug 26, 2017 at 12:08 pm
    This can be said of absolutely any and everything that has zero import duty. There may even be truth in the charges but would have to be proved at the other end as to how and where they were reimbursed!
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    1. Hiren Pan
      Aug 26, 2017 at 8:46 am
      Why do we think that only and only Higher Courts are impartial? The author is barely aware of the adjudication process under Customs Act and has made selective reporting. If the investigation fails to bring out any evidence, how does the adjudicating authority confirm the demand? Or perhaps, the case itself would have been booked because the person was considered close to those who were considered against the ruling dispensation when the case was booked? It was the same dispensation which had coined Saffron Terror. Why Indian Express and its elite team is silent on that issue? Why no charge sheet was issued against the accused how were condemned to jail in the name of Saffron terror? The sickular media will not write about it. Talking against PM has become fashionable and anybody and everybody can do that, because Supreme Court gives us liberty to speak but only till the point that we don't speak against Supreme Court.
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      1. R
        rupesh mishra
        Aug 25, 2017 at 3:03 pm
        wonder.... how this news article has not been forced to be deleted ....News against Modi shah and their goons does hardly get any place in Media even if someone dares... it is removed within minutes..
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        1. Al S
          Aug 25, 2017 at 2:30 pm
          Jispar hou Modi ka haat, woh laga sakta hai hur corruption investigation ki vaat.
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          1. N
            Nawang Tobdan
            Aug 25, 2017 at 2:27 pm
            It is said that relationship pays, but inseparable relationship favours in tons ------------------
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