Updated: August 20, 2021 3:39:54 am
A customs and excise tribunal in Mumbai will begin hearing the appeal filed by the Directorate of Revenue Intelligence (DRI) against two orders that struck down all proceedings against three Adani Group companies in power equipment overvaluation cases of Rs 5,500 crore, from August 30.
The decision to hear the cases came on July 26 after Adani Power Maharashtra Ltd, Adani Power Rajasthan Ltd and Maharashtra Eastern Grid Power Transmission Company Ltd — that won the first round in the legal battle — approached the tribunal seeking an early hearing of the matter as they feel the DRI probe has raised concerns among their independent directors, auditors, lenders, foreign investors and shareholders.
However, the DRI opposed the Adani firms’ plea stating that they have already been granted relief in the cases and “no prejudice” will be caused to them, “if the appeals are taken up for hearing in due course of time”. It also said the tribunal order in a similar case of another company has been challenged by the agency in the Supreme Court and the case against Adani firms should be heard only after the SC decides that case.
The Adani Group firms, in their petition to the tribunal in support of an early hearing of the cases, said, “… the issue involved in the present dispute has been widely publicized, causing concern amongst the appellant’s lenders and shareholders. The vilification campaigned by vested interests, including in and through media, has resulted in erosion of equity value, and thereby, triggering a cascading effect on the applicants’ business. The dispute arising out of the present case has a vital impact on the appellant’s group companies in as much as various foreign investors, lenders, financial institutions have time and again pursuing for ascertainment of the status of pending dispute”.
Earlier this year, the DRI had petitioned to the president of the tribunal to reconstitute the tribunal bench hearing the Adani cases as it felt the Revenue Department will not get justice if the case is heard by the old bench that previously ruled against the department in a similar case. Sources said the Adani case will now be heard by a bench comprising tribunal president Justice Dilip Gupta and P Anjani Kumar, technical member of the tribunal.
The three Adani group firms are 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 5467 crore.
In these cases, the DRI has alleged that while the goods (power generation and transmission equipment) were being shipped directly to India by original equipment manufacturers (OEM) based in China and South Korea, “the documents were routed through an intermediary entity created in UAE, who raised inflated invoices (inflating the values in original invoices of OEM several times) on the Indian company, against which money is remitted to UAE”. The DRI has alleged that the actual invoice value of the OEM was remitted to the supplier while the inflated extra amount was sent to accounts of the parent company of the intermediary. The intermediary company, according to the DRI, is controlled by the Adani Group through its representative firms.
In 2017, the adjudication authority of the DRI, KVS Singh, struck down the show-cause notices and other proceedings against the Adani Group firms in two different orders calling the probe “erroneous, illegal and improper not only in law but also on facts”. Subsequently, in 2018, the DRI challenged the orders of the adjudicating authority in the tribunal.
On July 17, Pankaj Chaudhary, Minister of State for Finance, had said that the DRI is investigating certain entities belonging to the Adani Group of Companies under laws administered by it. Chaudhary’s response was in reply to a question raised in the Lok Sabha pertaining to a freeze on the demat accounts of three of the six Mauritius-based funds, that own about $6 billion shares in Adani Group firms, over the issuance of Global Depository Receipt (GDR) by certain listed firms.
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