The Directorate of Revenue Intelligence (DRI) has informed a court that it will move the Supreme Court against the Bombay High Court order that quashed all Letters Rogatory (LRs) sent by it to foreign countries in connection with the alleged overvaluation of Indonesian coal imports from 2011 to 2015 by two Adani Group firms.
In an affidavit filed on November 1, the DRI said it “is considering to take appropriate legal remedies available to it and therefore is likely that SLP (special leave petition) would be filed with the honorable Supreme Court to claim appropriate reliefs”.
A Letter Rogatory is a formal request between two countries party to a Mutual Legal Assistance Treaty (MLAT), seeking judicial assistance in accessing information on an offshore entity in connection with an ongoing probe.
The DRI, in its affidavit filed with the Delhi High Court, also apprised the court on the status of its investigation into the overvaluation of coal imports to India by several companies.
The Delhi High Court had directed DRI to file an affidavit as it is hearing a public interest litigation (PIL) filed by senior advocate Prashant Bhushan on the alleged over-valuation of Indonesian coal and power equipment imports by about 40 firms in the country to the tune of Rs 29,000 crore.
According to the DRI affidavit, it has adjudicated three alleged overvaluation cases — PMC Projects (India) Pvt Ltd, Adani Power Maharashtra Pvt Ltd-Adani Power Rajasthan Ltd and Knowledge Infrastructure Systems Pvt Ltd. These cases are pending at various legal forums.
Apart from this, the intelligence agency has kept five cases pertaining to Coastal Energy Pvt Ltd, Reliance Infrastructure Ltd, Essar Power Gujarat Ltd, Vadinar Power Company Ltd and Adani Enterprises Ltd in abeyance as they are similar to these three cases. The DRI said it is waiting for the outcome of those three cases before proceeding in the remaining five to avoid “multiplicity of proceedings”.
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The DRI probe against all these companies began after the agency issued a general alert to its field formations across India in March 2016, outlining the modus operandi of over-invoicing of coal imports from Indonesia. DRI alleged that money was being “siphoned” outside the country and the electricity-generating firms were availing of “higher tariff compensation based on artificially inflated cost of the imported coal”.
The DRI alleged that Indonesian coal was directly imported from ports in that country to India while import invoices were routed through one or more intermediaries based in Singapore, Hong Kong, Dubai and British Virgin Islands to artificially inflate its value.
The agency, according to sources, found that inflated invoices received in India were issued by intermediaries, allegedly subsidiary companies of Indian importers or their fronts. The DRI alleged that in certain cases, the import value of Indonesian coal was artificially inflated by about 50 to 100 per cent by changing test reports which measure the calorific value of coal.
Artificial inflation of value of the imported coal increases the landed cost of coal, which is a primary fuel in coal fired thermal power plants. The higher tariff dispensed by the electricity regulator to the power generator enhances the cost of purchase of the power distributor, which in turn factors this artificially enhanced cost in its billing to consumers.