Topnotch Mumbai Customs man in CBI net

The raids were conducted by the Gandhinagar branch of the CBI on as part of its investigation into an alleged fraudulent clearance of machinery belonging to Essar Oil Ltd in 1999 when Bhada was commissioner of customs at Rajkot.

The case goes back to February 25, 1999. That day, when the banks were on strike, Essar had cleared goods worth Rs 700 cr under bond from its warehouse in Jamnagar by depositing a cheque of Rs 60 cr towards payment of duty though it did not have the required funds in its account. Essar apparently was in a hurry to clear the goods because it anticipated a duty hike in the budget due three days later.

The goods were cleared on the same day but the cheque was withheld. Later, in March, Essar paid up the Rs 60 cr, but the duty now payable was Rs 96 crore because of the hike in budget.

On a tip-off, the DRI seized the goods some time in April 1999 and issued a show cause for Rs 96 crore. DRI contended that since the entire clearance was fraudulent in the first place Essar was due to pay the increased duty rather than the pre-budget rate.

Another officer, A C Sharma, who was then deputy commissioner of customs, Jamnagar, has also been named in the CBI case along with Bhada and Essar officials. Bhada has allegedly been charged with having allowed an irregular clearance at a time when the bank strike was public knowledge. He was later transfered to Mumbai where the CBI conducted the raids on him.

Premises of P R Ashok, Essar Oil’s GM (accounts, Jamnagar) as well as bank officers were also covered by the simultaneous raids in Mumbai, Rajkot and Delhi on Thursday and Friday.In a communication to this paper on Saturday, B Ganesh, Essar’s GM (corporate communications) said there was no raid on the group. He also claimed it was a “routine enquiry conducted by the department with an official of the company for verification of the facts”.

Bhada is hearing, as commissioner (adjudication) Mumbai, all cases booked by the Directorate of Revenue Intelligence, Mumbai, easily the most sensitive area of the country as far as high revenue cases are concerned. In fact, he was exclusively entrusted with DRI cases (not only of Mumbai but also cases outside Mumbai to be adjudicated at Mumbai), by the then chief commissioner of customs, Mumbai, G S Tampi, days before Tampi retired from his post, and allegedly on instructions from the CBEC. Normally the cases are adjudicated by the respective commissioners.

The residence of another commissioner, customs in Delhi was also raided on Thursday in connection with Bhada, sources said.

Bhada’s transfer from Rajkot in 1999 itself was controversial. Though the orders had come in May 99, he took charge in Mumbai only in November after shipbreakers in Alang had lodged complaints against him.