Sebi, ED may Probe Adani for Flouting Customs Rules
Co gets show-cause notice from DRI, told to explain purchase of imported equipment
Market regulator Sebi, as well as other agencies such as the Enforcement Directorate and the Income-tax department are also likely to examine alleged duty evasion by companies of the Adani Group after receiving references from the agency investigating the matter, the Directorate of Revenue Intelligence (DRI), said two senior official aware of the matter. The DRI issued a show cause notice on Thursday a day ahead of the elections results and on the day finance minister P Chidambaram checked out of North Block. The notice asks the Adani Group to explain why imported plant and machinery should not be confiscated and penalty should not be levied for violation of customs valuation norms, a source said. Meanwhile, an Adani group spokesperson confirmed the re- ceipt of a show cause notice from DRI. “We have received the show cause notice from DRI. We are evaluating the same and would decide further course of action based on legal advice,” said an Adani Group spokesperson. ET reported in its May 17 edition that DRI has served a show cause notice, charging Adani Power Rajasthan, Adani Power Maharashtra and Maharashtra Eastern Grid Power Transmission Company Ltd and its contractor PMC Projects for alleged overvalution of imports worth .` 5500 crore .
While Sebi’s involvement stems from the fact that listed companies may be involved, Enforcement Directorate could probe any possible violation of foreign exchange and money laundering laws.
Adani group officials have in the past denied any wrong-doing. They have described the probe as being politically motivated, as the Group to perceived to be close to the Prime Minister elect - Narendra Modi.
During the election campaign Congress vice-president Rahul Gandhi criticised a lleged favours received by the Adani Group in Gujarat such as land at cheap rates.
Enforcement Directorate could probe any possible violation of foreign exchange and money laundering laws
Gautam Adani, the group’s chairman, has rubbished these allegations pointing out that they had purchased land at market rates over a long period of time.
The DRI had initiated investigation against the group late last year and largely focused on import of equipment through what officials with the probe describe as a circuitous route by using an intermediary.
Equipment was allegedly imported under a scheme that allowed duty-free or at concessional rates by entity based in India to foreign supplier.
Goods were then shipped directly to India by the manufacturers, but documents routed through an intermediary in UAE. The agency’s claims and investigation is based on invoices and funds transfer details that showed a higher value of the equipment imported by the domestic company while a parallel invoice issued by the intermediary entity to the seller showed lower value.