Demand for high-level investigations
The Confederation of All India Traders (CAIT) has expressed concern over imports of goods from China, which are likely to have a nexus with hawala transactions resulting huge loss of custom duty and IGST revenue to the government. It may also be possible that such hawala money might be transferred to Pakistan for conducting terrorist activities. Calling it as a serious matter, the CAIT has urged the government to institute a high level enquiry to curb activities of the crony nexus.
CAIT National President B C Bhartia and Secretary General Praveen Khandelwal said it is an important issue, which requires thorough investigations. The material being received in our country from China is said to be highly undervalued. It is necessary to understand what material is actually imported and what nomenclature has been given to it. In order to attract lower custom duty and lower IGST, the declaration in many cases do not match the material that is actually being imported. This needs proper verification of document along with the material that is being import from China.
Both Bhartia and Khandelwal said it is believed that the material being imported from China is declared at undervalued prices. It could be Collusion or hand in glove offer with certain mysterious officers. Moreover, IGST is paid at a very lower price and then this material goes into grey market and is sold at cheaper prices compared to Indian goods where GST is paid at full amount. It could be easily substantiated If verification of IGST paid at customs port is linked to credit for an IGST taken by importers, Surprisingly, it is observed that in most of the cases where Chinese goods have been imported, nobody has claimed IGST. This proves the point that the importer has sold the material in grey market.
The amount of custom duty and IGST saved by the importers helps him to sell Chinese goods in Indian market at very lower price. If the government takes up this matter and is very vigilant that custom duty and IGST is recovered at the real value of imported material, Chinese goods will automatically become costly compared to Indian goods.
They further said that in order to save Indian economy, MSMEs and to ensure proper tax collection at ports, it is high time that all imports should pass through a proper check. Additionally, the government can advertise the material being imported and if anybody wants to pay 25% to 50% extra in an auction over and above declared price then material can be sold to him and importer can be paid declared price.
It cannot be denied that the goods imported from China are highly underpriced. It is common sense that difference in actual price and the billed amount has to be transferred to Chinese exporter through some means. This needs to be investigated. Who are these hawala operators who facilitate transfer of money from our country to China? Are exports to China being under invoiced and difference is settled through hawala transactions or there is some other mode through which this money is going, they questioned.