Exporters stash away dollars, may face action

Special Investigation Team (SIT) on blackmoney has asked ED to take actions against over 788 exporters under FEMA for not bringing back exports proceeds into the country.

Each of these companies have exports proceeds of Rs100 crore in foreign countries for more than one year. As per RBI regulations, all exporters have to bring foreign exchange into the country as export proceeds within one year of the date of exports.

Not bringing export proceeds is a violation of Foreign Exchange Management Act (FEMA) as it amounts to illicitly parking funds abroad.

The data on whether a particular exporter has brought export proceeds into the country is maintained by Reserve Bank of India.

SIT also asked Directorate of Revenue Intelligence (DRI) to check from it’s database on how many exporters have claimed duty drawback but have failed to bring export proceeds and take necessary action against them as per law and inform SIT of action taken.

Exporters can claim duty drawback from government on exports made with respect to taxes paid on inputs or raw material to exports.

Any exporter can claim duty drawback only if the exporter has brought export proceeds into the country.

SIT found that the country loses on two counts - first by not getting proceeds of exports for exports made and secondly wrongful claim of duty drawback.

SIT had asked RBI to give details of exports made where exports proceeds were yet to be utilised even after a period of more than one year.

In response, RBI provided data on export outstanding for shipping bills prior to 1st March, 2014 pending for more than one year as well as data on export outstanding for shipping bills on or after 1st March, 2014 pending for more than one year.

SIT said that from the data provided by RBI, it emerged that huge amount of export proceeds have not been realised.

“ED to take necessary action under FEMA wherever needed and specially with respect to 216 Companies with respect to the period before 1st March, 2016 and 572 companies for the period after 1st March, 2016 for which each such company had export proceeds pending for realisation for more than Rs 100 crores and inform SIT on action taken,” said SIT.

It also asked RBI to develop an institutional mechanism and IT system to not only immediately red flag those cases where exports have been outstanding in violation of FEMA guidelines but share the complete data with ED and Directorate of Revenue Intelligence on a monthly basis.