Special Investigation Team (SIT) has asked the Enforcement Directorate and Directorate of Revenue Intelligence to act to check black money menace.
To check black money menace, the Special Investigation Team (SIT) has asked the Enforcement Directorate (ED) and Directorate of Revenue Intelligence (DRI) to act against companies claiming duty drawback without repatriate export proceeds. SIT has directed ED to take action under FEMA with respect to 216 companies with respect to the period before March 1, 2016 and 572 companies for the period after March 1, 2016, for which each such company had export proceeds pending for realisation for more than Rs 100 crore.
"SIT also directed Directorate of Revenue Intelligence (DRI) to check from its database on how many companies have claimed duty drawback but have failed to bring export proceeds, take necessary action against them as per law," the Finance Ministry said in a statement. The SIT, which was set up by the government to look into issues relating to black money, also asked RBI to immediately develop an institutional mechanism and IT system to immediately red flag those cases where exports have been outstanding in violation of FEMA guidelines.
Besides, RBI has also been asked to share complete data with Enforcement Directorate and DRI on a monthly basis. 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. The data on whether a particular exporter has brought export proceeds into the country is maintained by RBI. Not bringing export proceeds is a violation of Foreign Exchange Management Act (FEMA) as it amounts to illicitly parking funds abroad.
Finance Ministry further said exporters can claim duty drawback on exports made with respect to taxes paid on inputs to exports. "Any exporter can claim duty drawback only if the exporter has brought export proceeds into the country," it added. The Ministry further said it is important for DRI to have this data so that they can cross-check the data and see if any exporter who has not brought in export proceeds has claimed duty drawback or not. "The country thus loses on two counts - first by not getting proceeds of exports for exports made and secondly wrongful claim of duty drawback," it said.
It said the 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 March 1, 2014 pending for more than one year as well as data on export outstanding for shipping bills on or after March 1, 2014 pending for more than one year.
According to the Finance Ministry statement, the data was reviewed at the SIT meeting held on July 12-13, 2016. "From the data provided by RBI, it emerged that huge amount of export proceeds have not been realised," it noted. SIT directed that RBI may immediately 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 Enforcement Directorate and DRI on a monthly basis.
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