Take action against erring firms, ED told

A Supreme Court-appointed Special Investigation Team (SIT) on black money has asked the Enforcement Directorate (ED) and Directorate of Revenue Intelligence (DRI) to take action against 788 companies, which have claimed duty drawback from the government but failed to bring export proceeds.

Duty drawback is the rebate of duty chargeable on imported material used in the manufacturing of goods to be exported.

The SIT has directed the 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 of more than Rs 100 crore, the Finance Ministry said on Thursday.

“The 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 ministry said in a statement. The SIT has requested the Reserve Bank of India to immediately develop an institutional mechanism and IT system to red flag those cases where exports have been outstanding in violation of FEMA guidelines and share such export data to ED and DRI on a monthly basis.

The SIT also asked the 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, and inform SIT of action taken. The data of these companies provided by the RBI was reviewed in the SIT meeting last week, where it emerged that a huge amount of export proceeds have not been realised.