Export bias: Sops row may cost Centre Rs 6,000 crore

Mint reports

The finance ministry may lose up to Rs6,000 crore in revenue, if the Supreme Court rules against the Centre in a dispute pertaining to an export incentive scheme.

The dispute is coming up for hearing in the apex court on Thursday. The case pertains to the Duty Free Credit Entitlement Scheme announced by the commerce ministry in March 2003.

The scheme provides 10% credit to the exporter for achieving an increase in his export turnover. The exporter can use this credit to settle his customs duty on imported inputs, instead of cash.
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Some exporters, who were misusing the scheme, were following a modus operandi of purchasing exports from other firms through contract-basis to inflate their turnover. The turnover of just five exporters, who were found to be misusing the scheme, varied from 300% to 3,800%, according to documents submitted to the court by the government.

Similarly, some of the exporters resorted to large-scale export of low-volume and high-value items such as rough diamonds and gold. Export consignments were declared as ‘studded gold jewellery’ or ‘bangles’ at the time of exports, while they were cleared as gold scrap at the port of destination. In one instance, the same set of diamonds was rotating, and these neither entered the Indian domestic territory nor reached the consumers abroad.

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