DRI unearths coal import scam

New Delhi

A major scam involving several energy companies and traders, including some in the state sector, has been unearthed involving alleged over-invoicing of imported coal including through a tax haven to siphon off money abroad and charge higher power tariffs, according to DRI sources.

The companies include some of the biggest names in the sector as also some state electricity boards and central power utilities which have have come under the scanner of the Directorate of Revenue Intelligence (DRI).

The agency has found that certain importers of Indonesian coal were artificially inflating its import value against the original price, the sources said.

The objective of over-valuation appears to be to siphon off money abroad and to avail higher power tariff compensation based on artificially inflated cost of the imported coal, they said.

Intelligence developed by the agency further indicated that while Indonesian coal was directly imported from ports there to importers in India, the import invoices were routed through one or more intermediaries based in Singapore, Dubai, Hong Kong, British Virgin Islands among others for the purpose of artificially inflating its value.

The investigation conducted by the agency found that the inflated invoices received in India were found to have been issued by intermediary invoicing agents who appear to be either subsidiary companies of Indian importers or their front companies.

DRI, according to sources, late last month issued a ‘general alert’ to customs establishments over it coming across alleged instances of certain importers of Indonesian coal were artificially inflating their import value of coal by about 50-100 per cent.

The alleged artificially higher prices of coal were then passed on to electricity consumers, they said.

The alert listed as many as 40 power generating companies and traders who allegedly inflated the procurement price of imported coal to siphon-off money abroad and avail higher power tariff compensation based on artificially inflated cost.

Sources said DRI was of the opinion that Indonesian coal was directly shipped from Indonesia to the importers in India, the import invoices were routed through one or more intermediaries based in Singapore, Dubai, Hong Kong, British Virgin Islands for the “purpose of artificially inflating its value”.

The companies listed include a leading Gujarat-based group, two Mumbai-based groups as well as companies based in Chennai and Haryana. Two public sector enterprises are also named.

Sources said DRI had found that the supplier’s invoices were routed through intermediary invoicing agents based in a third country for the sole purpose of creating layers (typical of Trade Based Money Laundering) and artificially inflating its landed value.

The inflated invoices received in India were issued by intermediary invoicing agents based in Singapore, Dubai, Hong Kong, British Virgin Islands. These intermediary firms were either subsidiary companies of Indian importers or their front companies.

DRI asked customs to scrutinise import invoices. PTI