Dept unearths 3-year-old racket of 1 lakh tonne of agriculture grade urea diverted for industrial use.
While trying to unearth excise duty evasion of more than Rs30 crore to government exchequer by urea manufacturers, Directorate General of Central Excise Intelligence (DGCEI) stumbled upon an ongoing racket of more than 3 yrs where around 1 lakh tonne of agriculture grade Urea has been diverted to industrial use resulting in diversion of subsidy to the tune of Rs250 crore.
The directorate also believes that preliminary investigation indicate massive use of government subsidy scheme as well as excise duty evasion and misuse of Cenmvat scheme. While DGCEI looks into the duty evasion part of it, the central government seems ignorant of diversion of subsidised fertiliser to industrial use and how chemical producers are taking undue advantage from it, officials said.
“There is not much difference in the chemical characteristics of the product. However, excise duty rates are different. Therefore, to evade duty various dyes, pigments and chemical manufacturers use agriculture grade urea. We believe there is duty evasion of Rs30 crore,” a top DGCEI official said on Friday. Industrial grade urea is mainly used by CPC (copper pthalocyanine crude) blue manufactures operating from Ahmedabad, Vadodara, Ankleshwar and Vapi. DGCEI has searched and raided premises of at least 10 CPC blue manufacturers. Some of the companies involved include Meghmani Organics, Asahi Songwon Color, Narayan Industries, A One Chemicals, Ishan Dyes, Ramdev Chemicals, Saraswati Pigment and Ganesh Pigment amongst others.
According to Central Excise tariff, levy on agriculture grade Urea is 2% while for industrial use it is 12%. “Market rates are also different because subsidy component on agriculture use. Thus, excise duty for agriculture grade is Rs0.11 per kg and it is Rs3.84 per kg on industrial grade. While agricultural grade Urea sells for Rs6 a kg, industrial use is priced at Rs30 a kg,” official added.
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