DRI seeks judicial assistance from Singapore for details of an intermediary firm
The Directorate of Revenue Intelligence (DRI), which is probing the Rs30,000-crore coal import scam, has unearthed crucial evidences against over 20 big private and state-owned power companies that allegedly indulged in over-invoicing of import bills in a bid to square off other business transactions without making them appear in the books of accounts.
In a first major step to crack the massive scam, the agency has issued a letter rogatory (LR) to Singapore authorities for assistance in the case. An LR is a formal request from an Indian court to a foreign court for judicial assistance.
Sources in DRI said the LR to Singapore has already been sent, seeking details of an intermediary of a private power giant in India. The agency will also process LRs seeking assistance from Hong Kong, Dubai and other tax havens.
"The preliminary probe is over. We have collected all valid documents required for the investigation. Now it is time to take the probe to the next stage. The judicial requests are being sent as part of the probe on the basis of information we've got," a DRI official told dna.
The probe has revealed that while most coal imports were shipped directly from Indonesia, the invoices were routed through intermediary firms or associate companies based either in Singapore, Hong Kong or Dubai. The over-billed amount was then sent to the intermediary which, in turn, remitted the actual value to the Indonesian supplier.
"We are probing each consignment of these companies made between 2011 and 2014. It is noticed that several of those consignments had inflated bills with the additional component being diverted,'' said the source.
The most shocking part of the investigation is the wrong verification of the calorific value of the imported coal. "We had searched almost all laboratories testing coal in India to obtain the lab reports. It is found that the companies had actually imported low-grade coal (4,000 kcal/kg) but were issued high-grade certification by their respective labs. Generally, high-grade range of coal is above 6,300 kcal per kg," the source added.
According to industry experts, coal is imported as per the requirement of power plants. "Coal quality depends on power plant requirement. Power companies are equipped with technology that is able to handle different coal grades. Now the question is whether they (power firms) are able to handle domestic coal quality (which is generally below the quality of imported coal). If yes, you don't need to import coal," said a former chairman of Coal India Limited (CIL).
India is the world's third-largest importer of coal with Indonesia accounting for 70% of the country's imports. Coal imports into India jumped by 34% to 242.4 million tonnes in 2014-15.
Further, DRI has also found that the companies did not avail themselves of the concessional duties for imports from Indonesia. "In such a scenario, the companies would have to produce the certificate that would carry the real value," the source explained.
An official said that almost every importer, including reputed corporate houses and public sector firms, has indulged in over-valuation of coal imports.
In December 2014, DRI had raided 100 shipping companies, intermediaries and laboratories across the country in search of documents that showed the real value of the imports. The states where raids were conducted included Maharashtra, Delhi, Gujarat, Karnataka, Andhra Pradesh, Odisha, West Bengal and Kerala.
Officials said the imported coal from Indonesia was overvalued to the extent of three times the actual value declared in the country of origin.
Meanwhile, a public interest litigation (PIL) has been filed in the Nagpur bench of the Bombay High Court, alleging massive irregularities in import of coal by MahaGenco. The court has asked the finance ministry to file a reply within three weeks. Petitioner Anil Wadpalliwar has charged that MahaGenco went for importing coal without completely using its share of domestic coal. Imported coal was being used on the grounds that domestic coal had high ash content and low calorific value. However, no effort was being made to ensure that coal companies supplied the promised grade of coal, Wadpalliwar said in his plea.
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