Now, Bhosale will have to shell out Rs1.75 crore

Renni Abraham

Pune based hotelier Avinash Bhosale, who was booked by the Directorate of Revenue Intelligence (DRI) for trying to avoid paying a few lakhs in customs duty by not declaring dutiable goods in his baggage on his return from a foreign trip on May 27, 2007, will have to deposit Rs1.75 crore in a fresh case of foreign-make cars imported by him duty-free, under the Export Promotion Capital Goods (EPCG) scheme. Bhosale has expressed his willingness to deposit the amount.

Confirming this, a well placed official said, “Bhosale expressed a willingness to pay the duty component on vehicles that were seized from his residence.” On May 30, 2007, the DRI had raided Bhosale’s five-star hotel facility in Pune, Sun-and-Sand, and subsequently seized a number of vehicles from his residence. In all, the documentation available on eight vehicles imported on the payment of a nominal five per cent duty under EPCG, are being probed.

The DRI has also recorded statements of certain employees of the Sun-and-Sand hotel where they stated they had never seen some of the vehicles being used for the hotel facility.

Of the eight, three vehicles were being used by Bhosale for his personal and family use. The DRI has held Bhosale liable for violating the stipulations of the EPCG policy, under which his hotel has to maintain a log book of the vehicle to show that foreign currency has been generated for the country through the utilisation of the vehicle within a stipulated period.

A senior DRI official said, “Under the EPCG scheme, the Director General of Foreign Trade issues licences for the import of capital goods for manufacturing, or vehicles for firms like five-star facilities, on the payment of a nominal duty of around five per cent as against the regular 100 per cent duty.”

The hotel is then obligated to execute a bond promising to generate foreign exchange over a fixed term, such as a seven-year period, where around five times the duty exemption is given to it on the imported vehicle. For this to be established, log books are required to be maintained. Through the bond, the importer also agrees that if unable to show foreign exchange revenues generated by the vehicles, he would pay the remaining 95 per cent duty with interest on the same, from the date of the import.

Bhosale’s hotel has not been able to provide the log books recording the forex generated on the imported vehicles.