Authorities say some Chinese manufacturers are evading anti-dumping duty their goods would have attracted in European Union (EU) countries, by routing the same through India.
China and some South East Asian countries are becoming a major source of worry for Indian revenue intelligence agencies. The authorities say some Chinese manufacturers are evading anti-dumping duty their goods would have attracted in European Union (EU) countries, by routing the same through India.
‘Country of Origin Fraud’ is increasingly attracting the attention of customs enforcement authorities across the world. In fact, one such case brought a European Anti Fraud Office (OLAF) team to India last year on suspicion that some goods, imported by EU countries from India, were actually of Chinese origin, sources said.
The Directorate of Revenue Intelligence in its annual report for 2008-09 says, “Analysis of (some of the) cases detected during the year indicate that the objective was to evade payment of anti-dumping duties. Such frauds are being resorted to on account of increasing number of regional trade agreements or imposition of anti- dumping duties which impose country-specific restrictions or bestow tariff concessions on basis of country of origin of the goods concerned.”
In one such case, Chinese and Indian manufacturers caused a near-Euro 1.8 million loss to EU by importing iron and steel pipe fittings. A DRI official said, “OLAF officials requested us for a joint investigation. On probing we found that these metal pipes had been exported from India between 2005 and 2008. The fittings cost around Euro 3.2 million and would have attracted anti-dumping duty to the tune of Euro 1.8 million.” But the Chinese evaded the duty by sending it to India. So it was wrongly declared as being of Indian origin before being exported to Europe.
During a detailed investigation, DRI and EU sleuths unravelled the modus operandi of this trans-national racket.
The investigators found that Chinese suppliers sent pipe fittings to Indian importers who would warehouse them at Nhava Sheva port, unpack the containers and pack them again in fresh containers before it is shipped to the European buyers. The new consignments would be covered by a different set of invoices (with 5-8% value addition) and documents showing them to be of Indian origin.
“In some cases, Mumbai-based exporters arrange the certificate showing India as the country of origin, move the goods to another container and export the same to European buyers. There exist a set of companies that do not physically import or export the fittings. They are only instrumental in arranging the country of origin certificates for export to EU countries.”
In another such case, sun-control films were declared to be of Singapore origin as import of the article from actual country of origin, that is Chinese Taipei, would have attracted anti-dumping duty. “In another case, imports from China, Hong Kong, Chinese Taipei and Singapore were not only wrongly declared on the country of origin front but also under-invoiced,” the DRI report notes.
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