Central Excise team cracks down, evasion worth Rs 6 crore unearthed

Central Excise team of Rajkot raided manufacturing units of PSL Limited in Varasana, Nani Chirai and Gandhidham areas of Kutch district and unearthed duty evasion of Rs 6 crore by the company, falsely interpreting the Central excise exemption notifications for three consecutive financial years.

While speaking to Business Standard, J P Vaidya, superintendent, customs and central excise, Rajkot, said, "They had wrongly claimed duty benefits misinterpreting the certificates issued under the Central Excise Notification."

The company's Varsana and Nani Chirai units are engaged in manufacturing of bare mild steel (MS) pipes.

These products were moved to their another division in Gandhidham - PSL Limited, without paying duty based on the certificate availed from competent authority to their suppliers Larsen & Toubro, who are engaged in constructing water treatment plant, added Vaidya.

Explaining as to where the notifications were misinterpreted and duty evasion was done, S B Gurung, Assistant Commissioner said, "The certificates issued by competent authority is for coated pipes and not for bare pipes. On verification of records it was found that the party had adopted various devious procedures for removal of the bare pipes even under the same notification."

The company had supplied coated pipes from their Gandhidham unit for water turnkey projects to the constructing company L&T, without payment of duty for which they had procured MS pipes from their manufacturing units at Varasana and Nani Chirai, added Gurung.

Detailing on the transaction value undertaken, violating the notification and claiming wrong duty benefits, R L Meena, Superintendent, Customs & Central Excise, Rajkot said, "Total transactions undertaken by the company as far as supplies of the product is concerned is estimated approximately to Rs 215 crore in last three years and out of which Rs 47 crore supplies were carried out wrongly interpreting the notification, for which payment valuing worth Rs 6 crore to be paid towards Central Excise Duties and Tax would be recovered from the company."

Even the company's Gandhidham based coating unit has by and large evaded the service tax, as the PSL's Gandhidham unit was awarded with a contract of laying and installing the pipeline partially in few areas, which falls under the category of commissioning, installation and erections services, as a result, Service Tax valuing Rs 12 lakh is also to be recovered from company's Gandhidham unit, he added.