Excise rebate scam haunts Surat textile industry

The non-settlement of excise rebate claims by the excise department, in the wake of the multi-crore rupee excise rebate scam, is hitting the textile industry of Surat hard as textile exports from the city have reduced considerably.

Excise department officials however say that they are being cautious in settling excise rebate claims.

Though the exact figures are not available, industry experts say the non-settlement of claims has resulted in a fall of at-least 20 to 25 per cent in textile exports from the city.

"The excise department has stopped settling rebate claims of exporters since seven months. This was the time when the rebate scam was unearthed by the department. The exporters are facing a tough time, as their money is not being paid to them," Narain Agarwal of Surat-based Prafful Exports, told Business Standard.

Another exporter said, "Rebate claims worth at-least Rs. 50 crore are pending with the excise department since several months. The rules say that money should be refunded to the exporters within 24 hours of receipt of the claims, but the excise department is violating this rule.

The exporter also said that the entire textile chain had been disturbed by the fall in exports. The demand for grey fabric has dipped, and even the processing sector is caught in problems because of this.

Another exporter, on condition of anonimity, blamed the rigid stand of excise department for the problems.

"The excise department has every right to conduct investigations. But there are many exporters, who are doing genuine business. These exporters are being affected the most by non-settlement of claims," he said.

The excise officials are, however, defending their actions. "We are being cautious in settling the rebate claims so that the fraudsters do not cheat on the government, by availing false rebates. We have no intention of hurting the genuine exporters. We have started settling the rebate claims, and money has already been paid to some exporters. We expect to settle all the claims in the very near future," a senior officer of the department said.

Forty two excise officers, including those of superintendent, inspectors and tax assistants grade, were suspended, and four officers of assistant commissioner and deputy commissioner grade were transferred in December following the expose of the rebate scam.

Bogus export documents and shipping documents were produced by the scamsters to secure duty rebate to the tune of Rs 14.70 crore.

Investigations have revealed involvement of over 35 parties in the scam, out of whom 14 have been arrested. Of the suspended officers, the suspension of 26 officers was revoked in February, while the remaining 16 officers are still under suspension.