NEW DELHI, November 22: In a major crackdown on the Delhi-based Pearl group, THE income-tax department conducted country-wide raids on the group's offices and residences of some of its directors.

The raids were conducted at over 40 premises of a number of companies belonging to the group including Pearl Global and Pearl Polymers, I-T sources said. The excise department is also scrutinising the books of accounts of Pearl companies. The department has seized documents from various premises of the group.

Official sources said that the raids were a part of the revenue department's drive to unearth the misuse of various incentive schemes for the exporters. The move to crack down on exporters who have misused Vabal and other duty exemption schemes has been initiated at the highest level in the finance ministry and is being closely monitored by cabinet secretary TSR Subramanian himself.

It is learnt that the I-T department has prepared a list of plastic companies suspected of tax evasion. Raids on more companies are expected in the near future.

The department believes that a large number of export companies misused value-based advance licences (Vabal) and various other duty exemption schemes.

It is believed that exporters, especially those dealing heavily in plastic products, indulged in over-invoicing of exports and brought back the money into the company in the form of export income. Export earnings are exempt from income tax.

Cases of under-invoicing of imports and their diversion into the open market are also being investigated with active support of the directorate of revenue intelligence.

The excise department is also investigating Delhi-based Padmini Polymers Ltd for alleged misuse of Modvat, duty entitlement passbook scheme (DEPB) and other duty exemption schemes in trading of plastic items. Padmini had also been raided by the enforcement directorate early this year for alleged FERA violations.

Ganapati Exports, a superstar trading house with a turnover of Rs 2,000 crore in 1995-96, is also facing investigations by the directorate of revenue intelligence. The group has been charged with under-invoicing of imports and its diversion into the open market as well as over-invoicing of exports. Official sources said that some schemes such as DEPB schemes allowed high credit to the exporters. For example, though there is neither excise duty nor customs duty on ordinary software, CD-ROM manufacturers get 20 per cent credit. Thus, a large number of exporters indulged in heavy over-invoicing which not only helped them in routing tax-free income from abroad, but also allowed them to get high credit.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.