These duty-free CRCA sheets/coils and coated/uncoated paper were imported against six advance licences issued to Wimco, and subsequently sold in the open market without completing the stipulated export obligation. This is apparently in total contravention of the Exim Policy as also the corresponding provisions and the conditions of customs' notification 204/92.

In a detailed set of findings prior to the order, commissioner of customs KD Mankar says the evasion of customs duty by Wimco was detected by the Department of Revenue Intelligence (DRI), and had it not been so, the government would have lost huge amount of revenue.

"Wimco did not come forward on its own to declare diversion of importgoods, pending completion of export obligation, as being unintentional. The facts, on the contrary, prove that the diversion of goods to the domestic market was a well-thought out conspiracy for the reason that the goods, in question, were never intended to be used in the export product as these were not required to be so used. In fact, the fraudulent intentions of Wimco were apparent right from the stage of making an application to the DGFT for advance licences, wherein they had declared these ineligible items as inputs against the corresponding export products," he says.

Statements made by certain Wimco employees allege that Jatia had been advised against the sale of the duty-free material. Jatia, who looks after the import-export activities, has categorically stated that, "The items imported against the advance licence have been sold in the local market and that the material has been sold directly without using the same in the manufacture of the export product".

The Wimco top brass failed to respondto a faxed query on the issue from The Financial Express, though it is believed that the company has preferred an appeal against Mankar's order.

Mankar's order confirms a demand of Rs 2.03 crore from Wimco, slaps a further penalty of Rs 2 crore on the company and a penalty of Rs 1 crore on Wimco vice-chairman Rajkumar Jatia. A penalty of Rs 50 lakh has also been imposed on Gaurang Mehta, partner of Cosmos Paper Stores, for apparently providing a "supporting role" in the entire activity.

The commissioner has also maintained the fact that Directorate General of Foreign Trade authorities, acting on a DRI complaint on the wholesale misuse of the material imported duty-free did not consider it fit to cancel all the six licences, does not bind the customs authority to take a lenient view or drop the proceedings altogether against Wimco.

Wimco had, in its defence, claimed that since proceedings against the complaint on the matter/default under the provisions of the Foreign Trade (Development &Regulation) Act, 1992, and the Foreign Trade (Regulation) Rules, 1993, were initiated by the regional licensing authority and action completed, the present show cause notice was totally "unjust and against the established law".

Wimco had argued that under the established law of the land "no one can be penalised twice for the same allegation/offence under the same provisions of act, rules or laws for which penal action had earlier been initiated by another competent authority and action completed".