The revenue loss in 2,487 cases out of 10,758 licences scrutinised has been estimated at Rs 3,533.40 crore by the Comptroller & Auditor General of India (CAG). Considering that 28,101 Vabal licences were issued at Calcutta, Delhi and Mumbai, the actual revenue loss could be much higher since CAG scrutinised only 10,758 licences, sources in the commerce ministry said.

The audit has not only revealed misdeclarations, non-fulfilment of export obligations and excess imports by the exporters, but also brings out major lapses on the part of directorate general of foreign trade (DGFT) which is the licensing authority.

In as many as 266 cases, the licensing authorities did not observe input-output norms while granting licences whichresulted in excessive imports resulting in revenue loss of Rs 62.62 crore and interest loss of Rs 36.25 crore. Major licensees which benefited include Vimal Overseas, Lloyds International, Dimple Overseas, Ganapati Exports and Parasrampuria Synthetics.

In 242 cases, licences were issued on incomplete applications leading to excess duty-free imports and a revenue loss of Rs 303.50 crore. Some of the licences which imported duty-free inputs repetitively in excess by exploiting these loopholes were Tisco, Essar Steel, RSI, Raylon Industries, Blumenfield, Supreme Industries, Geekay Exim, Viplav Trading, Contessa Commercial, VVR Electronics and Euro Exports.

Citing specific cases, the report states that Essar Steel was granted a Vabal licence in 1995 for export of non-alloy steel coils and import inputs such as ferro manganese, refractories and consumable and low silica limestones. The import prices quoted by the company were much higher than the price actually paid causing a revenue loss of Rs 6.74crore.

Apollo Tyres was issued five licence for tyre exports. As per input-output norms, the company could import 2,694 MT of inputs but actually imported 6,448 MT causing revenue loss of Rs 15.88 crore and interest loss of Rs 10.86 crore.

Tisco was issued over 50 licences on which the company made excess duty-free imports of sensitive items. "Clubbing was allowed during a specific period and all licences involved pertained to Tisco which shows undue favouritism by DGFT," the audit report states.

In the case of JK Industries, the company was issued two licences with a CIF value of Rs 81.79 crore against tyre exports with FOB value of Rs 122.68 crore. As per the input-output norms, the company could import only 4,294 MT of inputs but actually imported 10,843 MT, inflicting a revenue loss of Rs 14.41 crore and an interest loss of Rs 10.71 crore.

The report states that Ceat was granted a licence for export of tyres and tubes against which it could import goods worth Rs 7.05 crore. The company did notmake any export during the validity period of the licence. The company was required to pay Rs 17.64 crore as CIF value of unutilised import material and amount equivalent to shortfall in export obligation. Duty amount recoverable with interest was Rs 8.62 crore. The total revenue loss, thus, stood at Rs 26.26 crore in Ceat's case.

Salora International was issued 12 Vabal licences with CIF value of Rs 5.42 crore against export of black and white television sets in complete knocked down (CKD) condition valuing Rs 6.89 crore. The company, however, imported colour picture tubes worth Rs 5.74 crore which was not allowed as these tubes were not inputs for B&W sets. The revenue loss in this case has been estimated at Rs 4.65 crore.