Customs probe Bharat Shah's export units for diamond smuggling

Customs probe Bharat Shah's export units for diamond smuggling
PRANATI MEHRA

MUMBAI, JAN 11: Seepz customs had, last year, detected a case of alleged smuggling by two export-oriented diamond units owned by Bharat Shah's companies. A show cause notice was issued in June last year to B V Star and B V Jewels for a total duty demand of Rs 15.51 cr, besides penalty and confiscation of goods worth several crores of rupees.

On a stock taking it was revealed that diamonds weighing 73730 cts and worth Rs 26.29 crore were short. This was based on the documents supplied by B V Jewels itself.

On the other hand, unaccounted for diamonds totally valued at over Rs 27 cr which went into exports of studded jewellery, were also identified. Customs suspect the companies had been replacing diamonds to conceal smuggling of the gems from the exclusive export zone and to fudge figures.

The EOUs enjoy special exemptions which allow them to import raw material as well as machinery duty free to meet export obligations.

While on the one hand, customs discovered a shortage of diamonds, on the other, the exports claimed by the units were not backed up with legal import documents of the gems. The stocks of both units were mixed up, so as to avoid detection of discrepancies, though rules stipulate strict maintenance of records. Capital goods imported by B V Star were allegedly found to be in exclusive use of B V Jewels.

SEEPZ customs conducted a stock taking of the two units from Jan 31, 2000. What they found was the following:
*Diamonds worth 26.29 cr (73730 cts) of B V Jewels were found short, allegedly were smuggled out of SEEPZ. Customs duty demanded, therefore, is Rs 12.54 cr
*B V Jewels had also suppressed the facts of disposal of capital goods worth Rs 58.34 lakh to one SB &T International Ltd, SEEPZ, without permission of customs. The customs duty foregone was Rs 39.31 lakh. That is how the total duty demanded is Rs 12.94 cr
*Suresh Mehta, a partner in both companies, had shown possession of 23 diamonds of 27.42 cts, valued at Rs 39.63 lakh, for which he could not show legal import documents.
*B V Jewels exported diamonds worth Rs 27 cr studded in jewellery, between 1998 and Feb 2000, but could not show how they had procured these.
* Further, another unaccounted lot of diamonds of B V Jewels weighing 10631.39 cts and valued at Rs 4.03 cr, were found without corresponding documents to show legal possession.
*In the case of B V Star, which had no production since 1997, customs duty of Rs 2.57 cr is demanded because of shortage of 8604.5 gms of gold and 844.16 cts of diamonds revealed in the stock taking.