Nine infrastructure firms in customs net
March 3, 2008
Gammon India, Punj Lloyd, Era among those being investigated for diverting tax-exempt equipment for pvt work
The central intelligence unit of Indian customs here has launched a series of cases alleging import duty evasion by nine infrastructure firms, including well-known names in the field such as Punj Lloyd Ltd, Era Constructions (India) Ltd and Gammon India Ltd.
The companies are alleged to have diverted construction machinery, imported without customs duty specifically for projects financed by the United Nations, other international aid organizations and approved by the government, to private projects, thus evading customs duty.
The money involved in the case is not large in itself, but the development is significant since these firms are involved in construction of roads for projects approved by the National Highways Authority of India (NHAI) and aided by the World Bank, Asian Development Bank and the UN.
Under the Customs Act 1962, equipment imported into India for completion of infrastructure projects financed by the UN or an international organization and approved by the government is exempt from customs duty. The firms had imported machinery, such as piling rigs for construction of roads, and had availed the exemption.
Core of the problem
“We have already booked cases against nine firms and have recovered over Rs12 crore against such illegal import of piling rigs,” said R.K. Mahajan, commissioner (general) of customs, Mumbai.
Apart from Punj Lloyd, Era Constructions and Gammon India, the list of companies provided by the customs includes Afcon Infrastructure Ltd, Ircon International Ltd, Meher Foundation and Civil Engineers Pvt. Ltd, Villayati Ram Mittal Pvt. Ltd (New Delhi), Vijay M Mistry Construction Pvt. Ltd and Maytas Infra Pvt. Ltd.
Each piling rig costs around Rs4 crore and attracts close to Rs1 crore import duty.
“We have also seized piling rigs worth Rs8.25 crore,” Mahajan said. According to him, these companies have evaded customs duty of at least Rs20 crore and the amount could be even more as the investigation is not yet complete.
The infrastructure projects are spread across India. For instance, Punj Lloyd, one of the largest engineering and construction firms engaged in infrastructure projects, had imported piling rigs for its two NHAI-approved projects in Assam, but, according to the customs intelligence unit, these rigs were diverted to New Delhi.
“The company had rented out one of the machines to Delhi Metro Rail Corp. Ltd,” claimed a senior officer of customs who did not wish to be named.
However, the firm admitted it has been “summoned by the central intelligence unit, Mumbai customs, seeking certain clarifications/information pertaining to import of hydraulic operated self-propelled piling rig along with accessories,” imported by it under customs duty exemption scheme.
“Unfortunately, by the time such rig, along with its accessories, touched the boundaries of India it was realized that the said rig etc. could not be optimally utilized at the Guwahati to Nalbari Section of NH31 in Assam project due to non- availability of work… Since the machinery so imported was worth crores of rupees and keeping it idle would not only result in decaying and deterioration but also have an adverse financial impact…the company deemed it prudent to deploy the same to some other appropriate site,” the company wrote in its email.
It admitted that the rig was deployed at the DMRC project “which included construction of roads.” Stating that “by utilizing the…rig at the DMRC project we were in a position to keep the same in running condition,” the company said in its email that the rigs would be used at the Assam project “the moment we receive a green signal…from NHAI.”
“We believe we have acted within the intent and framework of the customs notification and the undertaking and there is no violation of any nature whatsoever and your source on information about the tax evasion on our part is unfounded and baseless,” the email went on to say.
The New Delhi-based Era Constructions, now known as Era Infra Engineering Ltd, was awarded two contracts for construction of roads in Chhattisgarh. However, according to the customs, the machinery was allegedly rerouted to other parts of India. “During the investigation, one of the machines was found at the NTPC Ltd’s site in Dadri in Uttar Pradesh. The other was found in Haryana,” Mahajan said.
Era Infra’s vice-president (commercial) Anil Bhasin said the firm had paid customs duty and interest for the equipment, which was shifted to other nationally important projects of government and public sector undertakings. According to him, the company diverted a few equipment that were not required at the assigned projects to other sites. It actually wanted to return these equipment, but could not do so as there was no provision to return such equipment. “The customs duty for such equipment was paid,” insisted Bhasin.
Gammon India, a Mumbai-based construction firm, according to Mahajan, has violated the rules by diverting machinery to another location for private use. However, he declined to disclose the location where the equipment was transferred and said the case was under investigation.
Gammon India, too, denied being involved in customs duty evasion. “There may be a possibility that some construction companies who have imported equipment under such exemptions could have utilized the same for projects other than for which such exemptions are applicable like, real estate, housing projects, shopping malls, etc. To clarify your doubts, Gammon does not undertake real estate/housing projects which could have been a potential misuse as per your concern. In fact, central intelligence unit had enquired about the utilization from all the importers who had imported equipment under the above exemptions,” said Umakant Tiwari, assistant general manager (procurement), Gammon India, in an email response.
Source: livemint.com
Noida - a Paradise for Abode & Personnel
November 12, 2007
New Okhla Industrial Development Authority (Noida) is known to be the largest industrial town of Asia, but now it has undergone a paradigm shift in the last few years. The real estate in Noida is hitting the sky, which is due to a large migration of people from Delhi who are being bullish to make it their home. As a part of Uttar Pradesh, Noida cannot remain untouched by the problems prevailing in the state. Despite all, the individuals who have shifted their base to Noida witness to live a splendid life. And today with one more reason for all the real estate players in Noida is none other than the proposed second international airport at Greater Noida. The development is likely to give a push to prices of residential and commercial property projects in twin cities of Noida and Greater Noida.
Noida certainly benefits from the relative proximity to Delhi. Excellent network of roads, 100 per cent power back up make up for a good idea to stay here. Also, Noida is attracting large interests from young well to do professionals who are making the highest income tax paying district in UP. Even many prominent names in both domestic and international hospitality sector are to initiate exclusive five-star hotel projects in Greater Noida. The list includes Unitech, Carlson, ITC, Bharat Hotels, and NRI hotelier Sant Chatwal. To be located in the close proximity to the proposed international airport, these commercial establishments will enjoy an added advantage.
According to Mr. M L Sehjpal, Director of Pearls Infrastructure Projects Limited, “Noida has developed into the land of opportunities. Property demand has sky rocketed here. Housing opportunities are in great demand as are commercial spaces. Moreover, the demand for residential property in Noida and Greater Noida is likely to shoot up in very near future, feels industry watchers. In the wake of better infrastructure facilities, Greater Noida already gains preference over Gurgaon. A direct metro link with Delhi and the Expressway will further improve accessibility of Noida.”
As conglomerates, Indian corporate is scouting for commercial spaces; NOIDA is emerging as a preferred IT & ITES destination of India. Real estate developers in Noida in their bid to lure investors are coming up with state-of-the-art office spaces as per international standards. Mr. Harjeet singh Arora, MD, Best Groups, “There is an excellent potential in India and abroad as there is a lot of movement in corporate circles as India’s large, educated middle class has made its name in the field of software and IT-enabled services, thereby fuelling demand for about 40 million square feet annually in IT and ITES office space. With the sudden jump in demand for space, the real sector is witnessing a huge charn.” Best is also coming up with an IT Park in Greater Noida.
Futuristic Plan of Noida
- Plans are to set up a multipurpose SEZ (Special Economic Zone) spread on 2,500 acres of land along the Expressway envisioned to be categorically divided into industrial, residential, recreation, commercial and facilities. Within this plan, 600-1000 acres of land has been earmarked for handicrafts related SEZ. The much-awaited Noida City Center between sectors 25A and 32 is also a futuristic offspring of this plan.
- Noida authority is looking forward to set up a medical city on a spread of 50+ acre of land along the expressway to be named Arogya Dham. This medical city shall be a congregation of super-specialty hospitals with world – class facilities and matching commercial complex, attendant’s homes and plenty of open space thanks to wide roads, parks and green cover.
- The Botanic Garden of Indian Republic (BGIR) is being set up on a spread of 200 acres in sector 38A to conserve the endangered plants of the country and showcase its near extinction plan diversity.
- It is also planned to connect Delhi and NOIDA through Delhi Metro Rail Corporation phase II construction program, latest by 2009.
- NOIDA is also setting up CNG-based outlets for vehicles in collaboration with Indraprastha Gas Ltd.
Source: indiaprwire.com