A K Banerjee : CenEx Delhi II looks other way, copper trade mints gold?

The most evasion-prone item in Central Excise is the Metal Industry — whether it is iron and steel or copper. Evasion of excise duty is rampant here and its magnitude increases manifold when the departmental staff colludes or ignores.

Recently in Raipur, the Central Excise wing booked more than 100 cases of evasion of Central Excise duty of Rs 500 crores. More than 100 showcause notices have been issued. All the cases booked were for the period 2008-2009 .

Interestingly, the cases booked are of clandestine removal of steel ingots. Further, duty amounting to Rs 15 crore approximately have already been deposited and demands run in several crores.

In a few cases where the assessee approached the CESTAT for relief, the matters have also been decided in favour of the department 

Now the question arises as to how the department could detect such a large number of cases and what were the earlier incumbents doing during their tenure, if evasion was going on during a particular period on such a rampant scale.

Why hasn’t a single head rolled within the department? Are all systems and procedures such a failure? Then why have them at all?

Another place which requires immediate attention of the CBEC is the Trans Yamuna Industrial area in Delhi — a hub of rolling mills that make copper slabs that are used into making wires and then later for making cable.

Sources said that scrap is purchased from Sadar Bazar, Delhi, and about 50 melting units are making copper Ingot in the Trans Yamuna area. These ingots are reportedly sent to 19 rolling mills  (Jhilmil 5, G T ROAD 2, Friends Colony 1 and Soboli 11) for making copper rods. These rods are used for making copper wire drawing and used by the cable industries in the entire Delhi.

Sources in the trade said that each rolling mill has a capacity of manufacturing 50 tonnes per day.

The peculiarity of all the mills is that a majority of them are  running on diesel engine.

Such units are evading Central Excise Duty to the tune of crores of rupees going by the past litigation in this regard. The role of the staff of the Central Excise Delhi II Anti-Evasion needs to be investigated in this regard.

Sources also said that a pool system has been introduced allegedly with the blessings of Central Excise officers of Delhi II wherein it has been agreed in principle that each rolling mill will manufacture approximately 150 pieces of copper ingot for drawing copper rod more than 6mm, each measuring 140 kg (138 kg after burning loss) per day. This means that each rolling mill produces 20 tonnes per day and the central excise duty on the basis of Rs 40,000 per tonne will come to Rs 8 lakh per day per rolling mill, Rs 2.0 crore per month, and 24 crore per year approximately. The rate of the copper wire rod per kg is Rs 450 per kg plus duty.

However, the rolling mills are paying Central Excise duty of Rs 10 lakh (on higher side) per month and Rs 1.20 crore per year.

The total evasion of Central Excise duty comes to more than Rs 400 crore in Trans yamuna itself if calculated on the above basis.

The actual figure can only be calculated if proper investigation is done.

The rate of rolling per kg at present is Rs 13 whereas it was Rs 4.50 earlier before the pool system came into existence. Sources in the trade further say that to maintain uniformity in production, they have created a flying squad to check the production of each other. Surprisingly, all these arrangements have a green signal from the Central Excise Anti- Evasion Delhi II if the sources are to be believed.

Sources also said that a few  manufactures were not interested in pool system. However, they were pressurised into becoming its part by the kingpin of the trade. 

The copper scrap melting units generally work at night and ingots are sent to rolling mills early in the morning. Since the industries are located in agricultural land, they are not allowed to function here and, therefore, the manufacturing process takes place at night.

These units are also major sources of air pollution and have no anti-pollution device installed.

Sources also said that a particular superintendent of Central Excise Delhi II, who is the ‘Karta Dharta’ because of the blessings from the  senior most officer at the Delhi  Commissionerate, is dictating terms and is involved in most cases which can only be verified after a detailed investigation.

The malice of frequent transfers, which was highlighted in the previous issues of RTT in respect of Delhi-I commissionerate, is equally visible in respect of Anti Evasion Wing, Delhi II, and this calls for a greater monitoring. Let the readers be informed than earlier it was mostly Chief Commissioners who were doing posting/transfer of Inspectors and Superintendents, but the powers and accountability was shifted to Commissioners after the incident of some indiscreet orders issued by previous Chief Commissioner of Bhopal, which were also highlighted in the RTT. Now, who is accountable for these frequent orders in respect of Delhi Commissionerates can be revealed only by examination of files concerned or through some RTI application.But the fact is that Delhi has witnessed a lot of pre-mature transfers. Allegation of massive corruption are flying thick and fast about the Delhi Commissionerate but instead of taking any action  against corrupt officers, a few government officers with a zeal to save the government revenue have been victimized and transferred out of the Anti Evasion Wing Delhi II. This, again, needs to be thoroughly investigated

These rolling mills should be brought under compounded levy scheme and duty should be charged  per machine/factory.