In connection with an ongoing inquiry against Adani Defence for suspected Rs 77 crore import tax cheating, the Indian government recently overturned its decision to allow tax-free imports of missile components.
According to a Reuters story, the government has rescinded a controversial arrangement that allowed the importation of missile parts without paying taxes. The policy is at the heart of a probe against Adani Defence, which is being investigated for allegedly evading import taxes totaling Rs 77 crore.
The government said earlier in September that all such components, whether for short- or long-range missiles, would not be subject to import duties.
The most recent October 9 “corrigendum,” or correction notice, removed the phrase “missiles” from its prior policy without giving an explanation, according to the Reuters article. This reinstated earlier regulations that exempted only certain components used in long-range missiles.
For the first time, the government exempted all of these missile components from customs duties with the September announcement. The most recent October 9 directive has reverted to the previous regime’s policy, which did not expressly exclude small-range missile components from import taxes.
The probe into Adani’s tax evasion
India’s Directorate of Revenue Intelligence (DRI) has been looking into Adani Defence since March for allegedly avoiding tariffs of Rs 77 crore by importing certain missile components and falsely claiming that they were free from customs charges and taxes, according to a Reuters story earlier this week.
The article claims that Adani had to pay an import tax of 10% and a municipal tax of 18% on the parts it bought to make short-range surface-to-air missile systems. They were free from taxes because the manufacturer misclassified them as parts of long-range missiles.
Adani’s declaration
Adani Group said that the Directorate had “sought explanations” on its imports based on its understanding of the customs regulations, and that the “clarifications had been delivered with supporting papers,” according to a Reuters story.
An Adani representative said, “The problem remains closed from our end,” without providing any details or indicating if the business paid to resolve the issue, according to Reuters.