Adani group in trouble? CBI registers preliminary enquiry for over valuation and custom evasion

The Central Bureau of Investigation on Thursday registered a Preliminary Enquiry (PE) against Ahmedabad-based business conglomerate Adani Group controlled by Gautam Adaani. The Directorate of Revenue Intelligence (DRI) is investigating charges of overvaluation and evasion of customs duty. The DRI has been investigating into 3 group companies since 2010. The companies under the DRI radar are  Adani Power Maharashtra, Adani Power Rajasthan, Maharashtra Eastern Grid Power Transmission Company. 

These companies imported goods under power and infrastructure heads of Rs. 9048 crore against actual value of Rs. 3580 crore allegedly from China and South Korea. This ideally attracts a futy of 0-5%. The DRI  slapped a Rs 5,500-crore show-cause notice on Adani group for alleged over-valuation of capital equipment imports. Financial Express reported, "“evidence gathered suggests that the total value declared for the goods imported was Rs 9,048.8 crore whereas the actual value was Rs 3,580.8 crore; a difference of Rs 5,468 crore which has been siphoned." The show cause notice has been shared with the CBI as well.

The show-cause notice was issued by the Mumbai office of DRI against three companies of the Adani Group for alleged over-valuation by Rs 2,000 crore of capital equipment for its power projects, reports Zee News. According to DRI officials, the notice followed the investigation by the agency, wherein they were probing over-valuation of import of machinery and equipment by various Adani Group firms from a UAE-based company.

Last November, the Central Board of Excise & Customs had reminded the Directorate General of Foreign Trade cenceled import duty benefits issued to the Adani Group in 2004.

The CBI is also suspecting that few bank officials might be involved in the overvaluation as well. 

Financial Express quotes the DRI notice that states, "the goods (power generation and transmission equipment) are being shipped directly to India by the original equipment manufacturers (based in China and South Korea), the documents are routed through an intermediary entity (M/S Electrogen Infra FZE, UAE) created in Dubai ... The actual invoice value of the OEM is remitted to the supplier while the inflated extra amount is sent to accounts held in subsidiary / holding company established by Adani Group in Mauritius.”