DRI to check database: Companies face action for not bringing back export proceeds

NEW DELHI: In what is being seen as the most significant step aimed at getting funds stashed overseas back into India, the Special Investigation Team (SIT) on black money has asked the Enforcement Directorate to act against hundreds of companies, which have not transferred export proceeds of Rs 100 crore into the country.

In a statement, the finance ministry said the Supreme Court-appointed panel has asked ED to initiate action as per Foreign Exchange Management Act ( FEMA) against 216 companies for the period prior to March and another 572 for the period after March. The Directorate of Revenue Intelligence ( DRI) has also been asked to check its database to find out how many companies have claimed duty drawback but have failed to bring export proceeds, and act against them.

Reserve Bank of India rules require all exporters to bring back foreign exchange as export proceeds within a year of exports. "Not bringing export proceeds is a violation of FEMA as it amounts to illicitly parking funds abroad," the statement said.

Duty drawback is a scheme meant to refund taxes and duties that exporters would have paid.

"It is important for DRI also to have this data so that they could cross check the data and see if any exporter who has not brought in export proceeds has claimed duty drawback or not. The country thus loses on two counts - first by not getting proceeds of exports for exports made and secondly wrongful claim of duty drawback," the official release said.

The move follows a review by SIT, which had asked RBI to share details of exports, where the proceeds have not been used even after a year. RBI had provided data on export outstanding for shipping bills prior to March, 2014 which have been pending for more than a year as well as data on export outstanding for shipping bills from March, 2014, which have also been pending for over a year.

So far, SIT has largely focused on suggesting systemic changes, many of which have been implemented.