Overvalued power gear imports: Charges on Adani companies dropped

MUMBAI: The adjudicating authority of the Directorate of Revenue Intelligence (DRI) has dropped all charges against the Adani Group companies for overvaluation in import of power plant equipment by Rs 4,000 crore. Penal liability on employees and directors have also been dropped. DRI has decided to go in appeal.

DRI had issued three show cause notices to

Adani

Group companies, two for Rs 4,000 crore and Rs 1,500 crore in May 2014 and the third in September 2016 for Rs 1,000 crore for alleged overvaluation in import of equipment. The adjudication in two show cause notices are still pending.

In his order of August 22, additional director general, DRI (adjudication), K V S Singh, has dropped all charges. DRI will appeal against the order in the cus toms, excise and service tax appellate tribunal (CESTAT), a source said. Adani Group spokesperson declined to comment on the matter.

DRI had also issued two show cause notices to the

Essar Group

alleging overvaluation in import of power plant equipment of Rs 3,000 crore which is pending adjudication before the same commissioner.

The DRI has issued a series of showcause notices to various companies for alleged overvaluation in import of coal and power plant equipment to the extent of Rs 11,000 crore. Many of the cases are still under investigation. In all these cases, DRI has alleged that incidence of overvalu ation has directly impacted electricity tariff, resulting in excess payment by end users.

DRI has alleged that Adani Group's objective was to siphon off money abroad while availing higher power tariff compensation based on artificially-inflated costs of imported coal or capital goods. DRI had alle ged that though the equipment was directly imported to India from South Korea and China, the invoices were inflated in other countries. DRI alleged that the invoices were routed through Electrogen Infra in UAE, or EIF an intermediary entity created by Adani Group, who raised invoices with infla ted value.

Singh's order said that the Adani group company and EIF were related but it had not influenced the pricing. One of the Adani employees Jatin Shah resigned on August 31, 2009 and the next day he joined EIF. ``He was a free agent and being a professional was free to accept employment from anybody." the order said.

“The contract price was arrived at independently through international competitive bidding process," the order said. It also said that

Adani Power Rajasthan Limited

has adopted transparent and good corporate governance practices of procurement.The allegations were based purely on assumptions and presumptions, the order said. Quoting an income tax department order that assessed the transaction, the order said that the transactions were at arm's length.

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