100 CHA licences cancelled

MUMBAI: The Customs department has cracked down on the use of fake importer-exporter codes (IECs) and the Customs House Agents (CHAs). Licences of about 100 CHAs, including those of some of the big players, have been suspended while those of seven others have been cancelled for allegedly lending their licences to others.
The CHAs are now threatening to go on a strike at the major Customs houses in the country.
Explaining the logic behind the crackdown, a Customs officer said a lot of contraband or undervalued goods might have been sneaked into the country. "It would have been difficult to trace the real importer even if explosives were smuggled in through any of our ports,'' a Customs official said
But the crackdown also revealed a scary nexus between CHAs, importers and exporters as well as Customs officers; the drive exposed at least two Customs officers who allegedly hid facts and let off errant importers-for bribes of Rs 50,000-even as the drive to identify fake IECs was on. The officers have been suspended.
The Directorate of Revenue Intelligence (DRI), which had been investigating some large cases of undervaluation in electronics and software imports and garment exports, initiated the drive after finding a pattern in the fraud. The IEC-like a PAN meant to identify importers and exporters-had become a transferable commodity, the DRI found. Those who wanted to import suspicious cargo or to evade duty simply found an IEC-holder, who gave them the code number to be used for a fee. Exporters, using the same trick, were claiming huge duty drawbacks on fictitious goods and disappeared after the "export'' but the "exporter'' would, of course, remain in business with a new IEC.
Investigators have found that it is invariably a CHA who gets these importers and exporters an IEC number for temporary use though the law states that every importer or exporter must have an exclusive IEC. CHAs are also allowing others to use their licences illegally.
All this allowed importers and exporters to wriggle out in case a fraud was detected by saying they had just lent their numbers. CHAs, too, would say they did not help clear contraband or undervalued goods; they just lent their licence.