DIRECTORATE GENERAL OF CENTRAL EXCISE INTELLIGENCE,
            AHMEDABAD ZONAL UNIT, AHMEDABAD.


                              PRESS NOTE


Directorate General of Central Excise Intelligence (DGCEI), Zonal Unit
Ahmedabad's Vapi Regional Unit has detected a major modus operandi
of Central Excise duty evasion and is investigating the same against
various CPC (Copper Pthalocyanine Crude) Blue manufacturers
operating from Ahmedabad, Vadodara, Ankleshwar and Vapi area. In
the major search operations conducted on 01.05.2013 and 03.05.2013,
DGCEI unearthed the modus operandi of diversion of agriculture grade
Urea, meant for use by farmers, for industrial purpose, mainly to
manufacturers of CPC Blue Pigments. The price of agriculture grade
Urea, which is most prominent amongst fertilizers used by the farmers
in India, is highly subsidised and attracts Central Excise duty @ 2%. Such
agriculture grade Urea is manufactured in the state of Gujarat by
various Urea manufacturers like Krishak Bharati Cooperative Limited
(KRIBHCO), Gujarat Narmada Valley Fertilizers Company Ltd. (GNFC),
Gujarat State Fertilizer & Chemicals Ltd. (GSFC), Indian Farmers
Fertiliser Cooperative Limited (IFFCO) etc.. However, the price of Urea,
which is also an essential ingredient to manufacture CPC Blue Pigment
meant for industrial use is not subsidised and attracts full rate of
Central Excise duty i.e. @ 12%. For example the rate of agriculture
grade Urea is around Rs. 5.36 per Kg. and the rate of technical grade
Urea (imported) is around Rs. 32 per Kg. Government is heavily
subsidizing UREA which can be seen from the rates as mentioned
above. According to the present duty structure, Central Excise duty on
agriculture grade Urea is 2% and on technical grade is 12% thus per Kg.
central Excise duty on agriculture grade Urea and technical grade Urea
comes to around Rs. 0.11 and Rs. 3.84, respectively. In such a situation
if agriculture grade Urea is used as technical grade Urea differential
duty which is not paid comes to Rs. 3.73 per Kg. Therefore certain CPC
Blue manufacturers in connivance with some dealers/traders of
industrial grade Urea and distributers of agriculture grade Urea have
indulged themselves in receipt and utilisation of such agriculture grade
Urea, illicitly, in the guise of technical grade Urea and/or any other
industrial chemical product like T-Salt, refined Salt, pure Salt, Silica,
Caustic Soda etc..






The search operation resulted in seizure of 2100 no.'s of diverted
agriculture grade Urea bags from such manufacturers and recovery of
large number of incriminating documents. Preliminary scrutiny of
seized documents indicates that some dealers involved in the supply of
technical grade Urea were also providing such diverted agriculture
grade Urea to the CPC Blue manufacturers under the cover of bills
issued from bogus trading firms showing supply of different chemical
products(T-Salt, refined Salt, pure Salt, Silica, Caustic Soda etc.) instead
of agriculture grade Urea. During the search operations at the premises
of CPC Blue Pigment manufacturer's, officers also detected such
diverted agriculture grade Urea being unloaded within the premises of
CPC Blue manufacturers. The CPC Blue manufacturers involved in this
racket of diversion of subsidised agriculture grade of Urea comprises
M/s Meghmani Organics Ltd., Ankleshwar; M/s Asahi Songwon Color
Ltd., Vadodara; M/s Narayan Industries, Ahmedabad ; M/s A-One
Chemicals , Ankleshwar ; M/s Ishan Dyes, Ahmedabad; M/s Narayan
Organics, Ankleshwa r; M/s Ramdev Chemicals, Ankleshwar ; M/s
Pthalo Color, Vapi ; M/s Sarswati Pigments, Ankleshwar ; M/s Deep
Chem, Ankleshwar; M/s Ganesh Pigments, Ankleshwar, amongst
others.






The search operation conducted by the DGCEI indicates massive and
rampant misuse of government subsidy scheme as well as Central
Excise Cenvat scheme. Preliminary investigations have suggested
diversion of around one Lakh M.T. of agriculture grade Urea for
industrial use during the last three years. Accordingly, the consequent
loss to government exchequer by the said modus operandi is expected
to be more than Rs. 30 crores.