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Rs 9,000-cr tax evasion in import of 270 aircraft
July, 07th 2008

The Customs department has unearthed tax evasion of more than Rs 9,000 crore in the import of aircraft and the list of wrong-doers reads like a whos who of Indian business.

The air intelligence unit of the Customs department is set to impound aircraft owned by the rich and powerful in the country the seizure of Nita Ambanis birthday gift is not a one-off instance.

Investigations over months have revealed widespread violation of the law by major business firms. According to official sources, the businessmen have been taking advantage of the many loopholes in post-importation clauses of aircraft.

The scam basically is that aircraft helicopters and planes are imported without paying duty in the name of running commercial services but are then diverted for private use. Aircraft imported for private use attract a duty of nearly 28%.

Sources say that as many as 270 aircraft, imported under the non-scheduled operator (NSO) category in the past 30 months, as many as 68 operators (business concerns), have been diverted for private use rather than to run passenger services.

Under the Directorate General of Civil Aviation permit clauses, the NSOs are expected to operate their aircraft for non-scheduled and chartered passenger services. This means that such aircraft should be available to the public at large for various non-scheduled flights and also as chartered flights for a fee.

In many cases the aircraft importers have leased their aircraft to other operators who have licenses to operate, said the sources.

Meanwhile the customs department is learnt to have begun the process of issuing show cause notices to some of the importers. They include leading corporates such as Ranbaxy, GMR group, a Bharat Hotels company, Global Vectra Ltd, Taj Air, East India Hotels, and India Bulls.

The investigations have also brought to light that a good number of the importers under the NSO category are from Bellary in Karnataka, known as an iron-ore rich belt. The area has a number of rich and politically well-connected iron ore exporters, who were in the news recently during the assembly elections in Karnataka.

The duty liability arising out of alleged violation of post-importation conditions of the aircraft may be well over the conservative estimate of Rs 9,000 crore at 28% duty, said a source familiar with the investigations.

However another source in the customs department said the aircraft operators may go scot-free by paying much less duty as the current DGCA rules are ridden with loopholes.

There are many loopholes to take advantage of in the current format of DGCA permit. For instance some of the business houses follow the practice of issuing tickets to their employees to use the aircraft dubbing them as general passengers, some others use the aircraft for servicing political heavyweights, said the source.

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