Customs department probes tax evasion by Chinese goods importers

The sources said that the importers are getting in finished goods in the garb of raw materials and the intermediates violating the norms are getting concessional duty access to the country without adding any value. "Major product categories in violation of the norms include garments, cosmetics, shoes, plastic products, suitcases, handbags, furniture, household items, electronic goods, mechanical and electrical products, mobile phones, tabs and laptops," the sources added.

Despite re-routing of goods, imports from China too have been surging in the past, India’s imports from China alone have surged by 34 percent to over $78.5 billion during the January to April period this year.

Expressing concerns over such a trend, Najib Shah, Former CBIC Chairman said, “FTAs were conceived to promote exports and enable domestic industries to become part of the Global Value Chain. They help reduce the costs by reducing tariffs. The danger of course is in the goods which are not eligible for such benefits coming under the guise of FTA goods from partner countries. Hence the CAROTAR regime was put in place. In terms of these rules, a mere certificates-of-origin will not be sufficient, importers will have to exercise due diligence and satisfy the FTA benefit requirements. These rules are necessary to curb misuse. But the customs administration will have to ensure that they exercise these provisions cautiously and ensure that the consignments where benefits are due are not stopped.”