DRI Is Investigating Solar Companies For “Custom Duty” Evasion

The Directorate of Revenue Intelligence (DRI) is investigating several solar companies for potentially avoiding customs duty on imported parts for solar panels. The probe is in connection with underpayment of customs and wrong declaration in the import of solar cells and solar modules from China between April 2022 to October 2023.

DRI Officials have found evidence of duty evasion amounting to ₹1,900 crore, but believe the total amount may be even higher as the investigation continues. The names of the companies involved have not been disclosed yet, as they have not yet been notified. The investigation began in November 2023.

The evasion was done by using the project import route and customs warehouse scheme. The government had implemented a 25% customs duty on imported solar cells and a 40% customs duty on imported solar modules starting from April 2022. This was done to encourage domestic manufacturing and decrease reliance on imports from China.

To protect the national solar mission, the government permitted imports at a reduced rate of 5% through the ‘project import scheme’. Many solar companies took advantage of this window to pay less in taxes, as they were sending more than necessary for the project, according to DRI officials.

Additionally, these companies were misusing a customs warehouse scheme, which allowed them to defer import duties without paying interest. However, after reports of misuse, the Central Board of Indirect Taxes and Customs decided to cancel the permission for using this scheme.

The official added that the issue was also flagged by the ministry of new and renewable energy (MNRE), which had formally requested the board to look into the matter.

The above article is based on Economic Times report, fake checked and edited by Clean-Future Team