The Enforcement Directorate (ED) is investigating suspected illegal outward remittances of over ₹4,000 crore as part of its scrutiny of transactions by a Surat-based jewel firm
According to an ET report, the agency filed a complaint with its Adjudicating Authority under relevant provisions of Foreign Exchange Management Act (FEMA). It alleged that the Surat-based entity – Sharnam Jewels Limited – which is operating from a 20*22 feet commercial office in a special economic zone (SEZ), illegally transferred forex to foreign shores in the "garb of imports from the special economic zone".
According to the complaint, the agency has so far detected illegal transfers of ₹3,437 crore while the people in the know say the total amount of alleged illegal transfers is likely to reach ₹5,000 crore.
The complaint, which ET has reviewed, alleges that the Surat-based entity "no infrastructure to manufacture gems and jewellery running into thousands of crores" and maximum foreign remittances have been made to Hong Kong.
M/s. Sharnam Jewels Limited (SJL), LLP, its partners and others. Acting under FEMA has been booked by the ED while the agency has also seized properties, in the form of plots, flats and bank balances worth ₹29.9 crore, the publication reported.
The report said that ED conducted searches at the premises of Sharnam Jewels in December last year. While Sharnam Jewels has claimed to have a closing stock of ₹520 crore, ED, during a physical verification, found out that a meagre stock of ₹19 lakh.
The publication reported that the agency has claimed that jewel firm adopted a unique modus operandi to make illegal outward remittances using the exemptions granted to SEZ(s).
According to the agency, the Surat based firm strategically selected SEZs due to the lack of stringent monitoring by customs authorities on duty-free imports, enabling those seeking to transfer illicit funds out of India to do so under the guise of payments for fictitious imports to SEZs.
The complaint further alleges that SJL "was showing highly over invoiced imports of fake uncut diamonds and other precious metals and stones mostly from Hong Kong-based entities namely Sigma Diamonds Limited, Diarect Marketing Ltd; B S enterprises, Hast Impex, HS Exim Co, DVL Limited". The ED claims that between 2021 and 2023, a total of $503.4 million (Rs 4,000 crore) was remitted under the pretext of these fraudulent imports.
The ED has further alleged in its complaint under FEMA that a total payment of $503.4 million (₹4,000 crore) was made in two years from 2021 to 2023 in the garb of fake imports.
In its complaint, ED alleged that the firm exported fake gems and jewellery out of the SEZ in compliance with SEZ Rules. However, SJL failed to bring back the mandatory inward remittances to India, amounting to $431 million (approximately Rs 3,500 crore) between 2021 and 2023, ET reported.
The complaint states that "the firm did not actually sell any goods or services to Indian entities for which it received payments through a complex web of transactions which in turn SJL sent outside India in the garb of fake imports."