The Enforcement Directorate (ED) has issued a showcause notice to one of the six export companies allegedly involved in a Rs. 600 crore gold export fraud that was busted by the Central Bureau of Investigation (CBI) in October 2010.
The notice was issued to Andheri-based Ushma Jewellery and Packaging Export Private Limited and its directors on Wednesday under the provisions of Foreign Exchange Management Act (Fema). It asks the company and its directors to reply why they should not be penalised for violating Fema provisions.
The company, along with five others, had approached Metal and Scrap Trading Corporation (MSTC), a government enterprise for export of gold, in 2008-2009 to export Rs. 600 crore worth of gold to the UAE, and sought 80% advance. In accordance with norms, the companies first organised the Rs. 600 crore and exported the gold, following which they got Rs. 480 crore (80%) as advance from MSTC.
The advance was given on condition that they should return it within 170 days with a commission of 1% of the total export amount, which stood at Rs. 6 crore.
However, the companies failed to return the amount. The CBI had also found that instead of exporting to firms listed with MSTC, the firms sent it to UAE companies owned by them. They then sold the gold in the open market in UAE with commission and transferred the funds back to India through hawala.