Industrial leaders fear bogus billing with steep rise in bicycle exports

  • Arjun Sharma, Hindustan Times, Ludhiana
  • Updated: May 09, 2015 20:07 IST

With the rise in exports of bicycle and cycle parts to Bangladesh and Nepal, several industrial leaders have expressed fear about bogus billing. The exports to Bangladesh has almost tripled in the last five years.

The bogus billing scam had rocked the cycle industry last year in which the excise and taxation department had found that the manufacturers had sold their goods actually in Uttar Pradesh and Bihar but showed it to have been exported to Nepal in order to get incentives.

The excise department of Punjab was left shocked when an input from the central excise department that stated excessive bogus billing in the names of firms in Nepal was causing immense financial losses to different state governments as well as the central government.

These manufacturers by attaining the bogus bills from the Nepal-based companies were causing losses to states as well as central exchequer. Local taxes of states and 2% Central Excise Tax (CST) is not charged if the material is sold in Nepal or Bangladesh.

As per the data from official website of ministry of commerce and industry, the export of bicycle and cycle parts to Bangladesh has tripled in the past five years that has raised serious concerns even among the industry leaders.

Last year, commissioner of excise and taxation Anurag Verma had initiated a high level inquiry after it came to the light that more than 100 cycle manufacturing companies of Ludhiana were selling their goods in UP and Bihar and had documents of sale in Nepal. When it was investigated by the agencies, it came to the light that the goods were sold in domestic market. However, the inquiry was hushed up later after severe political pressure on the excise department.

Similar situation has arisen now after the reports of bogus billing from the companies based in Bangladesh have come to the fore. While the exports to Bangladesh in 2010-11 was only Rs 5.70 crore, it declined to Rs 2.17 crore in 2011-12. However it reached Rs 12.85 crore in 2012-13 and Rs 16.27 in 2013-14.

Surprisingly, only in nine months (from April 2014 to January 2015), the exports of Ludhiana manufacturing companies to Bangladesh reached to a whopping Rs 18.42 crore.

In a similar manner, the export to Nepal in 2010-11 was Rs 31.97 crore that increased to Rs 33.82 crore in 2011-12 and Rs 39.82 in 2012-13. The exports of cycle and parts reached Rs 53.18 crore in 2013-14 and Rs 55.81 crore from April 2014 to January 2015.

Avtar Singh Bhogal of MS Bhogal and Sons, a major cycle parts manufacturer, said exports to Bangladesh were never so large earlier.

"Dealers in Calcutta many years ago used to buy material from Ludhiana and illegally sold it to the shopkeepers in Bangladesh,"he said. According to Bhogal, there may be something fishy behind the increasing exports to Bangladesh.
Badish Jindal, the president of Federation of Associations of Small Industries of India (FASII), said the racket of bogus billing is causing losses to the government.

"A high-level inquiry should be initiated and documents of all exporters, who send material to Bangladesh should be verified so that reality could be brought to the fore,"said Jindal.

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