Delhi HC keeps order directing CBI, DRI to look into over-invoicing by Adani group 'in abeyance'

Nothing that the case involving Adani Power Maharashtra Limited is pending before the Supreme Court, said its Dec 19, 2023 directions to the CBI and DRI about Adani Group firms be kept 'in abeyance' until the matter's outcome before the top court.

New Delhi: The Delhi High Court has kept in abeyance its order asking the CBI and the Directorate of Revenue Intelligence (DRI) to “meticulously and expeditiously” look into allegations of over-invoicing of imports by the Adani Group.

A bench of Justices Suresh Kumar Kait and Neena Bansal Krishna, while noting in its January 5 order that a petition filed by the Commissioner of Customs (Import) in a matter involving Adani Power Maharashtra Limited is pending before the Supreme Court, said its December 19, 2023 directions to the CBI and DRI in respect of Adani Group firms be kept in abeyance until the outcome of the matter before the top court.

On December 19, 2023, the high court had directed the two federal probe agencies to meticulously and expeditiously look into the allegations of over-invoicing of imports by various power generating companies in India, including the Adani Group and the Essar Group, to ascertain the factual position and take appropriate action against the erring firms.

Over-invoicing involves inflating the value of goods or services to make it appear that the companies are spending more on imports than they actually are. Over-invoicing is used for several purposes, including to evade taxes or customs duties.

Recently, Adani Power Limited filed an application before the high court placing on record a copy of the order passed by the Supreme Court by which an appeal filed by the Commissioner of Customs (Import) against Adani Power Maharashtra Limited was dismissed on March 27, 2023.

The counsel for the Adani firm informed the court that the customs department has filed a petition seeking review of the top court’s order which is pending adjudication.

The high court, while disposing of the application, said “Relevantly, this court vide judgment dated December 19, 2023, in para 52 had passed a direction to the respondents to look into the allegations raised by the petitioner herein against the respondents, one of which is the present applicant- M/s Adani Power Limited”.

It said, “In view of the fact that review petition preferred by the department is sub-judice before the Hon’ble Supreme Court; the directions passed by this court in para 52 of judgment dated December 19, 2023 in respect of M/s Adani Power Maharashtra Limited and M/s Adani Power Rajasthan Limited (now M/s Adani Power Limited) are kept in abeyance awaiting outcome of the said review petitions.”

The high court’s December order was passed while disposing of two petitions filed in 2017 by NGO Centre for Public Interest Litigation (CPIL) and former bureaucrat and social activist Harsh Mander.

The petitioners had referred to show cause notices issued by the DRI dated May 15, 2014 and March 31, 2016 that spoke of various entities of the two corporate giants indulging in gross over-valuation of imported goods (zero or low duty rated) to siphon off money abroad from public listed companies.

The CPIL, represented by advocate Prashant Bhushan, sought a probe by a Special Investigating Team (SIT) into DRI reports about several private power generating entities engaging in over-invoicing.

Mander, in his plea, sought a direction to the Central Bureau of Investigation (CBI) to probe cases of over-invoicing by power companies, as reported by the DRI, or to set up an SIT under a retired judge of the Supreme Court to go into it.

He also sought a direction to the Department of Revenue and Ministry of Power to make declaration of international market price a mandatory part of the bill of lading/ shipping at the time of presentation of the documents to the Customs Authority of India (CAI) and to direct the Reserve Bank of India (RBI) to make it mandatory for banks to require declaration of international market price while granting credit/ discount facilities on any bill of lading/ invoice for import in India.

The counsel for the DRI had submitted that due to the voluminous nature of cases, involving several stages and multiple countries, the process of investigation was extremely time-consuming and complicated, but the agency was taking all steps for their expeditious completion.

The court had perused the status report filed by the DRI and noted that multiple proceedings are pending before the Customs Excise and Service Tax Appellate Tribunal (CESTAT) and other forums.

It noted the CBI has informed that two cases were registered against the erring companies and, in the first case, preliminary enquiry has been concluded. Investigation is in progress in both the cases, it noted.

The CPIL’s counsel had earlier informed the court that the DRI had in March 2016 identified 40 power companies that over-invoiced coal imported from Indonesia.

The CPIL has alleged that coal and equipment required for power generation in India are bought from Original Equipment Manufacturers (OEMs) through a foreign intermediary company which is a wholly controlled/ owned subsidiary of Indian power companies. While the invoices generated by OEMs reflect the actual price of the product, those generated by the intermediary companies of Indian power entities are inflated 'almost to the extent of 400 per cent'.

Subsequently, the illegally inflated cost borne by Indian power companies is passed on to the consumers who pay higher tariffs on electricity consumption, it alleged.