DRI books Rs 100-cr case on illegal imports of drug

NEW DELHI: As part of a crackdown on bulk drug importers avoiding payment of anti-dumping duties, the Directorate of Revenue Intelligence (DRI) has unearthed a major racket with the arrest of one person in the Capital for importing bulk drugs worth Rs 100 crore by allegedly evading Rs 10 crore in duties.

DRI is currently investigating major importers of bulk drugs who are allegedly diverting imports to the local market without paying anti-dumping duties.

It is believed that many pharma majors are importing bulk drugs for manufacturing Doxycycline, Oxy-tetracycline, Norflox and Penicillin-G.

Intelligence officials have seized bulk drug Oflaxacin worth Rs 36 lakh from the premises of Gaurav Pharma and found enough evidence of alleged illegal imports of Trimathoprim, Vitamic-C and Paracetamol in the country.

It is estimated that about 50% of imports in the bulk drug segment are diverted to the local market allegedly evading customs duty as high as 36%, including CVD and anti-dumping duties, sources said.

The accused had imported bulk drugs worth Rs 100 crore in the last two years under the export-oriented unit (EoU) scheme. However, it was found that the pharma company had diverted its imports to local manufacturers and traders in Mumbai and Delhi instead of using it for export purposes.

Under the EoU scheme, an importer is allowed cheap imports of bulk drugs provided he exports the manufactured drugs. For using the bulk drugs in the domestic market, the imports invite a levy of 36% that include anti-dumping duties.

Anti-dumping duties are levied to protect the domestic industry. However, since half of the bulk drugs imported are diverted to the local market, many major pharmaceutical companies have already shifted to importing cheap drugs or have been forced to shut down their manufacturing units.

Sources said imported bulk drugs were found diverted to manufacturers in Baddi in Himachal Pradesh, Vapi in Gujarat and Bhiwandi in Maharashtra. In many cases, it was found that the imports were directly offloaded in the domestic market while they were strictly meant for EoUs.

The DRI drive will help protect the domestic industry which for long was reeling under the pressure of cheap imports, especially from China.

Source: The Economic Times