Second raid on cigarette-making unit in Pandhurna

Source: The Hitavada      Date: 05 Jan 2019 11:37:20


 

Business Bureau,

The special squad of Goods and Services Tax (GST) Intelligence Department on Thursday raided a cigarette manufacturing factory based in Pandhurna in Madhya Pradesh for the second time in a span of about six months. Sources told The Hitavada that the promoters of the factory were manufacturing cigarettes meant for export but illegally selling it in the domestic markets.

It is believed that the authorities had seized huge quantites of cigarettes and also found that the promoters had evaded tax worth Rs 800 crore to Rs 1,000 crore. The team raided the factory on Thursday comprised officers attached to Nagpur, Mumbai, Hyderabad and Ahmedabad branches of the department.

The factory was shut down after the department had seized cigarettes worth Rs 100 crore in July 2018. But the manufacturing process was illegally going on in the unit. The factory was manufacturing duplicate “One & Only” and “Davidoff” brands of cigarettes. Interestingly, these brands are popular in international markets.  While most of the cigarette making units carry out production in just one shift per day, the Pandhurna-based factory was operational 24X7.

Most of the workers deployed in the factory were from Balaghat and were provided accommodation at Pandhurna by the promoters while for technical support many experts from foreign countries occasionally visited Pandhurna.

The earlier raid revealed massive tax evasion by the promoters. It is important to note that cigarettes sold in domestic market attract heavy taxes but when it comes to selling the same product in international markets, the tax component is quite low. Sources said that the huge disparity in the taxes would have attracted the promoters to manipulate the companies overseas sales figures and divert as much quantity of cigarettes as possible in the domestic markets. Interestingly, the factory was equipped with modern machines imported from Germany and UK.

It is believed that the illegal production was pumped into the market using familiar channel of pan kiosks, daily need shops and small grocery stores at a very attractive price. Further investigations are underway.