Note: This article has been edited to incorporate clarifications provided by the Directorate of Revenue Intelligence after the publication of the story, as well as Paranjoy Guha Thakurta’s responses to the same.

New Delhi: India’s revenue intelligence agency has told The Wire that it has every intention of filing an appeal against the dismissal of its show-cause notice against the Adani Group for the over-invoicing of imports to the tune of around Rs 5,500 crore.

This information was provided after The Wire reported that the DRI had just one day left to decide its course of action.

The Directorate of Revenue Intelligence (DRI) serves as the investigative wing of the Department of Revenue in the Ministry of Finance. A questionnaire was sent to finance secretary Hasmukh Adhia on the status of the case, but no answer was received prior to publication. The DRI’s clarification to The Wire‘s story was posted on Twitter at 1:05 am on November 21. Adhia’s reply was received by email on November 22.

The DRI had investigated the modus operandi of imports of power generation equipment by three corporate entities in the Adani group: Adani Power Maharashtra Limited, Adani Power Rajasthan Limited and Maharashtra Eastern Grid Power Transmission Company Limited. The DRI issued show-cause notices against the firms more than three years ago, on May 15, 2014, alleging overvaluation of imports to the extent of Rs 5,468 crores. The notice proposed confiscation of imported equipment and the imposition of penalties.

This writer has documented the DRI’s investigations into companies belonging to the Adani group for allegedly over-valuing imports of coal from Indonesia and electricity generating equipment. It has been argued that over-invoicing of imported coal and equipment could have contributed to electricity consumers paying an additional 50 paise to two rupees for every unit (kilowatt hour) of electricity consumed.

It was noted that Vinod Adani’s name has appeared in the Panama Papers that contained information from Mossack Fonseca, the Panama-based law firm. In the leaked documents, it was indicated that two months after incorporating a company in the Bahamas in 1994, Vinod Adani requested that a correction be made in the “spelling” of his name, changing it from Vinod Adani to Vinod Shah.

It was further disclosed that a firm called GA International Inc was set up a few months after the formation in 1993 of the Adani group’s flagship company in India named Adani Exports Limited, which was subsequently renamed Adani Enterprises Limited. Many presume that ‘GA’ stands for Gautam Adani, the head of the Adani group in India who is reportedly close to Prime Minister Narendra Modi.

The DRI, in continuation of its investigations, dug further and issued show cause notices last year to six companies in the group alleging that these firms had over-valued equipment to the extent of Rs 1,173 crore. These companies are:

Adani Enterprises Limited which is setting up a solar power plant of 40 megawatt (MW) capacity;

Adani Renewable Energy LLP which is setting up another solar power plant of similar capacity;

Adani Hazira Port Private Limited which is investing in the long-term development of Hazira port in Gujarat;

Adani International Container Terminal (P) Limited and Adani Ports and Special Economic Zone Limited which are setting up and developing port facilities at Mundra, Gujarat; and

Adani Vizag Coal Terminal Private Limited Limited which is setting up a coal handling terminal at Visakhapatnam, Andhra Pradesh.

On August 21, 2017, the DRI adjudicating authority, K.V.S. Singh, summarily dropped all proceedings against the Adani group. He also dropped penal proceedings against various persons including Vinod Adani.

The Indian Express reported Singh’s order on August 25, 2017. This writer was informed by officials that the same afternoon, Gautam Adani met Hasmukh Adhia, who was revenue secretary at the time, at his office in North Block.

The Wire sent an email to Adani (via his assistant, Mitul Thakkar) seeking details of the agenda and outcome of the meeting. To Adhia, we asked whether matters arising out of the DRI show-cause notice and the adjudicating authority’s ruling had figured in the discussions. Adhia, who is now finance secretary, was also asked whether he and the ministry had taken a view on the DRI appealing the adjudicating authority’s decision since the deadline was fast approaching. Till the time of original publication on November 20, neither Adani or Adhia had responded.

On November 22, Adhia replied to The Wire’s queries. “I did not have any meeting with Gautam Adani on August 25, 2017 as confirmed from my office appointment calendar,” he wrote. As for the mechanism for deciding on whether to appeal the adjudicating authority’s order, Adhia said: “As per the statutory provisions, the order of this adjudicating authority is to be reviewed by a committee comprising two chief commissioners of customs. They have reviewed the adjudication order dated 22nd August, 2017 and have directed the commissioner of customs vide their order dated 15th November 2017 to file an appeal in the tribunal. In such cases, the finance minister or the finance Secretary does not advise the DRI whether to file an appeal before the tribunal or not. The decision to file an appeal before the tribunal is governed by the aforesaid statutory provisions.”

According to the Customs Act, the DRI has 90 days to arm itself with an internal legal mandate to file its appeal against the order of the adjudicating authority before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Mumbai. While The Wire reported that till the morning of Monday, November 20, such an appeal had not been filed, and that only 24 hours were left, the DRI’s clarification says that the 90 day deadline is only for the agency to internally review the adjudication order and that the Customs Act provides one additional month for the actual appeal to be filed.

The DRI also said that the review process was completed on November 15 and that “the appeal is being filed by the commissioner of customs in the tribunal before the last date, i.e. December 14, 2017.”

This author has written why Singh’s order appears erroneous. The authority had confirmed the DRI’s allegations against Knowledge Infrastructure Private Limited (KIPL) in a similar show-cause notice relating to over-valuation of coal imported from Indonesia. This order is at present being contested before the Mumbai bench of CESTAT. (All these orders and show-cause notices are available at www.theafiles.in.)

If one carefully peruses the orders in the case related to KIPL and the Adani group, one distinctive aspect is the evidence produced by the DRI’s investigating officers in the latter case relating to firms in the Adani group. The adjudicating authority appears to have ignored the invoices detailed in the notice for every consignment of goods imported into India by Adani Power Maharashtra and Adani Power Rajasthan.

It is to be appreciated that one invoice has been issued by the original exporter and another invoice by another firm. The adjudicating authority, Singh, did not apparently examine certain critical accusations made by the DRI in its notice which, curiously, has all been reproduced in his own order.

The notice has described as “sham” the claim that the companies in the Adani group purchased equipment on the basis of international competitive bidding. A detailed chronology of events has been provided to substantiate the allegations.

In an unrelated note, the DRI, not very long ago, missed the “legal deadline” to file a review petition before the Supreme Court, in another case relating to the Adani group, relating to trading activities in cut and polished diamonds, that necessitated the filing of an application for condonation of delay before the Supreme Court.

As a top official in the finance ministry, Hasmukh Adhia has been advising taxpayers not to wait till the last day to pay their goods and services tax (GST) every month. Why the government has waited so long to appeal Singh’s order in the present case is not clear.

Paranjoy Guha Thakurta is a Delhi-based journalist. His new book, Thin Dividing Line: India, Mauritius and Global Illicit Financial Flows, is being published by Penguin Random House in December.

Note: This article has been edited to incorporate clarifications provided by the Directorate of Revenue Intelligence after the publication of the story, as well as Paranjoy Guha Thakurta’s responses to the same.

Note: This article was further updated at 1510 on November 22, 2017 to incorporate the response of revenue secretary Hasmukh Adhia.