RIL executives summoned for Hazira excise duty evasion

A central revenue authority has summoned some executives of Reliance Industries Ltd (RIL) in connection with its investigation in an alleged excise duty evasion case involving the company's Hazira unit in Gujarat.

The Directorate General of Central Excise Intelligence (DGCEI), under the Finance Ministry, is looking into the case relating to alleged wrong classification of mixed xylene – a chemical obtained through cracking of Naphtha – produced by it and sold to paint factories, official sources said.

The company was allegedly paying 12.5 per cent duty on it by declaring the product as organic chemical, but instead it should have been declared as mineral oil which attracts 14 per cent levy, the sources said.

The Hazira plant of RIL has allegedly evaded payment of about Rs 26 crore as excise duty to the government, they said.

Ambrish Anjaria, who according to the tax authorities is plant head at Hazira, and Vilas Sawant, General Manager (Sales) have been asked to appear before the authorities in connection with the probe, the sources said. Besides them, Chief Financial Officer Alok Aggarwal is also likely to be called by the DGCEI officials, they said. Aggarwal was earlier asked to join the investigation on January 31 and later on February 10, 2017. However, he cited some personal issues and a fresh date will be issued soon.

The summons have been sent to seek presence of these executives before the DGCEI officials to get certain details about the case, they said.

When contacted, an RIL spokesperson said that the company has compiled with all rules and regulations, but did not give a direct reply to the question on summoning of the officials.

The spokesperson further said that the "company's understanding of the product's constituents has also been endorsed by the Premier Institutes of Chemicals and Petroleum."

"The product is essentially a chemical and its Central Excise classification will depend on the exact constitutes. It will thus highly presumptuous to generalize the classification based on merely on the broad description of the product or the results in respect of other manufacturers," the company said.

The company maintained that a proper chemical test will be able to remove any ambiguity in this regard. "Further our operations are regularly audited by various government agencies. In any case the duty paid is modvatable by our customers irrespective of its classification," it said.

RIL has been manufacturing mixed xylene (solvent grade) at its Hazira factory for over 10 years. This stream is obtained during Naphtha cracking. The Hazira manufacturing division is located near Surat, in Gujarat. It comprises of a Naphtha cracker feeding downstream fibre intermediates, plastics and polyester plants.