False claims on drawback from exporters has baffled the commerce ministry to such an

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extent that a mere Rs 650 crore of claims made by exporters have been refunded against claims worth Rs 2000 crore that have been filed.

The claims filed by exporters are over and above refunds worth Rs 1,200 crore made annually on drawback and terminal excise duty by Director General of Foreign Trade (DGFT).

“Deemed export is essentially import substitute policy and on closer examination we found drawback claims were not meeting

eligibility requirements. Hence, we ended up paying not more than Rs 650 crore by March 31, 2011 from the additional grant of Rs 2,000 crore last year,” AK Pujari, director general of foreign trade (DGFT) said.

Pujari was speaking at an interactive session on foreign trade policy held by Federation of Indian Exports Organisation.

DGFT refunds duty drawback on deemed exports and terminal excise duty on sanction from commerce ministry. On an average, there is a refund of Rs 1,200 crore terminal excise duty and duty drawback each year but with surge in power projects and lack of clarity on eligibility criteria for claims, there had been a surge in demand for drawbacks last year.

However, Federation of Indian Exports Organisations (FIEO) felt that these should not be classified as false claims. Instead, it is false interpretation of policy.

“The policy was unclear to exporters.It has now been made clear by DGFT that there is no incidence of duty where project authorities are directly importing and supplying to contractors,” Ajay Sahai, director general of FIEO added.