Press note regarding duty evasion by various CPC (Copper Pthalocyanine Crude) Blue manufacturers – DGCEI, Ahmedabad Zonal Unit



Directorate General of Central Excise Intelligence (DGCEI), Zonal Unit Ahmedabad’s Vapi Regional Unit has detected a major modus operandi of Central Excise duty evasion and is investigating the same against various CPC (Copper Pthalocyanine Crude) Blue manufacturers operating from Ahmedabad, Vadodara, Ankleshwar and Vapi area. In the major search operations conducted on 01.05.2013 and 03.05.2013, DGCEI unearthed the modus operandi of diversion of agriculture grade Urea, meant for use by farmers, for industrial purpose, mainly to manufacturers of CPC Blue Pigments. The price of agriculture grade Urea, which is most prominent amongst fertilizers used by the farmers in India, is highly subsidised and attracts Central Excise duty @ 2%. Such agriculture grade Urea is manufactured in the state of Gujarat by various Urea manufacturers like Krishak Bharati Cooperative Limited (KRIBHCO), Gujarat Narmada Valley Fertilizers Company Ltd. (GNFC), Gujarat State Fertilizer & Chemicals Ltd. (GSFC), Indian Farmers Fertiliser Cooperative Limited (IFFCO) etc.. However, the price of Urea, which is also an essential ingredient to manufacture CPC Blue Pigment meant for industrial use is not subsidised and attracts full rate of Central Excise duty i.e. @ 12%. For example the rate of agriculture grade Urea is around Rs. 5.36 per Kg. and the rate of technical grade Urea (imported) is around Rs. 32 per Kg. Government is heavily subsidizing UREA which can be seen from the rates as mentioned above. According to the present duty structure, Central Excise duty on agriculture grade Urea is 2% and on technical grade is 12% thus per Kg. central Excise duty on agriculture grade Urea and technical grade Urea comes to around Rs. 0.11 and Rs. 3.84, respectively. In such a situation if agriculture grade Urea is used as technical grade Urea differential duty which is not paid comes to Rs. 3.73 per Kg. Therefore certain CPC Blue manufacturers in connivance with some dealers/traders of industrial grade Urea and distributers of agriculture grade Urea have indulged themselves in receipt and utilisation of such agriculture grade Urea, illicitly, in the guise of technical grade Urea and/or any other industrial chemical product like T-Salt, refined Salt, pure Salt, Silica, Caustic Soda etc..

The search operation resulted in seizure of 2100 no.’s of diverted agriculture grade Urea bags from such manufacturers and recovery of large number of incriminating documents. Preliminary scrutiny of seized documents indicates that some dealers involved in the supply of technical grade Urea were also providing such diverted agriculture grade Urea to the CPC Blue manufacturers under the cover of bills issued from bogus trading firms showing supply of different chemical products(T-Salt, refined Salt, pure Salt, Silica, Caustic Soda etc.) instead of agriculture grade Urea. During the search operations at the premises of CPC Blue Pigment manufacturer’s, officers also detected such diverted agriculture grade Urea being unloaded within the premises of CPC Blue manufacturers. The CPC Blue manufacturers involved in this racket of diversion of subsidised agriculture grade of Urea comprises M/s Meghmani Organics Ltd., Ankleshwar; M/s Asahi Songwon Color Ltd., Vadodara; M/s Narayan Industries, Ahmedabad ; M/s A-One Chemicals , Ankleshwar ; M/s Ishan Dyes, Ahmedabad; M/s Narayan Organics, Ankleshwar; M/s Ramdev Chemicals, Ankleshwar ; M/s Pthalo Color, Vapi ; M/s Sarswati Pigments, Ankleshwar ; M/s Deep Chem, Ankleshwar; M/s Ganesh Pigments, Ankleshwar, amongst others.

The search operation conducted by the DGCEI indicates massive and rampant misuse of government subsidy scheme as well as Central Excise Cenvat scheme. Preliminary investigations have suggested diversion of around one Lakh M.T. of agriculture grade Urea for industrial use during the last three years. Accordingly, the consequent loss to government exchequer by the said modus operandi is expected to be more than Rs. 30 crores.


Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Telegram

taxguru on telegram GROUP LINK

Download our App


More Under Excise Duty

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

December 2023