Southern States - Andhra Pradesh   

`Illegal operations' by steel plants; three arrested

By W. Chandrakanth

HYDERABAD SEPT. 30 . The Anti-Evasion Cell of the Customs and Central Excise Department here have detected large-scale clandestine operations, involving manufacture and sale of steel and iron products, by some mini steel plants.

The investigation have led to the arrest of the Managing Director and two directors of a mini-steel plant (Shalini Steels Limited). The arrested persons — Suresh Kumar Singhal (MD) and Vijay Kumar Agarwal and Naresh Kumar Agarwal (directors) — were sent to 14-days' remand by the Special Judge of the Court of Economic Offences, A. Shankarnarayan, on Tuesday after officials produced them on the charge of duty evasion involving excisable goods worth Rs.19 crores in the last three years, according to the Anti-Evasion Cell of the Customs and Central Excise Deparment.

According to sources, the Customs and Central Excise Department discovered a ring of brokers and a network involved in "sale and supply of re-rolled steel and iron products within Andhra Pradesh and Karnataka and Tamil Nadu." They played a key role in securing the raw material and supplying the end products to buyers. The network of regular dealers did not figure anywhere and the modus operandi was to directly supply the raw material to the plants, place orders and collect the finished product, without making any entries in any of the records.

The sources said the Anti-Evasion Cell stumbled on the big catch when the officials pieced together information on power pilferage to the tune of Rs.4.61 crores, allegedly resorted to by the steel plant.

Later, while attending a workshop on energy audit in August by the State Commercial Taxes Department, the officials gained more insight into the power consumption pattern of the steel plants. The knowledge thus gained aroused the curiosity of the Cell over the steel plant's necessity to pilferage power of such magnitude. It sent an official to a plant posing as a builder in need of steel products for a proposed complex and it stumbled across the existence of a broker system. The department strengthened its intelligence network further to find how the brokers operated from their homes using cell phones and landlines without establishing any offices. It took the department two months to explore the operation.

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