Mumbai: Nirav Modi is no stranger to breaking the law. In December 2014, officers of the Directorate of Revenue Intelligence (DRI) received information that M/s Firestar Diamond International Ltd, owned by Mr. Modi, was exporting diamond-studded jewellery by overvaluing the same and the diamonds studded in the jewellery were of low value.
An official, privy to the DRI probe, said imported, duty-free, high-value, and cut and polished diamonds were being diverted to the domestic market while cheaper low-value diamonds were being used to make jewellery for export to Hong Kong and UAE. The consignments were under the names of M/s Firestar Diamond International Ltd (FDIL) and M/s Firestar International Pvt Ltd (FIPL), both owned by Mr. Modi.
On December 5, 2014, a DRI team intercepted an export consignment of diamond-studded jewellery. Eight consignments meant to be exported to US (1), Canada (1), Hong Kong (3), and Dubai (3) were intercepted. On examination, the DRI found that diamonds meant to be sent to Hong Kong and Dubai (4 pertaining to FDIL and 2 pertaining to FIPL) were grossly mis-declared in the quality, quantity and value, mainly that of cut and polished diamonds, studded in jewellery covered under six shipping bills.
While shipping value of the cut and polished diamonds for the six consignment were declared as ₹43.10 crore, the value ascertained by the investigation agency was ₹4.93 crore.
The DRI’s Mumbai zonal unit issued two show cause notices on June 5 and June 24, 2015, to Mr. Modi and three of his firms — Firestar Diamond International Pvt Ltd, Radashir Jewellery Company Pvt Ltd, and Firestar International Pvt Ltd — located in the Surat Special Economic Zone (SEZ). The three firms are into import of duty-free diamonds, pearls and gold for manufacturing jewellery at the Surat SEZ, exclusively for export after value addition. The show cause notices raised a demand of ₹37.16 crore as duty, ₹5.48 crore as interest at 15%, and ₹5.57 crore as penalty. The three companies later paid ₹ 48.22 crore as duty demand, penalty and interest. Mr. Modi also sent two letters, dated July 3 and July 23, 2015, to the commissioner of central excise and service tax in Surat to close the case. “Our officers visited the factories at Surat SEZ and verified the stock of imported duty-free raw material. This revealed a huge variation when compared to cut and polished diamonds and pearls,” a DRI officer said.
According to them, cut and polished diamonds worth ₹100 crore was found in stock at the factories as against a declared stock of ₹1,100 crore. The total value of pearls in stock was worth ₹4 crore, instead of the declared stock of over ₹100 crore.
