High-Speed Diesel (HSD) smuggling causing revenue loss of Rs 2,500 crore to Maharashtra exchequer

The report highlights the illegal import and smuggling of HSD prevalent at all major customs ports, including Nhava Sheva, Mumbai, Kandla & Mundra ports.

Staff ReporterUpdated: Friday, June 03, 2022, 06:43 PM IST
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Rampant smuggling of High-Speed Diesel (HSD) on the high seas off the Mumbai coast has caused a major revenue loss of Rs 2,500 crore every year to the Maharashtra exchequer.

An intelligence report of the Central Economic Intelligence Bureau had alerted the Central Board of Indirect Taxes and Customs of HSD smuggling in the grab of biofuels sludge oil to evade customs tariffs.

The report highlights the illegal import and smuggling of HSD prevalent at all major customs ports, including Nhava Sheva, Mumbai, Kandla & Mundra ports.

“Intelligence gathered indicates that organized syndicates have been engaged in illegal import/smuggling of High-Speed Diesel (HSD) originating from UAE. The intelligence further indicates that the imported items are generally declared as 'Base Oil SN50', 'Hydrocarbon Oil' and 'Sludge Oil'. Items declared as 'Base Oil SN50' are in clear, but there is no item called SN50 in the base oil market and the item is actually Diesel,” reads the report accessed exclusively by The Free Press Journal.

High-Speed Diesel (HSD) is classified under the Customs Tariff Act and permitted to be imported only by State Trading Enterprises.

A high-level joint meeting chaired by Dy CM and state finance minister Ajit Pawar was held with senior officials of Customs, GST, Coast Guard, State Police and State Excise Department last week to plug the leaks in smuggled diesel entering the state, evading duties and causing revenue loss.

The officials were briefed about the smuggling of diesel in the grab of free to import petroleum class ‘C’ products like hydrocarbon oil, base oil, marine fuel, and furnace oil to evade action.

“Oil mafia active in the high seas using the passage meant for international cruises to smuggle HSD to evade customs levies and state taxes for petroleum products. The organized crime syndicate is engaged in the illegal sale of the smuggled HSD as Biodiesel in the open market,” explained a senior state excise official heading the probe into the smuggling and sale of diesel in Mumbai.

State excise officials rued the lack of testing by customs officials for petroleum products imported and released from Customs Freight Stations (CFS) without ascertaining the parameters of the sample for restricted class 'A' products like petrol, diesel and LPG.

“Oil mafia adjust parameters of smuggled diesel and sample labs are not sufficiently defining imported fuel. A slight change in the HSD parameter allows the smuggled hydrocarbons like diesel fractions to pass as sludge, furnace and base oil. The exact content of the sample product should be defined if it is free to import petrol products or smuggled diesel,” claimed the state excise officials at the high-level meeting.

The officials further alleged that the smuggled diesel is subsequently available in the open market as a biofuel to avoid taxes and demanded that “Customs and GST has data sharing policy which should share data with the state for the end use of fuel imported before release to check illegal sale of the smuggled diesel.”

The state government has started cracking the whip and sealing unauthorized Bio-Diesel bunks in Nandurbar, Nasik, Dhule, Nagpur, Nanded, Beed, Buldhana and Palghar.

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