Crackdown on two Mumbai-based entities trying to export wheat on fake LCs

In a crackdown on exporters who had submitted fraudulent letters of credit for wheat exports, the commerce ministry's arm DGFT has imposed monetary penalties on two Mumbai-based entities and decided to initiate criminal proceedings against them.

The government has banned wheat exports on May 13, but allowed shipments for which Letters of Credit (LCs) have been issued before the ban date. It was later decided to initiate strong action against entities trying to export wheat on the basis of fake letters of credit.

The commerce ministry has tightened the norms for obtaining registration certificates for wheat exports with a view to curbing fraudulent practices such as submission of improper documents by traders.

In pursuance of the directive of the ministry, the Mumbai DGFT office after inquiry found that two entities -- Ganpati Traders and Pride Agro Fresh LLP -- have submitted fake LCs for export of wheat.

According to the order of the Additional Director General of Foreign Trade (DGFT), a total penalty of over Rs 42 crore has been imposed on Pride Agro Fresh LLP. It has also been decided to file an FIR before EOW (Economic Offences Wing) of Mumbai Police.

In the case of Ganpati Traders, the DGFT has slapped a penalty of over Rs 18 crore and decided to file an FIR.

In both the cases, the DGFT has found that the LCs for obtaining RCs for wheat export submitted by them were not genuine.

When contacted for the comments, Pride Agro Fresh LLP did not respond to the query on the issue.

According to a separate order of the Additional DGFT - Mumbai, "it is proved beyond doubt that Ganpati Traders has submitted fake letters of credit and obtained Registration of Contracts (RCs) for export of wheat".

Both the orders also said that the aggrieved parties can file an appeal against these orders after depositing the penalty amount.

Commerce and industry minister Piyush Goyal has recently warned that the government will take strict action against exporters who are trying to ship or have shipped wheat by submitting back-dated and improper documents following the ban on exports of the crop.