Siliguri CGST & CX Commissionerate has initiated action against a prominent watch manufacturer, located in Sikkim, for allegedly availing benefits under the budgetary support scheme, 2017 in violation of the scheme’s provisions.
According to intelligence inputs and subsequent investigation, the unit was availing tax exemptions meant for eligible manufacturing units under the erstwhile Central Excise Area-Based Exemption scheme, despite engaging only in basic assembly work. The unit reportedly received fully manufactured watches from its Pantnagar (Uttarakhand) and Hosur (Karnataka) plants, merely attaching straps, adding stoppers, conducting tests, and packing the products in Sikkim — activities which do not qualify as “manufacturing” under para 5.8 of the DIPP Notification dated 5 October 2017, according to a senior CGST official.
Investigators found that the HSN codes on both purchase and sale invoices remained unchanged, indicating no transformation into a new product with a different composition or name. Prima facie, the GST refund involved in such allegedly erroneous claims stands at around Rs 225 crore.
Notably, this revelation comes close on the heels of another major detection by CGST Siliguri, where units in Sikkim were found to have wrongfully claimed over Rs 1,032 crore under the same scheme by inflating value addition figures, far beyond the permissible cap set by the Centre.
Officials confirmed that further investigations are underway to recover the undue benefits and tighten compliance across the region.