Mumbai, Aug 27 (PTI) The Directorate of Revenue Intelligence (DRI) has arrested two persons for a Rs 115 crore fraud involving availment of export incentives by entities without eligibility, officials said on Wednesday.

Those arrested were a Mumbai-based individual, dubbed by the central agency as the "mastermind" of the fraud, and a customs broker The DRI had specific intelligence about a syndicate fraudulently availing duty drawback and RoSCTL benefits by exporting misdeclared and overvalued garments to African countries by using several dummy IECs (importer-exporter codes) from ICD (inland container depot) Talegaon in Pune, an official said.

RoSCTL, or rebate of state and central taxes and levies scheme, serves as a key incentive framework for Indian exporters.

Acting on the intelligence, the DRI intercepted two such live consignments, he said.

Examination of the consignments revealed misdeclared and inferior quality goods were being exported at grossly inflated values, according to the official.

Simultaneous searches were conducted at eight premises in Mumbai, said a DRI statement.

Preliminary investigations revealed that 14 IECs, identified so far, were issued in the names of fictitious individuals and were non-existent or bogus, it stated.

All export documentation and invoices were prepared by a Mumbai-based mastermind. Crucial digital evidence, including fake invoices, were recovered during searches, it added.

In his voluntary statement, the mastermind admitted the syndicate procured low-quality goods from markets in Mumbai, Kolkata, and other cities without invoices or e-way bills, and exported them by overvaluing to the extent of 5 to 6 times their actual value, said the statement.

Using this modus operandi, they fraudulently availed drawback benefits of approximately Rs 18.74 crore and RoSCTL benefits of about Rs 96 crore - totalling Rs 114.74 crore -- it said.

The mastermind, who has orchestrated the whole scheme, was arrested along with a customs broker, who was a complicit in the fraud and received commission for processing such exports, it stated further.

Further investigation in the fraud was underway.

Duty drawback is a government scheme formulated to refund duties and taxes paid on imported inputs used in the production of exported goods. PTI DC RSY

Export incentive fraud exposes use of dummy exporter codes and fake invoices leading to arrests and ongoing investigation. A revenue agency uncovered an export incentive fraud involving fictitious IECs, fabricated invoices, and misdeclared, overvalued garment exports to claim duty drawback and RoSCTL benefits. Searches recovered digital evidence and fake documentation; investigators identified numerous non existent IECs and arrested a Mumbai based individual who prepared export paperwork and a customs broker alleged to have facilitated the scheme. Preliminary inquiries show wrongful claims arose from procuring goods without proper invoices and exporting them at inflated values, and further investigation is ongoing.