Construction stocks slide on scrutiny by Customs department

Construction stocks slide on scrutiny by Customs department

Nine construction stocks declined 0.08% to 5% at 13:20 IST on BSE on reports of the central intelligence unit of Indian Customs launching a series of cases alleging import duty evasion by nine infrastructure firms.

Meanwhile, BSE Sensex was down 397.86 points or 2.2% to 17,677.49, on weak cues from the global markets.

Gayatri Projects (down 5% to Rs 501.40), Jaiprakash Associates (down 4.67% to Rs 251.90), Era Infra India (down 2.7% to Rs 722.75), Punj Lloyd (down 2.48% to Rs 367.70), Valecha Engineering (down 1.67% to Rs 212.50), Hindustan Construction Company (down 1.2% to Rs 164.60), Nagarjuna Construction Company (down 1.65% to Rs 274.05), Gammon India (down 0.86% to Rs 530) and IVRCL Infrastructure Projects (down 0.08% to Rs 457.10) edged lower.

As per the reports, the perpetrators include well-known names in the construction field such as Punj Lloyd, Era Constructions (India) and Gammon India.

The companies are alleged to have diverted construction machinery, imported without customs duty specifically for projects financed by the United Nations (UN), other international aid organizations and approved by the government, to private projects, thus evading customs duty.

The money involved in the case is not large in itself, but the development is significant since these firms are involved in construction of roads for projects approved by the National Highways Authority of India (NHAI) and aided by the World Bank, Asian Development Bank and the UN.

Under the Customs Act 1962, equipment imported into India for completion of infrastructure projects financed by the UN or an international organization and approved by the government is exempt from customs duty. The firms had imported machinery, such as piling rigs for construction of roads, and had availed the exemption.