DRI investigates Adani Defence for alleged customs duty evasion on missile components

The Directorate of Revenue Intelligence (DRI) has launched a detailed probe into Adani Defence Systems and Technologies Ltd., a subsidiary of Adani Enterprises, over allegations of customs duty evasion related to imported missile components, according to multiple news reports.

The Telegraph reported that preliminary findings indicate that the investigation centres on whether parts imported for short-range surface-to-air missile systems were mis-declared as components of long-range missiles to avail of duty exemptions not legally applicable at the time.

Under the rules in force during the relevant period, short-range missile components attracted a 10 per cent basic customs duty plus 18 per cent local tax, whereas long-range missile components were exempt. Officials estimate that the alleged misclassification may have caused a revenue loss of around Rs 77 crore.

Documents reviewed by the agency reportedly show that Adani Defence imported non-explosive components including structural fittings, mounting assemblies, and control interfaces for missile systems.Investigators allege that exemptions were wrongly claimed on consignments that should have been taxed.

The company has provided customs entries, end-use certificates, and correspondence with foreign suppliers, and has acknowledged differences in classification while maintaining that the imports complied with the applicable notifications and technical documentation.

Trade data cited in reports suggest that imports from Russia alone amounted to about USD 32 million since 2024, with total imports from Russia, Israel, and Canada valued at approximately USD 70 million during the same period.

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The disputed duty represents a significant portion of Adani Defence’s finances for FY 2024–25, accounting for over 10 per cent of revenue and more than half of reported profits.

Under Section 28 of the Customs Act, 1962, if duties are found to have been short levied or evaded, authorities may recover the amount with interest and impose a penalty up to the sum of the evaded duty, which could raise the potential liability to Rs 154 crore, officials said.

An Adani Group spokesperson told the press that the company has cooperated fully with authorities and furnished all necessary documentation, adding that the DRI’s queries were addressed and the matter stands concluded from their end. However, the agency has not issued any final order and continues to examine records.

The timing of the probe coincides with the September 2025 amendment to customs rules exempting all missile components from import duty. Officials clarified that the exemption applies prospectively and does not cover transactions completed prior to its issuance.

The DRI, which operates under the Central Board of Indirect Taxes and Customs, investigates complex cases of duty evasion, smuggling, and trade-related financial fraud. While the current inquiry focuses strictly on customs compliance, it does not impact Adani Defence’s operational contracts with the Indian armed forces, which include drones, electronics, and weapon systems supplied under government tenders.