Non Tariff Barriers and 10% Gold Duty Spurs Gold Smuggling

“Smuggling of gold into India is a challenge for the customs department and the menace has to be handled at a policy level, Central Board of Excise and Customs chairman Najib Shah said.

“Till such time the local demand is not met and there is a duty on it, there is profit involved in the smuggling of gold. Gold smuggling is a challenge. It has to be met at a policy level,” he said, while speaking to reporters after the conclusion of the 11th Asia Europe Meeting (ASEM) of the Directors General/Commissioners of Customs held here.

“As you are aware there is a 10 percent duty on the import of gold. You are also aware that we have an insatiable liking for gold. The demand for gold has always been high,” he said.”

In the first part of October, 31.75 kg of gold valued at Rs 8.43 crore was seized at Madurai airport in Tamil Nadu.

Gold from Dubai and Singapore has become “attractive” for smugglers to buy and transport it to the country. 

There is no local tax on gold in Dubai while Singapore returns the tax at the airport.

Dubai and Singapore are the major supply centres for gold market and most of the travellers in South India come from these two places via air, while majority of gold from Sri Lanka is smuggled through the sea route.

The 10 percent import duty and restriction of stay abroad and questions on source of money and declaration of marking on gold bars and the associated paper work are forcing gold inflow into India through informal channels. The infamous 20:80 RBI scheme to allow gold import to exporters in the 2013-14 period has spawned gangs of smugglers.

The falling rupee exchange rate and the import duties across countries make gold a preferred metal for smuggling compared to other goods. Gold has returned as a glore of value. (The gold bond scheme will thus have few takers, it is believed).

There is a price difference of about Rs five lakh per kilogram of gold purchased in India as against in Dubai after paying the customs duty.

The price difference of Rs 2.30 lakh per kg along with an additional 10 per cent customs duty, totaling to Rs five lakh price difference between the gold in Dubai and India for legally importing it.

India, Sri Lanka and Bangladesh together have high duty and restrictions on gold.

Most of the arrested persons are mere carriers, their handlers are well connected by businessmen.

Kutty Gang at Cochin Airport

The shadow team of the city police held a fugitive wanted in connection with the sensational case related to massive gold smuggling through Cochin International Airport Limited (CIAL) at Nedumbassery. The police identified him as Kunhayan Kutti, 40, of Kakkattummal House near Kayanna Bazar, Perambra in Kozhikode. 

The Union Finance Ministry had issued a lookout notice in his name after he went absconding over two months ago. The police have detained him invoking provisions of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act. He was sent to Poojapura Central Jail on Thursday. 

The gang involving Kutti was suspected to have smuggled over 360 kilograms of gold out of CIAL through carrier passengers. The police had earlier arrested nearly 35 persons, including airport ground handling staff, jewellery shop owners and carriers. Though Kunhayan Kutti too was nabbed earlier, he managed to escape from the police custody. 

According to the police, Kunhayan Kutti was taken into custody from a lodge Salena Plaza at Kayanna, not far away from his home, where he was hiding. As many as three parallel investigations - by CBI, Thiruvananthapuram City Shadow Police and Kozhikode District Police - were on to track him.

The breakthrough in the investigation came when one of the carriers Kutti had sent to Abu Dabi returned recently. The police shadowed her and found out that she regularly contacted him through phone. The cyber cell sleuths helped the probe team find out his location, following which they nabbed him from the lodge on Wednesday night. 

The gang’s modus operandi was to smuggle gold bars from Gulf countries through carrier passengers, who would conceal them in their dress or shoes. They would hide contraband in the toilet from where the ground handling staff would collect it. Kutti’s role was to collect the contraband outside the airport and deliver it to the receivers.