DRI raids Mumbai traders suspected of dealing in smuggled gold

MUMBAI: The Directorate of Revenue Intelligence (DRI) has been conducting raids for the past few days on gold traders in Mumbai’s famous Zaveri Bazaar market, during which it has confiscated an unspecified quantity of the metal from certain traders who were dealing with certain entities alleged to be part of a gold smuggling cartel, said persons aware of the development.

“The said entities were detained earlier this year under Cofeposa and have since been released, but the agency is now investigating constituents who have allegedly been dealing with them,” said one of the persons. “The raids are ongoing.”

Cofeposa stands for the Conservation Of Foreign Exchange And Prevention Of Smuggling Activities Act, 1974 and empowers authorities, who invoke it, to arrest people smuggling gold and forex.


DRI officials were not immediately available for comment.

When contacted, Surendra Mehta, national secretary of India Bullion & Jewellers Association (IBJA) said, “Queries have been raised by certain trade constituents regarding the documentation needed to prove the genuineness of the transactions for which the association is seeking consultants’ opinion to resolve these.”

Under Section 123 of the Customs Act, the burden of proof that certain notified goods like gold, silver, cigarettes, etc, are not smuggled rests with the persons from whose possession they have been seized by the authorities. The goods can be released if relevant documents pertaining to duty paid, etc, are presented to the authorities.

Gold smuggling allegedly began from 2013 when the UPA government raised the import duty on gold to 10% from 2% to rein in the current account deficit. Finance minister Nirmala Sitharaman raised the duty further to 12.5% on July 5 when she announced the Union Budget for FY20. Apart from the import duty, bullion attracts 3% GST, taking the total levy to 15.5%.

Trade estimates that around 80—100 tonnes could be smuggled each year to escape the import duty. Indian residents have consumed an average of 769 tonnes of gold in each of the five years through 2018, data from Metals Focus, data provider to World Gold Council, shows.