In what could be seen as clear indication of a rise in gold smuggling, cases related with seizure of illegal gold being imported during the first two months of the current calendar have touched over 34 per cent of full year of 2020, 36 per cent of 2021 and around 22 per cent of 2022. All through these years, Kerala saw maximum such seizures.

In a written response, Minister of State for Finance Pankaj Chaudhary informed the Rajya Sabha that 875 seizures were made during January and February this year. Total number of seizure was 2,567 in 2020, 2,445 in 2021 and 39,82 in 2022. In terms of quantum, total gold seized was 2,154.58 kg in 2020, which rose to 2,383.3 kg in 2021 and 3,502.16 kg in 2022. First two months of 2023 saw seizure of over 916 kg.

Although the government did not explain why quantity of illegal gold being brought in is on rise, it is widely believed that the prime reason is increase in import duty. The government, however, has always held that there no is direct relationship between rise in tariff and higher smuggling.

Industry players say another reason for higher smuggling is rise in customs duty. According to the World Gold Council (WGC), smuggling could have increased by 33 per cent to touch 160 tonnes in 2022 compared to the pre-Covid period due to the increase in the import duty on gold to 12.5 per cent from 7.5 per cent in July last year.

Meanwhile, Chaudhary said the government makes policy interventions and takes operational measures to check smuggling. To deter smuggling of gold, Customs field formations and Directorate of Revenue Intelligence (DRI) keep constant vigil and take operational measures such as passenger profiling, risk- based interdiction and targeting of cargo consignments, non-intrusive inspection, rummaging of aircrafts and coordination with other agencies. Modus Operandi Circulars related to new modus/method used by the gold smugglers are issued from time to time.

“In last three years, National Investigation Agency (NIA) has conducted investigations and filed charge sheets in three cases of gold smuggling,” he informed.

According to a report by FICCI, outright smuggling as defined by the DRI is “the secret movement of goods across national borders to avoid Customs duties or import or export restrictions.” Non-declaration (where no product is declared at port of entry) as well as not being in possession of any legal import documentation can also be considered as outright smuggling.

Evading Customs duty

But, smuggling could also take place through legal channels of trade by various means to evade Customs duties and other taxes applicable on such goods and products. This is referred to as technical smuggling and such goods are liable for confiscation under Section 111 of the Customs Act 1962. Ways and means of technical smuggling may be classified into four categories based on seizure data of DRI which include undervaluation, mis-declaration, misuse of end use and other notifications and other means.

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