Customs checks fail to curb duty free import of gold coins from South Korea

Already 12-13 tons of gold is understood to have arrived so far from Korea since July

The customs department is seeking a bank guarantee equivalent to the normal 10 per cent import duty for shipments of gold coin from South Korea but it has had no effect on the flow.

As already reported, these imports have recently ballooned, exploiting a loophole in the free trade agreement (FTA) signed with that country. After July, another 12-13 tonnes is understood to have arrived so far from Korea. The imports are at zero duty and those doing it prefer to also give the bank guarantee asked, say sources, besides any other information the Customs might ask.

Sources aver the way importers are providing all information to Customs in writing, it is clear the former are confident about their legal interpretation on such import.

The government has allowed the office of the director-general (safeguards) in the finance ministry to consider complaints. The industry has done so, arguing such import is hurting genuine bullion dealers and jewellers.

India Bullion and Jewellers Association has stated that in their global meet in Goa last weekend, it was disclosed that since July 1, when the goods and services tax (GST) took effect, about 10 tonnes of gold coins and articles (about a fifth of the normal monthly import) had come in, disrupting the regular market, “which is already reeling under the pressure of parallel trade. It is proposed that for gold and gold articles, a GST cess be levied, partly by reducing basic customs duty in such a manner that the net tax impact becomes equivalent for goods imported into the country both from non-FTA and FTA countries”.