DRI busts smuggling racket, seizes goods worth Rs 18 crore

The Directorate of Revenue Intelligence (DRI) has seized Rs 18-crore worth of branded footwear, clothes and other items and arrested four people who were allegedly involved in the smuggling of goods from China and Hong Kong using shell companies.
The DRI said in a statement today that the smuggling racket was being run in connivance with Custom House Agents.
The items were illegally brought in from Hong Kong and China through the Kolkata port by fudging the description, quantity and value of the goods, and thereby evading a heavy custom duty, it said.
"The fraud literally amounts to outright smuggling of consumer goods in commercial quantities concealed in containers... As a part of a systematic racket," the DRI said.

The four arrested were part of the shell companies.
The worth of the goods would be 80-100 times more than what was declared by the shell companies if the value declared before customs was compared with the market value of the goods, it said.

As a part of the DRI's operation, four consignments from China and Hong Kong for a Kolkata-based firm were intercepted and examined.
While such miscellaneous items as hair clip, lights, unbranded footwear and unbranded baby garments were declared in the documents filed before the custom authorities, a whole array of articles -- from ladies' undergarments to branded shoes and massage chairs -- were wrongly declared, it said.

"The total market value of these goods has been estimated to be around Rs 18 crore," it said.
The cartel involved used a unique method. The actual importer used a Kolkata-based shell company with a valid Import Export Code (IEC) issued by the Directorate General of Foreign Trade (DGFT).
The shell company's directors in connivance with others forming a part of the syndicate would allow the IEC to be misused for a hefty consideration without going into the nitty gritty of the imports.
The IEC holders in such cases are usually proprietorship or partnership firms, which do not require a registration from the Registrar of Companies.

In such rackets, some people even run a brokering business between actual importers and IEC holders.
To top it, there are also customs brokers who clear the consignment on behalf of such defunct IEC holders, turning a blind eye to the law. They ignore such necessities as the Know Your Customer (KYC) norms that are required for verifying the bona-fides of the IEC firms.
Thus, the cartel runs the whole job of importing mis- declared goods, getting them cleared without much effort, dupe the government and evade a huge amount of custom duty, the DRI said.