* Head at exporting company in Cochin arrested-official
* 10.5 kg of gold was being smuggled out of tax-free
* Arrest is second known example of exporters smuggling gold
By A. Ananthalakshmi
SINGAPORE, Aug 14 An Indian gold-exporting
company has been raided over suspicions it was trying to smuggle
gold out of a special economic zone, in a sign of a crackdown on
the practice in the world's second-biggest bullion consumer.
The managing director of jeweller, Ashwin Gold, was arrested
last week after the firm allegedly trying to smuggle 10.5 kg of
gold meant for export into the domestic market, said Safeena AN,
development commissioner of the Cochin special economic zone
(SEZ), where the company's office is located.
"Based on intelligence that customs officials received we
raided the company's office," Safeena said. "The bill of entry
for imports was recorded in the ledger. But they were trying to
move the gold out without any proper intimation to us."
The gold was being moved out of the SEZ in a car, she said.
The contact number listed for Ashwin Gold on the Cochin SEZ
website was unreachable, while customs officials declined
India - whose demand for gold is only exceeded by China -
last year imposed a record 10 percent import duty and made it
mandatory to export a fifth of all bullion imports, seeking to
curb bullion demand that has blown out the trade deficit.
With the lure of big profits from avoiding duty, smugglers
have come up with innovative ways to bring in gold ranging from
swallowing nuggets to hiding bars in dead cows.
Smuggling by exporters appears to reveal a more
sophisticated scam to get gold into the local market.
The first arrest of an exporter trying to divert gold into
the local market was made in June in the Surat SEZ, Reuters
An official at the exporting company was caught with 25 gold
bars as his car was leaving the tax-free zone.
Government authorities are aware of such practices and have
been increasing scrutiny sources have said.
But Indian authorities are struggling to hold back the tide
of smuggled gold.
The World Gold Council estimated on Thursday that about 200
tonnes of gold could be smuggled into India this year due to the
restrictions, which are likely to persist till the first quarter
(Editing by Ed Davies)