The Directorate of Revenue Intelligence (DRI), Mumbai, arrested a Dubai-based Indian jeweller on Thursday for allegedly evading Customs duty amounting to Rs seven crore.
The accused, Kishor Dhakan, had in February 2009 sent jewellery worth more than Rs 100 crore from Dubai to two jewellers operating in a special economic zone (SEZ) in Noida, for processing.
Jewellery imported by jewellers in SEZs is exempt from duty. However, they have to re-export it after processing and cannot sell it in the local market.
In this case, instead of re-exporting the jewellery Dhakan sent, the jewellers sold it to retailers in India, mostly in Mumbai. A top jeweller in Mumbai, who has a tie-up with a known Dubai jewellery brand, bought a part of the consignment.
According to the DRI, to fulfill the condition of re-export, the SEZ jewellers sent scrap back to Dubai showing it as processed jewellery. The DRI got a whiff of the racket and conducted raids last year, and seized the jewellery from the retailers in Mumbai.
A DRI official said the agency believes Dhakan was a part of the racket because the scrap was sent to him. "However, we could not question him because he was based in Dubai and wasn't coming here," a senior DRI official said.
The DRI issued a look-out notice for Dhakan at all the airports of the country. Immigration authorities at Lucknow airport picked him on August 8 when he arrived from Dubai. They informed DRI officials in Mumbai, who asked Dhakan to visit them on August 9. He was arrested on Thursday.
On Friday, Dhakan applied for bail in a local metropolitan magistrate's court, which reserved the order until Monday and sent him to judicial custody.
Advocate Rizwan Merchant, who is representing Dhakan, told Hindustan Times that his client was not responsible for duty evasion because it was the responsibility of the two jewellers who received the jewellery and diverted it to the local market.
Merchant said the DRI has already recovered duty of Rs 7 crore from the retailers, who had bought the jewellery from the jewellers.