Indian SEZs Seen Illegally Diverting Imported Gold

SEATTLE (Scrap Monster): The jewellery manufacturing units operating in gold special economic zones (SEZs) are allegedly involved in the act of diverting imported gold into domestic markets. This is deemed illegal, as the very purpose of units operating within the SEZ is value addition of imported gold and diamonds and exporting them back.

In accordance with SEZ act, the SEZs are outside the customs jurisdiction. The customs official in SEZ does not have the right to verify the transactions taking place within them. The consignments could be inspected only with the prior approval of the Central Government of India. Consequently, the units operating within the SEZs take advantage of the crippled inspection mechanism and deliver the imported gold into domestic market. Also, the units were found exporting ‘fake’ jewellery.

Recently all units operating at the Hyderabad Gems SEZ, Raviryala were closed following a raid by the Directorate of Revenue Intelligence (DRI) sleuths. The raids exposed illegal trade practices including diversion of major proportion of the imported gold into domestic market and use of semiprecious stones and low-grade gold in exported jewellery.

Henceforth, it will ensure that consignments in new units of gold and diamond SEZs will be checked, said DRI statement.

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