It has been found that the Indian traders are getting hands on the comprehensive economic agreement (CEA) with South Korea for the illegal track of gold to devoid import duties applicable for getting bullion in the country. As mentioned in the agreement, all the gold imported from the countries listed in the agreement do not comes under the taxable part which in turn gives the traders to try unhealthy ways to import the bullion. As the goods and services tax is applicable to stringent conditions, the traders found some new ways to trick out the new GST out of their way.
The South Korean comprehensive economic agreement has the companies established in South Korea which is in the direct trading with Indian companies for transacting in Gold business. And the Indian companies which are importing gold through these South Korean companies are getting their gold from countries like Dubai, Thailand and Indonesia at a much cheaper rate. It is to be noted that the gold imported is being processed into medallions, jewellery and coins to give them a new shape for trespassing.
All these gold items are then exported to India at zero duty according to the terms and condition of CEA. By the time, the gold is pushed into the market, and all this gold is been melted by the Indian merchants and is been sold as Bullion. The fact which should be considered is that the bullion sold also draws 10% import duty which is totally against the terms and condition of the agreement while it is also included in the agreement that no change in the form of the gold should be done.
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Rajesh Khosla, president of the Association of Gold Refineries and Mints (AGRM), stated that “The free trade and comprehensive economic agreements are being misused by some of the traders here, What’s being discussed in trade circles is that to avoid the 10% normal customs duty on bullion, these Indian entities who have offices in Dubai are exporting bullion to South Korea where they set up shop recently. They convert these bars into articles of gold in South Korea and export the same here to themselves at zero import duty under the CEA. These articles are recast into gold bars and sold with the 10% duty locally, giving them a clear advantage over other domestic importers and distorting the market.”
Now the matter has been taken down by authority and the designated department has launched a probe into the alleged complaints coming out of sources pertaining to the misuse of comprehensive economic agreement terms and conditions. The government will be checking all the transaction details and importing list to confirm the Complaints received by the government authority. Recently the government also announced a circular in which it has been asked all the gold importers to furnish the imported details regarding the manufacturers in South Korea and all the inputs preferred by the manufacturers, this will take initiative to check the misuse of importing guidelines of CEA.
Apart from this, there are chances of more strict actions to be taken by the government against the gold importers. In this regard, the Indian Bullion and Jewellers Association also requested the government authority to completely ban the jewellery imports along with medallions and gold coins through the countries to which the Indian government has made a comprehensive economic agreement based on the free trade. The request has been made to dig out any illegal or misusing of gold importing terms and conditions.
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It has been heard from the sources that there is a cycle which is operating underneath to flush out all the import duties being mentioned in the agreement. As according to the sources, it is stated that the coins and medallions which are of 22 carats are firstly exported to the companies in Dubai where they are molded into the bars after which these bars are then sent to the South Korea where they are processed into the coins and medallions after which they are finally exported to the India back, saving the duty according to the agreement.
In this process, the traders again melt this articles into the bars and sell them into the market with added 10% import duty making large profits to the importers. It is learnt that according to the government circular which demands exporting ban on all the gold items including gold coins medallions and jewellery higher than 22 carats will make a certain impact on the misuse of gold items coming into the agreement.
