On Friday evening, gold was quoting at around $1,654 an ounce in international markets.
In Mumbai, the yellow metal is going at a discount of $7-10 per ounce while in Ahmedabad it is $7.
Increase in gold import duty to 15 per cent in July and the sharp fall in the value of the rupee against the dollar have kept gold prices comparatively elevated in the Indian market.
Estimates show such disguised imports of gold to have increased to 22 tonnes in just a month.
These imports, yet not declared illegal, are cleared only at the Delhi Customs House.
Some bullion importers have found a big haul in an ambiguous rule on imports of platinum alloys. Apart from platinum, the other metal in the alloy is gold.
The issue is that gold attracts 15 per cent import duty and platinum 10.75 per cent. Hence the duty on platinum alloys will also be 10.75 per cent. This means gold is imported at a duty lower by 4.25 percentage points and in the past one month, imports of yellow metal as platinum alloys have resulted in a Rs 450-crore revenue loss.
This is a case of mis-declaration and duty violation, say industry observers. Some complaints have been made to the director general of foreign trade, who referred the matter to the revenue department.
No clarification has come in stopping such imports.
Three persons from different segments of the gold eco-system told Business Standard gold was entering India in large quantities and sold at a price lower than the gold on which normal duty was paid, resulting in open market prices quoting at a discount of $7-10 per ounce. “This practice has impacted the morals of dealers and refineries dealing in gold sourced at international moral standards,” a refiner said.
The modus operandi of importers is changing. The initial import was a few hundred kilos to test the practice and later the quantity increased with virtually a tonne of gold imported as alloy per day currently. The content of platinum was 4 per cent initially and is now 6 per cent, and the rest is gold.
A source tracking imports of gold said: “Import through banks is confined to import by exporters who need gold approved by the London Bullion Market Association, and is required for lending under metal loans. Imports of even dore or unrefined gold have reduced significantly because refiners pay import duty lower by 0.65 percentage points. But gold imported as platinum alloys attract a 4.25 percentage point lower import duty and local refiners can use this alloy to refine and make gold bars.”
A leading analyst said the only option now was to make the import duty on the platinum alloy the same as the one that is higher among the rates applicable to metals forming the alloy.
A refiner stated “as per the notification of September 2021, gold in any form when its purity is 22 carat or higher can’t be imported by anyone other than the notified agencies. However, this seems to have missed the attention of the customs department”.