TIOL - COB( WEB) - 511
JULY 28, 2016

By Shailendra Kumar, Editor

EVER since India faced serious Current Account Deficit (CAD), and the import duty on gold was hiked to 10% in 2013, gold has not moved out of the 'precious' basket of commodities which generally make regular front-page headlines. Now, the Prime Minister wants the Indian Gems & Jewellery Industry to consolidate its global presence. But, the industry in turn wants lowering of the Customs duty to halt the latest trend of shifting of business to the neighbouring countries. Even as a tug-of-war continues between the Government and the Industry which wants a long-term gold policy, a separate Ministry and an independent Jewellery University, the yellow metal continues to produce 'yellow fever' for criminal syndicates and their moneyed financiers in India for giving a push to its smuggling. Accelerated smuggling means more seizures but that does not seem to be a good news for the Customs which is stuck with huge piles of seized valuable items but no disposal for various reasons. No disposal strangely means heightened index of temptation to steal or to conspire to substitute the sealed items by cheap imitations or to fall victim to 'milkar churana' syndrome!!

Organised heist of precious items from Customs vaults is not an isolated event. It happened in Chennai Customs in 2007 when a Preventive Officer had replaced diamonds worth Rs 45 lakh with zirconium (American diamonds). Another similar tale of missing diamonds was reported from Chennai Customs last year in which diamonds worth Rs 2.5 Crore was substituted in the strong room of the Custom House at Rajaji Salai. It was followed by the incident of 30 kg gold bars missing from the Trichy Customs custody. And the latest one is 57 kg of missing gold from 32 of 36 sealed packets inspected by a team of officers at Delhi Custom House. And this is sequel to what was detected as missing 23 kg gold in November 2013 in Delhi Customs.

With no let up in domestic gold demand of about 900 tonnes annually, the share of smuggled gold has also gone up. And it can be inferred from the growing graph of seized gold. Mumbai Airport Customs alone had seized more than 1000 kg in 2014 and 2015. If one takes into account the seizures of all the airports, the DRI and also some old stocks lying in Customs vaults across the country, a conservative estimate may put the figure at above Rs 3000 Crore worth of gold. With so much of precious metals in vaults, how can one believe that the senior Customs officials would be so casual about safeguarding the Exchequer's interests? With more than 10 kg seized gold pouring into the Customs vaults every day, can it be believed that the CBEC bosses did not have time to spare any thought to its safe upkeep and updation of procedures? They did think about it and the same can be inferred from the Customs Draft Disposal Manual 2013. Even as the Draft remains the Draft, the CBEC issued a detailed Instruction in December 2015. That is another matter that when the entire world has got accustomed to the CCTV technology, the CBEC now wants installation of CCTV in strong rooms at all Custom Houses.

Anyway, what is noticeable here between the Trichy and Delhi Customs cases is the time taken to hand over the case to the CBI. As soon as missing gold was detected in the Trichy case, senior officers did not waste time to refer the case to the CBI - this is as per the CVC Manual. But the same was not followed in the case of Delhi Customs. The first detection was reported in November, 2013 but the senior officers took more than 5-6 months to file an FIR. Why? What sort of internal investigation was done for five months? And what could have stopped them from such internal probe even if they could have registered the FIR with the police? And, why was this case not handed over to the CBI if they suspected the involvement of some private persons along with their own officers? Why should any Commissionerate lose five months writing letters to the Board or the Directorate of Vigilance rather than quickly getting down to the brass tacks! This sort of lapse cannot be expected from the Customs which is any day a much superior investigating department than the police? Worse, merely reporting the case to the Delhi Police without any list of custodians in the past decades was of no help to anybody? And, what is more shocking is that the Delhi Customs did not act quickly even after the CVC held a meeting with the senior officers and guided them to wrap up the initial probe. Even the Union Finance Minister had asked for fixing of accountability in July, 2015.

After one year of what FM called for, in place of fixing accountability of officers the FM was last week intimated about another heist of 57 kg gold. It sounds so strange! This is more so when the Zonal Member has been insisting on handling over the case to the CBI. And even the Directorate of Vigilance has been in favour of investigation by an independent agency. Now, that the FM has ordered the handing over the case to the CBI, a major loss of evidence for the CBI would be effacement of forensic evidence like fingerprints on sealed packets. Another major challenge would be to zero in on possible accused from a large list of officers who held the charge in the past two decades. Many of them must have retired also. It basically means that many good officers who must have done their job honestly are also going to be questioned for the systemic fault and poor transfer policy favouring only the blue-eyed boys of senior officers who can be posted in the Customs. There is no fair policy so far as the posting of Inspectors, Superintendents and AC/DCs goes. Customs is generally for the ones good at protocol or those who can pull some powerful strings. 'Poor' merit is not even second benchmark in the list of qualifications!!

Against such a stark ground reality, the Board's instruction to post only officers with integrity and proven track records as custodians loses its meaning. In other words, no credentials are examined before appointing one as the custodian of the strong room. Secondly, when such blue-eyed are given highly sensitive charge, and another blue-eyed of a different senior officer comes to assume that charge, there are slimmer chances of extensive stock taking and verification of several registers. This is more so when the officers are directed to be relieved immediately. In such a case how feasible is it for any new officer taking charge to physically verify each sealed packet gathering dust for more than three decades in case of many Custom Houses.

What CBI would finally find is going to be a different story but the million-dollar question is - why is CBEC in general so casual about the disposal of seized valuables and perishable goods? Is it merely because all such items are case property of the court, and they are to be handed over to the actual owner if they win the case? This is where a mega reform is called for. Notwithstanding a brilliant and exhaustive Draft Disposal Manual and the latest Board's Instruction, why should the Customs waste so much of time, energy and resources on safe upkeep of such items? Such is certainly not the primary skill of the Customs! Customs should focus on its twin responsibilities - facilitation of the trade and enforcement of the Customs provisions. A simple solution needs to be found for the activities like disposal and upkeep of seized goods.

In the first place, why to keep seized valuable goods which are freely marketable unlike the firearms and narcotics, in Customs strong rooms for decades? Upkeep not only costs the Exchequer but also results in losses for the Government if they are stolen. A simple solution for gold disposal today can be that the right in the beginning when the seized gold is produced in the court, the sanction of the Magistrate should be taken to deposit the seized gold under the Gold Monetisation Scheme which would not only earn interest for the real owner but also save the Customs from the hassles of upkeep. To top it all, such gold lying unused in the Customs vaults would be back in circulation to help the Gems & Jewellery sector in its exports efforts and also save forex for the economy. Whatever needs to be done should be done including amending the Customs Rules and make it mandatory for the gold owners to give their consent to the Government to deposit the same under the GMS. This is one scheme which also promises gold with extra 1% since the actual owner would want to have his gold back after winning the case.

Till the time any policy decision is taken by the Govt, the CBEC should demand more accountability from its senior officers who sit in the same Custom House but take 5 to 6 months to react to a serious event like a heist from their own basement. Such a time gap in reacting to such negligence or connivance or criminal conspiracy does not keep them out of the radar of suspicion of extending patronage to the suspects. Apart from speeding up the disposal of goods, the new Instruction framed by the Board should be implemented with alacrity and the Member (Customs) should personally monitor the same which has not happened in the present case despite being only a few kilometers away from the Delhi Custom House. Let's also hope that the Revenue Secretary and the Finance Minister also pay a little extra attention to the disposal issue as this promises a good sum to the revenue kitty if auctions are done expeditiously and goods are not allowed to perish or deteriorate. After all, it is public money and let's have more respect for the same! And it can happen only if some heads are made to roll and the culprits are put behind the bar.