New Delhi, Feb 28 : Even as the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) are tightening the noose around the coal mafias and the cattle smugglers in West Bengal, the Central Customs department has found another smuggling racket of undervaluing the value of the export of the raw human hair from India to other countries and then "smuggling" it to China via land route, officials said.
After identifying the new modus operandi of the undervaluation of the raw human hair variety, which is also called goli or thutti or choti the Customs department has alerted the officials of the multiple agencies including Goods and Services Tax (GST), Directorate of Revenue Intelligence (DRI) and Airport Authorities across India.
In a note to multiple agencies, the Customs department explained the modus operandi of "the export of raw hair variety by undervaluing the price by exporters.
According to senior Customs officials, the department worked on the leads it received and during its investigation it was found that few exporters "decreased" the value of export consignments of raw human hair to Myanmar, Bangladesh and Vietnam as compared to their actual value.
The Customs department said that the modus-operandi of deflating procurement of export quality raw human hair was adopted by traders primarily in West Bengal and Telangana.
The officials of the Custom department further said the exporters sent the consignments of raw human hair variety to three countries by undervaluing the value more than hundred times of its original price.
The official related to the inquiry said that multiple teams of Customs department were formed and during surprise survey in several districts of West Bengal it was found the same raw human hair was being sold between Rs 3,000 per kg to Rs 6,000 per kg while the export bills were undervalued as less than Rs 100 per kilogram.
Meanwhile, a senior Custom official related to the development said that there were two-fold objectives of undervaluation of raw human hair.
He said one objective was for under-reporting foreign exchange to escape Foreign Exchange Management Act (FEMA) compliance and income tax generation in India while another was to smuggle Indian-origin human hair to China. He explained that land routes were identified to escape close to 28 per cent Chinese import duty on raw human hair.
The official said that there are two types of hair collected in India -- Remy hair (the highest grade of human hair, a preferred choice for hairpieces and wigs because it creates a natural look) collected from temples where pilgrims tonsure their hair as part of a religious vow and non-Remy hair - household waste collected by gypsy groups or nomads from villages, who sell it to dealers in hair, who in turn sell it to hair export firms. The latter process it, make it reusable and export it to the West, where it is used to make wigs and hairpieces. Several lakhs of people work in the collection, stocking, and processing of hair.
The official said that price of Remy and non-Remy hair depends mainly on the length and strength of the hair.
The official said that human hair export from India is a business worth crores and India is a key player in the global beauty industry. Even China mixes Indian hair to increase the quality of hair it sells after processing.
According to officials, hair export market in India is worth Rs 70 million approximately at the moment.
According to Customs department officials, in the last 10 years, human hair running in thousand crores has been smuggled out of India through undervaluation of invoices, causing losses worth crores in taxes and job losses.
Looking at the rampart export of the raw human hair, in 2019, the commerce ministry has asked the Central Board of Indirect Taxes and Customs as well as the anti-smuggling unit to take appropriate action. The government had also weighed in the exporters' proposal to restrict the export of raw hair to ease supplies for them.
The Customs department has asked other agencies to verify documents against shipping bills to check under-invoicing of hair consignments.
(Anand Singh can be contacted at firstname.lastname@example.org)