THIRUVANANTHAPURAM: The Directorate of Revenue Intelligence (DRI) is investigating a major racket involving import of large quantities of readymade garments originally from China to India through the Karipur Airport by circumventing a rigid import tax barrier meant to protect the domestic garment industry from the inflow of cheap foreign goods.

The Central Government has fixed "a per piece duty rate" for imported ready-made garments, a large quantity of which comes into India from China through Thailand. A suit imported thus will attract a duty of Rs.1,100 and an undergarment around Rs.25, as per the current tariff structure. The stiff tariff barrier also applies to cotton trousers and ladies tops, the mainstay of the domestic garment industry in Tirupur in Tamil Nadu and Kannur in Kerala. However, the import duty on baby garments and pyjamas is much less and chargeable on a percentage rate.

Last month, the DRI found that Chinese readymade garments imported through the Karipur Airport are being charged lesser duty, with importers declaring most of their consignments wrongly as "baby garments." Certain Customs officials are also being investigated in connection with the racket.

The racket came to light when the DRI noticed that Chinese garments from Bangkok were a major item of import at the Karipur Airport. However, the consignments were then found to be booked on flights to Mumbai, Chennai and New Delhi after Customs clearance at the Karipur airport.

In mid-April, the DRI inspected certain clothing consignments cleared by the Customs officials at the Karipur Air Cargo complex. The DRI officials found that the importers had paid only nominal Customs duty for the consignments which contained a large quantity of readymade garments that attracted the "per piece duty rate."

The DRI served demand notices to five importers asking them to pay the actual duty that was around 40 times more than what was fixed by the Customs officials. The agency found that 1,000 such consignments of garments had been imported through the Karipur Airport in the past one year alone.

The DRI, which has estimated a loss of Rs.10 crores to the exchequer, is currently checking the past records of clearance at the airport.

Following the DRI investigation, 40 consignments weighing nearly 30 tonnes began to pile up at the Karipur Airport for nearly three weeks. A bulk of the consignments have now been cleared under DRI supervision by the importers who were made to pay nearly Rs.1crore as duty.

The DRI suspects that certain big businessmen based in Mumbai, Delhi and Chennai are behind the racket.The imports were made by firms floated in the name of locals who had no investment in the business.

The DRI suspects that their role was limited to just "facilitating" the Customs clearance of the goods.

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