The Enforcement Directorate (ED) on Wednesday said that it has carried out searches at eight premises of human hair merchants and exporters in Hyderabad and Andhra Pradesh’s West Godavari district in connection with a FEMA violation case.
An ED official said that the financial probe agency, during its money laundering probe against Chinese online betting apps, found that hawala payments to the tune of Rs 16 crore were paid to human hair merchants. The ED then took up the Foreign Exchange Management Act (FEMA) case against the hair merchants based in Telangana and Andhra Pradesh, and it was found that many domestic merchants were aggregating and selling the raw hair to foreign merchants based in Hyderabad, Guwahati, and Kolkata.
“This hair is smuggled out of India via road via points at Moreh in Manipur, Zokhawthar and Aizawl in Mizoram etc, to Mandalay in Myanmar,” he said, adding that the smuggled hair was then sent to China, where it was labelled domestic and processed.
Chinese traders were, thus, able to avoid import duty of 28 per cent and also earn 8 per cent export incentives at the time of export by claiming smuggled Indian hair as Chinese hair, the official said.
The official said that many Indian exporters are also suspected to be under-valuing the exported human hair in terms of value/quality to evade import duties in the recipient country.
During the searches, the ED seized 12 mobile phones, three laptops, one computer, hand written diaries, rough account books and loose sheets containing incriminating information. It also recovered unaccounted cash of Rs 2.90 crore from the possession of the hair merchants.
“These exporters and merchants could not explain the source of above cash found at their premises,” the official said.
The official also said that it was also found that two Hyderabad-based merchants had received Rs 3.38 crore for domestic sale to northeast-based merchants through illegal Chinese app — Linkyun Technology Private Ltd and Dokypay Technology Private Ltd — company’s Paytm accounts.
The official said that during the probe, it was also noticed that few Myanmar citizens are permanently stationed in Hyderabad, and are purchasing human hair locally and then exporting it to Myanmar by using the IEC code of Indian persons or entities at under-valued prices. The difference amount is settled either locally or through hawala channels.
The ED is analysing the purchase and sale or export prices and quality, the official said, adding it was, prima facie, suspected that human hair exported to Myanmar, Bangladesh, Vietnam, Austria etc is under-invoiced.