Human hair: ED unearths Rs 16 cr hawala payments in TS, AP
The Foreign Exchange Management Act (FEMA) investigation was initiated against the hair merchants based in Telangana and Andhra Pradesh.
Hyderabad: The Enforcement Directorate (ED) has found that hawala payments to the tune of Rs. 16 crore were made to human hair merchants during the money laundering investigation conducted by it against Chinese online betting applications.
Consequently, the Foreign Exchange Management Act (FEMA) investigation was initiated against the hair merchants based in Telangana and Andhra Pradesh. The ED carried out a search operation in eight premises of human hair merchants/exporters in Hyderabad and in West Godavari district in AP.
During the FEMA investigation, it was found that many domestic merchants were aggregating and selling the raw hair to foreign merchants based in Hyderabad, Guwahati and Kolkata. These hair were smuggled out of India via road through Moreh in Manipur, Zokhawthar and Aizawl in Mizoram to Mandalay in Myanmar, according to an ED press release.
Ultimately, it finds its way to China, where these were labeled as domestic Chinese hair and processed. The Chinese traders thus avoid import duty of 28 per cent at the time of import and also earn eight per cent export incentives at the time of export, by claiming smuggled Indian hair as Chinese hair.
Many Indian exporters are also suspected to be under-valuing the exported human hair in value and quality to evade import duties in the recipient country.
During the search operation, the ED seized 12 mobile phones, three laptops, a computer, hand written dairies, kacha account books and loose sheets containing incriminating information. Total unaccounted cash of Rs 2.90 crore was also seized from the possession of the hair merchants.
These exporters and merchants could not explain the source of the cash found in their premises. Further, it was also found that two Hyderabad-based merchants had received Rs.3.38 crore for domestic sale to North-east merchants through illegal Chinese App { M/s Linkyun Technology Private Limited & M/s Dokypay Technology Private Limited } Company’s Paytm Accounts, the press release said.
It was also noticed that a few Myanmar Citizens are permanently stationed in Hyderabad, and were purchasing human hair locally and then exporting it to Myanmar by using the IEC code of Indian persons at under-valued prices. The difference amount was settled either locally or through hawala channels.
The ED is analyzing the purchase and sale/export prices and quality. Prima facie it was suspected that human hair exported to Myanmar, Bangladesh, Vietnam and Austria were under-invoiced. Evidences have further revealed that some entities have been receiving payments against sale of human hair in the bank account of their employees and subsequently cash was withdrawn and handed over to their owners.
Most exporters were not maintaining proper books of accounts and were also evading Income Tax liabilities.
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