Economy

Smuggling of foreign cigarette brands on the rise

Shishir Sinha New Delhi | Updated on January 24, 2018

cigarettes

cigerettes

Seizure during April-July more than double of FY 2014; higher import duty prime cause

There is an alarming rise in smuggling of foreign brand cigarettes, if seizure data from April 1 till date is any indication.

Seizures during the first four months of this fiscal are already more than double that in whole of FY 2013-14.

According to information compiled by the Finance Ministry, total seizures during the current fiscal (April 1 till date) stood at 5.58 crore sticks of foreign branded cigarettes.

For 2012-13, 2013-14 and 2014-15, the numbers stood at 5.18 crore, 2.64 crore and 11.43 crore, respectively.

Officials admitted that “there appears to be a spurt in the smuggling of foreign brand cigarettes”.

The rise in smuggling is largely being attributed to higher import duty, which currently averages about 90 per cent.

Current rate

This is even as this year’s Budget prescribed an increase in the specific rate of Central excise in the range of 17-29 per cent, subject to the length of the cigarette stick.

“There will certainly be a price differential, as there will be no duty on items brought in illegally. But this is not ‘the’ reason for smuggling,” an official said.

He said though cigarettes can be imported under the ‘Open General Licence’ (where importers do not have to fulfil any export obligation after paying duty), the conditions attached to the permit are not easy to fulfil.

“There should be a pictorial warning on each pack, same as required by domestic manufacturers. Then, the price should be printed in Indian currency. After this, an imported consignment faces high duty and countervailing duty, which makes it uncompetitive against domestically manufactured cigarettes,” he said, adding that this opens the way for smuggling.

Foreign cigarette brands are mainly being smuggled from China, Myanmar, Nepal, Bangladesh, Indonesia and Pakistan. Brands such as Gudang Garam, Luvin Fresh or Djarum Black are popular among the youth, prompting people to smuggle these.

Recently, Customs officials found some of these brands in the domestic market with the local price printed on the packs.

Later, they realised that these prices were not printed after legal imports but after smuggling, to pass these off as legal.

Frequent checks

Another official said that while porous borders on both road and sea routes make smuggling easier, the method of checking of very few bigger consignments having paper, plastic or wooden items also encourages smuggling.

He said the customs field formations, along with the Directorate of Revenue Intelligence, have been sensitised and asked to carry thorough checks of containers more randomly, even on very small intelligence information.

Published on July 29, 2015

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