Navi Mumbai: The state excise department busted an illicit racket of imported ethanol misdeclared as lab chemicals evading customs levies and state taxes and seized 28,000 litres of pure potable ethyl alcohol from Nhava Sheva Container Freight Station (CFS) on Monday night.

The seizure of 56,000 bottles of ethanol by the state excise department from Sea Bird CFS is a major embarrassment for the customs officials posted at Jawaharlal Nehru Customs House (JNCH) clearing the illicit consignment.

The importer K Raj and Co was in September booked by the Customs Rummaging and Intelligence Cell for smuggling undenatured ethanol with 99.9% purity imported from China in 500 ml packaging misdeclared as lab chemicals to evade 150% customs levies on potable ethanol used in pharmaceutical and distilleries. “The 99.9% purity ethanol consignment imported from China was being diverted to major Pharma companies and Distilleries causing major revenue loss to the Customs kitty and the state excise amounting to Rs 40 crore every month,” confirmed a senior state excise official.

The state excise lost about Rs 200 per litre of the imported ethanol cleared by the customs as lab chemicals. The brazen smuggling of potable ethanol and diverting them to pharma companies, beverages and distilleries by the same set of importers has raised eyebrows on the working of customs officials at JNCH, Nhava Sheva clearing the illicit consignment without payment of appropriate customs levies.

Earlier in July 2022 the Customs had issued Show Cause Notices to the Nariman Point-based K Raj and Co for duty evasion and fined Rs 34 crores for misdeclaring imported ethyl alcohol as lab chemicals availing lower customs tariff and state excise levies. Importer K Raj and Co proprieter Manohar Lal Tolani refused to comment on the seizure by the state excise department and the earlier penalties imposed by the customs for smuggling ethanol.

The sale, purchase, storage, transport and distribution of any alcohol is prohibited by the state excise department without valid license and certificates which the importers circumvented by declaring the imported the potable ethyl alcohol in smaller packaging of 500 ml as lab chemicals.