i)

Customs Department would route sale of confiscated etc. gold found ripe for disposal through State bank of India (Bank) who will act essentially as consignee agents. Such confiscated etc. gold considered ripe for disposal would be delivered by the concerned Custom House to the Bank at the various major center(s), Viz. Mumbai, New Delhi, Calcutta, Chennai, Ahmedabad for sale in the open market.

ii)

Such gold would, as far as possible, be in an easily marketable form such as TT bars, 1 Kg. bars, 500/100 gms. Bars etc. Crude gold/jewellery will be converted by Customs Department to .999/.995 purity before delivery to the bank for sale;

iii)

The Bank and the Customs Department would nominate Nodal Officers at the various centers. To begin with, the Commissioners of Customs at various centers would interact with              Mr. R.K. Garg, Deputy General Manager, Gold Banking Department, Corporate Centre, Mumbai. The Bank would advise the Names, Designation, Telephone Nos. etc. of the Nodal officers at the various centers in due course;

iv)

The sale price of gold would be based on prevailing international prices/local market prices, fineness and type of gold being sold. [The pricing of gold would be worked out by the Bank taking due note of the Methodology/guidelines as per enclosed Annexure I.]

v)

The Bank will decide at which center the gold is to be sold based on various cost/other factors. The Bank will use its discretion/market knowledge to get the benefit of “best” possible price to the Customs. However, as gold prices can fluctuate substantially even during the course of a day this factor has to be borne in mind. Customs Department will not have any on-line system of exchange of information on fixation of prices the Bank will exercise its discretion/judgement on (a) when to sell (b) at which price for sell.

The floor price for sale would however, be tentatively reserved at the previous day’s closing Bullion Merchant Association Price at the concerned center less 1% (one percent). The above arrangement would be reviewed as and when necessary through mutual discussions;

vi)

No commission would be levied by the Bank on the Customs Department. However, all out of pocket expenses incurred by the Bank  would be deductible from the sale proceeds. The methodology for working this out will be advised to the Customs Department;

vii)

The Bank would arrange for payment of taxes such as Sales Tax, Octroi etc. out of the sale proceeds of the gold and would submit copies thereof to the concerned Commissioner of Customs alongwith the advise/challan for remittance of sales proceeds. The sale proceeds will be deposited immediately after sale of gold into the designated accounts to be advised by the Commissioner of Customs.

viii)

The concerned Custom House would provide copies of the Assaying Certificate alongwith the physical delivery of gold. Customs would assume responsibility for the fineness as certified in the Assaying Certificate. In the event of any gold being found counterfeit the same will be returned to the Commissioner of Customs concerned. The department would also ensure that the gold is suitably packaged as per practice in the market. The Bank would render necessary assistance to Customs Department.

ix)

The Bank would take physical delivery of the gold from the customs warehouse/offices against a suitable acknowledgement. The control systems/mechanisms for this purpose will be worked out by the Bank and advised to Customs Department.

x)

The Bank would also explore scope for marketability of coins. The price of such coins would be based on the actual gold content only.

2.

Board desires that all Custom Houses should take urgent steps for disposal of the gold in their jurisdiction through State Bank of India as per the above guidelines.

Encl: As above.

ANNEXURE I

International Gold Price based on going market

(A) USD----------

Add  CIP Premium (as applicable in the market depending upon the type of bars, quantity etc.

(B) USD----------

Sub Total

(C)

Converted at prevailing USD/INR exchange rate @

(D) Rs.

Add Customs Duty as applicable

(E) Rs.

Add  Local Taxes as applicable (Sales Tax, Octroi, Turnover Tax etc.) at the center

(F) Rs.

Sub Total

(G) Rs.

Less costs incurred by Bank

(H) Rs.

Net payable to Customs Department

(I)   Rs.

i)

The above method will be applicable for London Good Delivery Gold Bars in the form of TT Bars/1 kilo bars/500 gm. bars.

ii)

Bars/coins of other denomination which will have relatively lower marketability would be priced lower.

iii)

India Government Mint (IGM) certified  bars of 0.995 purity will be priced at a fraction of 995/999 of the international price and also taking into account the local market price of such gold.

iv)

While  every effort would be made to recover  the CIP premium  from the buyer the success thereof will depend on the market factors as some buyers may not be willing to pay the  CIP premium  as the same cost has not been incurred.

v)

The above methodology would not apply for coins, broken pieces/jewellery etc. even if they are of  0.999 fineness.

vi)

The above methodology would be applicable for bulk sales and not for retail sales.