Local and national press in India reports that four individuals – including the general manager of the duty free shop at Hyderabad's Rajiv Gandhi International Airport (RGIA) – were arrested last week in connection with

the alleged smuggling of duty free liquor with intent to sell the goods on to buyers in the Indian domestic market.

An Economic Offence Court apparently heard that the individuals would collect the names and numbers on foreign passports and then fabricate shop receipts to make it look as if these individuals had bought the goods within their allowances – and duty free liquor in particular.

It is alleged that the equivalent number of bottles and other items – for which there were allegedly falsified receipts – would then be smuggled out of the airport for onward sale in the downtown domestic market.

Various press reports suggest that a truck load of goods was seized in one raid on the home of one duty free shop employee, while others point to other seizures related to the same group of individuals at other locations and times.

Those arrested were named as Mr C. Venkateswara Rao, Mr Koteswara Rao; Mr Chandrasekhar; and Mr Chakravarthy and the authorities are said to be continuing their investigation. Individuals in the airport's immigration department are also reported to be under scrutiny after allegedly providing the relevant passport details to those who masterminded the scam.

A joint venture between Nuance-Shoppers Stop operates the duty free shop offer at the smart new Hyderabad Airport which replaced the old facility in Hyderabad in 2008. The joint venture's senior management will doubtless be as keen as any other party to get to the bottom of his matter as a well-respected operation.

When Nuance-Shoppers Stop began their seven-year contract last year they were projecting sales revenue of up to $240m over the full contract period of seven years.

The Nuance Group declined to comment on the Hyderabad reports when contacted yesterday.

COMMENT: The scam described above is hardly new and is a 'system' that has been used before in certain countries where liquor and other import duties and taxes are high.

The methodology usually involves the goods being sold at a discount in a downtown environment for a much higher price than in the duty free environment, with the duty free component usually 'reconciled' to the till with fraudulent receipts designed to deceive both the shop owners and customs. In high duty countries the 'smuggler' still makes a fat profit of what remains-Ed.