Two persons, who were arrested while exchanging Rs.45 lakh in Perumbavoor on Friday, are suspected to be part of a larger racket involved in tax evasion in the plywood manufacturing unit.

Sources in the police said that there had been information about attempts to evade tax and the area was under surveillance. Al Ameen, 30, of Coimbatore and Kunju Mohammed, 55, of Karothukuzhy, were arrested from Perumbavoor bus stand in a joint operation by the Directorate of Revenue Intelligence and the Perumbavoor police. The two could not give proper account for money in their possession.

The suspected method of tax evaders was to bill for lesser amounts for processed plywood and then bring back the difference in payment through unofficial channels and carriers. Of the more than 1,000 industrial units in Perumbavoor, there are 300-odd plywood manufacturers.

The town is renowned in the domestic market as the cheapest provider of plywood because of the availability of rubber wood as raw material.

“Some efforts have been noticed among our members to evade Central Excise Tax and we have been campaigning amongst us to discourage that trend. Except for adjustments made in payment, all transactions are done through proper billing,” said Abdul Kareem, general secretary of the Ernakulam District Sawmill and Plywood Manufacturers’ Association.

However, those who have been up in arms against the plywood industries alleged that this practice has been going on for long.

“A similar case was reported some days ago from Muvattupuzha and probably that might have triggered Friday’s arrest. Otherwise, this was known to all authorities,” said Varghese Pulluvazhi, chairman of the Action Council for Environmental Protection, also referring to a case registered by the Kalamassery police a couple of years ago, after a youth carrying a big sum of unaccounted money was attacked at NAD Road and robbed.

“It is to be suspected that only a part of the actual amount is transacted through banks and nearly 60 per cent of the payments are routed through hawala networks. They have agents and a system for this and what happened in Perumbavoor is not an isolated incident,” he said.

The police are probing the possible link between these carriers and other hawala rackets, though preliminary investigations have thrown up no such leads.

A combined effort from various agencies like the police, DRI, and the Department of Commercial Taxes was required to curb the trend, said a senior police official in the rural district.

More In: Kochi