Calcutta: Calcutta-based jeweller Nilesh Parekh has been arrested by the directorate of revenue intelligence for the alleged "fraud of diversion of primary gold of over 1,700kg".

"We arrested Nilesh Parekh, a Shree Ganesh Jewellery House promoter, on Thursday and produced him before a court on Friday. He has been remanded in eight days' judicial custody," a directorate spokesperson said.

The directorate said the company had imported 35,746kg of gold free of import duty between 2005 and 2015, but had exported 34,041kg of gold jewellery. "Thus, there appears to be a diversion of 1,705kg of primary gold."

Parekh had failed to explain how more than 1,700kg of raw gold was lying at his company's units in Sector V in the Manikanchan Special Economic Zone without valid papers, directorate sources said. The company could not be reached for comment.

As an SEZ unit, the company was allowed to import gold duty-free but was required to export the finished jewellery and earn foreign exchange. "The company showed it had exported 1,705 kilos of gold on paper. But in reality it had not," a directorate official said.

The directorate said the company had "failed to realise export proceeds to the tune of Rs 7,450 crore on account of export of jewelleries to the several dummy and shell companies at Singapore, Hong Kong and Dubai".

In May 2017, the CBI had arrested Parekh on charges of cheating a consortium of 25 banks by siphoning off funds and fraudulent exports to paper companies registered in Hong Kong, Singapore and the UAE.

The complaint was lodged by the State Bank of India on behalf of the consortium of banks that had allegedly suffered a loss of Rs 2,223.13 crore.

On Friday, directorate officials raided the company's units at Manikanchan and scanned the vaults and the safes to allegedly recover gold jewellery and precious stones, including diamonds, with a ticket price of around Rs 36.05 crore.