"Yesterday, we picked up one of the directors of this leading jewellery shop. On interrogation, he agreed that they had purchased more than 10 kg smuggled gold from the gang," the official said on the condition of anonymity, to IANS.
Sources also said a key member of the smuggling gang, Shahbaz, was arrested three days ago by the DRI.
"The questioning of Shahbaz led us to the leading jewellery shop at Kozhikode, and on interrogation of one of the directors, we were able to find all the links. Till now, we had not been able to know where the smuggled gold finally ended," the DRI official said.
The smuggling gang was busted after the DRI picked up two women from the Kochi airport a few months back. Two more women were later arrested when they arrived at the Kozhikode airport from the Middle East.
The DRI officials found out that the women were mere carriers, working as part of an organised gang.
The probe team arrested another person involved in the smuggling, Fayaz, last month. Following that arrest, officials also zeroed in on three customs officials at Kochi on suspicion that they were aiding the smuggling.
Kerala government's policies are being blamed as one of the factor casuing a spurge in gold smuggling activity. The import duty on gold was increased thrice this year as part of the state government's efforts to check the rising imports and burgeoning Current Account Deficit.
According to Customs sources, the gold in different shapes, including molten form, were mostly seized from passengers who arrived from Dubai.
"Gold has become lucrative and a potential contraband for smugglers with hike in duty and restrictions on import," Customs Commissioner, Kochi, K N Raghavan told PTI.
(With agency inputs)