Department sources said the raids on the company's premises at Sahibabad in Uttar Pradesh led to the discovery of over 2,500 drawing, designs and technical know-how documents.

The department has made a custom demand of Rs 12 crore from Honda Siel of which the company has deposited Rs 3 crore. The company has sought time till the end of this month for submitting details of the imported technical know how, drawings and designs.

Sources said the evasion was discovered by custom officials of inland container depot (Tughlaqabad) during the scrutiny of the company's annual report. Commissioner (customs) Krishna Kant ordered a detailed investigation which was conducted by deputy commissioner (preventive) Mahender Singh.

Investigations showed payments of Rs 120 crore for technical know how, drawings and designs to bemade to the parent company Honda.

The customs subsequently issued summons to Honda officials including its managing director. The rooms containing the documents relating to technical know, designs and drawings were also sealed by the department.

The drawing and designs were imported by the company through courier baggage and cleared at Sahar International Airport, Mumbai and IGI Airport, New Delhi before June 1997, when a custom duty of 10 per cent was leviable on them. Imports of technical know how, design and drawing are currently allowed duty free.

Sources said that the company declared the value of the imported drawing and designs of only a few thousand rupees and paid a nominal duty while the actual value of the imported designs, drawings and technical knowhow was over Rs 120 crore.

This is the second major case of duty evasion, involving a multinational, detected by the custom authorities at the ICD, Tughlaqabad in the last five months.