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At least 9,000 watches of international brands such as Rado, Tissot, Longines were seized from Tirur and Kochi.
Sivakumar was detained for allegedly attempting to smuggle 500 grams of gold.
The Customs detained Shiv Prasad with 800 grams of gold on Wednesday.
A few weeks before his transfer, the inspector was threatened by a man who identified himself as a BJP Yuva Morcha leader.
The officials seized 28 gold tablets weighing 3,317 grams.
The gold was found in a mixer grinder in the first case while in the second it was concealed in the rectum of the passenger.
Gold in coiled forms was found concealed inside the toys with high engineering skills, said the officials.
Both the passengers had arrived at the Thiruvananthapuram International Airport from Dubai.
The Customs took help from a lathe workshop to dismantle a product and recover the gold.
The accused Jossy hid six kilograms of gold in the form of four bangles concealed in 'Nivea Creme' boxes.