New Delhi, August 16: The Directorate of Revenue Intelligence (DRI) has dismantled a network allegedly involved in importing areca nuts originating in South-East Asian countries into India by falsely declaring them as being of Bangladeshi origin to claim customs duty exemption under the South Asian Free Trade Area (SAFTA), according to a government release. The investigation has indicated a potential revenue loss of more than ₹2,500 crore, while nine people have been arrested so far.
The DRI operation, based on intelligence developed over a month, found that syndicates were allegedly sourcing areca nuts from Indonesia, Thailand, Malaysia and other South-East Asian countries and mis-declaring Bangladesh as their country of origin.
Areca nut imports into India attract a Basic Customs Duty of 100%, while eligible imports under SAFTA are fully exempt from customs duty. Areca nuts originating in Bangladesh qualify for the exemption if they satisfy the prescribed Rules of Origin criteria.
Following intelligence about large-scale fraudulent claims of SAFTA benefits, the DRI conducted simultaneous searches at premises linked to importers, Customs Brokers and Importer Exporter Code holders in Kolkata and Visakhapatnam. Officials recovered documents and evidence that the agency said established the South-East Asian origin of the areca nuts.
DRI officers also seized around ₹75 lakh in cash, suspected to be proceeds from the sale of illegally imported goods, along with a live consignment of around 160 metric tonnes of areca nuts.
According to the investigation, the alleged masterminds facilitated movement of areca nuts from South-East Asian countries into an Export Processing Zone in Bangladesh. The goods were then allegedly routed to India after merely changing containers and bags and passed off as Bangladeshi-origin areca nuts.
The DRI said SAFTA Certificates of Origin had been fraudulently obtained from Bangladeshi authorities. The alleged masterminds charged substantial commissions from Indian importers for arranging routing, documentation, clearance and transportation of consignments, with large payments allegedly collected in cash.
The investigation has also indicated the use of hawala channels and dummy entities for moving and layering financial proceeds.
DRI said one Customs Broker firm was found to be particularly responsible for clearing most of the fraudulent areca nut imports identified during the investigation. Following the DRI probe, the competent authority has suspended the firm’s Customs Broker licence.
The investigation so far has indicated that customs duty exceeding ₹2,500 crore may have been evaded through such imports in recent years. Nine people have been arrested in connection with the case.
The government release said such illegal imports adversely affect domestic areca nut growers and legitimate trade by distorting prices and disrupting a level playing field, apart from causing revenue losses and undermining regulated trade practices and economic security in border regions.
The DRI said the operation had disrupted an organised network allegedly involved in systematic mis-declaration of country of origin, fraudulent use of SAFTA benefits and large-scale customs revenue evasion.
