The Directorate of Revenue Intelligence (DRI) has uncovered a large-scale racket in which areca nuts sourced from Indonesia, Thailand, Malaysia and other South-East Asian countries were allegedly imported into India by falsely declaring Bangladesh as their country of origin, causing a potential customs revenue loss of more than Rs 2,500 crore, according to a Ministry of Finance press release, issued on Sunday.
The intelligence-led operation has led to the arrest of nine people, seizure of around Rs 75 lakh in cash and approximately 160 metric tonnes of areca nuts, the ministry said. The Customs Broker licence of a firm allegedly responsible for clearing most of the fraudulent consignments identified in the case has also been suspended.
The DRI investigation found that syndicates were allegedly exploiting duty exemptions available under the South Asian Free Trade Area (SAFTA) agreement. While areca nuts imported into India generally attract a Basic Customs Duty (BCD) of 100%, eligible imports originating in Bangladesh can receive full customs duty exemption under SAFTA, subject to prescribed Rules of Origin criteria.
According to the ministry, the syndicates sourced areca nuts from South-East Asian countries and routed them through an Export Processing Zone in Bangladesh. The goods were allegedly repacked into different containers and bags before being sent to India and passed off as Bangladeshi-origin areca nuts.
The masterminds allegedly obtained fraudulent SAFTA Certificates of Origin from Bangladeshi authorities and charged substantial commissions from Indian importers for arranging the routing, documentation, customs clearance and transportation of consignments.
Searches uncover cash, documents and live consignment
The DRI conducted simultaneous searches at multiple premises linked to importers, Customs Brokers and Importer Exporter Code (IEC) holders in Kolkata and Visakhapatnam.
Officials recovered documents and other evidence indicating the South-East Asian origin of the areca nuts. Around Rs 75 lakh in cash, believed to be proceeds from the sale of illegally imported goods, was also seized, along with a live consignment of approximately 160 MT of areca nuts.
The investigation has also revealed the alleged use of hawala channels and dummy entities to move and layer the proceeds generated through the scheme.
The ministry said the fraudulent imports had resulted in customs duty evasion exceeding Rs 2,500 crore in recent years. The investigation is continuing.
The DRI said the illegal imports not only caused substantial revenue loss to the government but also adversely affected domestic areca nut growers and legitimate businesses by distorting prices and creating an uneven playing field.
The operation has, according to the Ministry of Finance, disrupted a network involved in systematic mis-declaration of country of origin, fraudulent availment of SAFTA benefits and large-scale evasion of customs revenue.
