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DRI
uncovers large-scale illegal use of SAFTA agreement in areca imports
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Months
long investigation reveals defrauding exchequer of over Rs. 2,500 crore (approx.); Rs. 75 lakh cash, 160 MT areca nuts seized (approx.);
Nine arrested
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Syndicates
imported areca nuts into India from Indonesia, Thailand, Malaysia and other South-East
Asian countries by mis-declaring country of origin as Bangladesh
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Licence
of Customs Broker firm responsible for clearance of most of the fraudulent imports
of areca nuts suspended
1. Major DRI crackdown: The
Directorate of Revenue Intelligence (DRI) has dismantled a large syndicate
allegedly importing South-East
Asian areca nuts into India by falsely declaring them as Bangladeshi-origin
goods.
2. Potential revenue loss exceeds
₹2,500 crore: The investigation indicates that the
Government may have been deprived of more
than ₹2,500 crore in customs revenue over recent years.
3. SAFTA duty exemption misused: Areca
nuts normally attract 100%
Basic Customs Duty (BCD), but eligible Bangladeshi-origin
imports can receive full
customs-duty exemption under SAFTA, subject to Rules of Origin
requirements.
4. South-East Asian goods rerouted through
Bangladesh: The syndicate allegedly sourced areca
nuts from Indonesia,
Thailand, Malaysia and other South-East Asian countries, routed
them through an EPZ in Bangladesh and subsequently imported them into India as
Bangladeshi-origin goods.
5. Minimal processing used to disguise
origin: According to the investigation, the goods
were allegedly repacked
into different containers and bags in Bangladesh before being
sent to India, without acquiring genuine Bangladeshi origin.
6. Fraudulent Certificates of Origin: The
masterminds allegedly obtained fraudulent
SAFTA Certificates of Origin from Bangladeshi authorities to
claim preferential treatment.
7. Large-scale searches: DRI
conducted simultaneous searches at premises linked to importers, Customs Brokers and IEC
holders in Kolkata
and Visakhapatnam.
8. Cash and goods seized:
Investigators recovered around ₹75
lakh in cash, suspected to represent proceeds from illegal
imports, along with a live consignment of approximately 160 MT of areca nuts.
9. Commission-based network: The
alleged masterminds reportedly charged substantial commissions for arranging routing, documentation, customs
clearance and transportation of the consignments.
10. Hawala and dummy entities used: The
investigation uncovered the alleged use of hawala channels and dummy entities to move
and layer proceeds generated from the fraudulent trade.
11. Customs Broker licence suspended: One
Customs Broker allegedly handled clearance of most of the fraudulent
consignments identified in the investigation. Its licence has been suspended
by the competent authority.
12. Nine arrests: Nine persons have been arrested
so far in connection with the investigation.
13. Impact on domestic growers: Such
duty-evading imports can undercut
Indian areca nut growers, distort domestic prices and adversely
affect legitimate businesses.
14. Impact on legitimate trade and revenue: The
operation exposed not only substantial customs
revenue leakage but also disruption of fair competition and
regulated trading practices.
15. Border-region economic security concern:
Authorities highlighted the broader implications for economic security and legitimate trade
practices in border regions.
The DRI operation has exposed a
sophisticated origin-misdeclaration racket allegedly exploiting SAFTA to evade
more than ₹2,500 crore in customs duty. The
case highlights the importance of Rules
of Origin verification, scrutiny of SAFTA Certificates of Origin, Customs
Broker oversight and financial-trail investigation in
preventing preferential-duty fraud.
[ABS News Service/17.08.2026]
The
Directorate of Revenue Intelligence (DRI), in a month-long intelligence-led operation,
has dismantled a major network involved in importing South-East Asian areca nuts
into India by falsely declaring them as Bangladeshi origin and fraudulently availing
concessional duty benefits under the South Asian Free Trade Area (SAFTA). The investigation
has so far revealed a potential revenue loss of more than Rs. 2,500 crore. Nine persons have been arrested in connection with the
case.
The
import of areca nuts into India attracts a Basic Customs Duty (BCD) of 100%. However,
eligible imports of areca nuts made under SAFTA agreement are fully exempt from
customs duty. The areca nuts originating
from Bangladesh are entitled to exemption under SAFTA if imports meet the prescribed
Rules of Origin criterion.
Intelligence
gathered and developed by DRI indicated that certain syndicates were fraudulently
claiming the SAFTA benefits on a very large scale on imports of areca nuts. While they were importing areca nuts originating
and sourced from Indonesia, Thailand, Malaysia and other South-East Asian countries,
they were mis-declaring the country of origin of areca nuts imported into India
as Bangladesh.
Thereafter,
simultaneous searches were conducted at multiple premises linked to importers, Customs
Brokers and IEC holders in Kolkata and Visakhapatnam. Several incriminating documents
and substantial evidences establishing the South-East Asian origin of Areca nuts
were recovered. DRI officers also recovered and seized around Rs. 75 lakh in cash, believed to be sale proceeds of the illegally imported
goods. A live consignment of around 160 MT
of areca nuts.
The
investigations so far have revealed huge scale of fraudulent imports of areca nuts
in which exchequer has been duped of customs duty in excess of Rs 2,500 crore in
recent years. The masterminds were facilitating the import of areca nuts from South-East
Asian countries into one of the EPZ in Bangladesh and thereafter routing the goods
to India merely changing containers and bags and passing them off as Bangladeshi-origin
areca nuts. They had fraudulently obtained SAFTA Certificates of Origin from Bangladeshi
authorities. The masterminds were charging substantial commissions from Indian importers
for arranging the routing, documentation, clearance and transportation of the consignments
and massive collection of payments in cash... The investigation has also brought
to light the use of hawala channels and dummy entities for movement and layering
of the financial proceeds.
Investigation
has further revealed that one Customs Broker firm was particularly responsible for
clearance of most of the fraudulent imports of areca nuts identified in the case.
Consequent to the ongoing investigation by DRI, the Customs Broker's licence has
been suspended by the competent authority. Nine persons have been arrested so far
in connection with the case.
Such
illegal imports adversely impact domestic areca nut growers and legitimate trade
by creating unfair price distortion, and disrupting the level playing field for
legitimate businesses. Besides causing huge loss to the Government revenue, these
illegal activities also undermine regulated trade practices and economic security
in the border regions.
With
this operation, DRI has effectively disrupted a well-organised network involved
in systematic mis-declaration of country of origin, fraudulent availment of SAFTA benefits and large-scale evasion of customs
revenue.