DRI Busts Rs 2,500 Crore Areca Nut Import Fraud, Nine Arrested

NEW DELHI: The Directorate of Revenue Intelligence (DRI) has dismantled a large-scale network involved in importing South-East Asian areca nuts into India by falsely declaring them as originating from Bangladesh. This fraudulent scheme allowed syndicates to exploit duty exemptions under the South Asian Free Trade Area (SAFTA) agreement, leading to an estimated revenue loss of over Rs 2,500 crore to the exchequer.

The intelligence-led operation, which spanned over a month, culminated in the arrest of nine individuals. Authorities also seized approximately Rs 75 lakh in cash and 160 metric tonnes of areca nuts. The Customs Broker license of a firm allegedly responsible for clearing most of these fraudulent consignments has been suspended.

Exploiting Trade Agreements

The DRI investigation revealed that syndicates were sourcing areca nuts from countries like Indonesia, Thailand, and Malaysia. These nuts were then routed through an Export Processing Zone in Bangladesh, where they were allegedly repacked and falsely declared as Bangladeshi-origin produce. This allowed the importers to claim full customs duty exemption under SAFTA, whereas areca nuts imported directly into India generally attract a Basic Customs Duty (BCD) of 100 per cent.

According to the Ministry of Finance, the masterminds behind the operation fraudulently obtained SAFTA Certificates of Origin from Bangladeshi authorities. They charged substantial commissions from Indian importers for facilitating the routing, documentation, customs clearance, and transportation of these consignments, often involving cash transactions.

Wider Implications of the Fraud

The investigation has also uncovered the alleged use of hawala channels and dummy entities for the movement and layering of illicit proceeds generated through the scheme. Such illegal imports are reported to adversely impact domestic areca nut growers by creating unfair price distortions and disrupting the level playing field for legitimate businesses. The activities also undermine regulated trade practices and economic security.

The DRI’s operation has effectively disrupted a well-organized network engaged in systematic mis-declaration of the country of origin, fraudulent availment of SAFTA benefits, and large-scale evasion of customs revenue. The investigation is ongoing to identify further syndicate members and ascertain the complete extent of the revenue loss.

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