The Directorate of Revenue Intelligence (DRI) said it has dismantled a major network allegedly involved in importing South-East Asian areca nuts into India by falsely declaring them as Bangladeshi-origin goods and fraudulently claiming customs duty exemptions 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, while nine people have been arrested in connection with the case, according to a PIB release.
The Ministry of Finance said the action followed a month-long intelligence-led operation.
The import of areca nuts into India attracts a Basic Customs Duty (BCD) of 100%. However, eligible imports originating from Bangladesh can receive full customs duty exemption under the SAFTA agreement, subject to compliance with the prescribed Rules of Origin criteria.
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According to the DRI, certain syndicates allegedly exploited these provisions by sourcing areca nuts from Indonesia, Thailand, Malaysia and other South-East Asian countries and mis-declaring their origin as Bangladesh when importing them into India.
Based on intelligence gathered during the operation, the DRI conducted simultaneous searches at premises linked to importers, Customs Brokers and Importer Exporter Code (IEC) holders in Kolkata and Visakhapatnam.
During the searches, officers recovered documents and other evidence that the agency said indicated the South-East Asian origin of the consignments.
The DRI also seized approximately Rs 75 lakh in cash, suspected to be proceeds from the alleged illegal imports, along with a consignment containing around 160 metric tonnes of areca nuts, the Ministry said.
According to the DRI, the syndicate allegedly routed areca nuts from South-East Asian countries through an Export Processing Zone (EPZ) in Bangladesh. The goods were then allegedly transferred into different containers and bags before being sent to India and passed off as Bangladeshi-origin areca nuts to claim SAFTA benefits.
The agency further alleged that the network fraudulently obtained Certificates of Origin from Bangladeshi authorities to support the declarations and claim preferential treatment. The alleged masterminds reportedly charged substantial commissions from Indian importers for arranging the routing, documentation, customs clearance and transportation of the consignments.
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The DRI also said its investigation uncovered evidence of large cash collections and the alleged use of hawala channels and dummy entities to move and layer proceeds linked to the operation.
A Customs Broker firm that the DRI said was responsible for clearing a large portion of the alleged fraudulent imports has also faced regulatory action. Its Customs Broker licence has been suspended, according to the Ministry.
The Ministry said the alleged activity not only resulted in a substantial potential loss of customs revenue but could also distort market prices and adversely affect Indian areca nut growers and legitimate traders.
The investigation is ongoing, with the DRI examining the alleged roles of importers, intermediaries, Customs Brokers and other entities involved in the movement and clearance of the consignments, according to the Ministry of Finance.
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