India dismantles network faking Bangladesh origin to avoid areca nut duty

India's Directorate of Revenue Intelligence (DRI) has dismantled a major network involved in importing South-East Asian areca nuts into India by falsely declaring them as being of 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, it said, adding that nine persons have been arrested in connection with the case, a Finance Ministry statement said today.

The import of areca nuts into India attracts a basic customs duty of 100%. However, eligible imports of areca nuts made under the SAFTA agreement are fully exempt from customs duty. Areca nuts originating from Bangladesh are entitled to exemption under SAFTA if imports meet the prescribed Rules of Origin criteria.

Intelligence gathered and developed by DRI indicated that certain syndicates were fraudulently claiming SAFTA benefits on a very large scale on imports of areca nuts.

While the syndicates were importing areca nuts originating in and sourced from Indonesia, Thailand, Malaysia and other South-East Asian countries, they were misdeclaring the country of origin of areca nuts imported into India as Bangladesh.

The masterminds were charging substantial commissions from Indian importers for arranging the routing, documentation, clearance and transportation of the consignments, along with the large-scale collection of payments in cash.

Investigation has further revealed that one customs broker firm was particularly responsible for the clearance of most of the fraudulent imports of areca nuts identified in the case.

Following the DRI investigation, the customs broker's licence has been suspended.

With this operation, DRI has effectively disrupted a well-organised network involved in the systematic misdeclaration of country of origin, fraudulent availment of SAFTA benefits and large-scale evasion of customs revenue.