DRI cracks Rs 2,500-crore areca nut duty evasion racket; how the masterminds exploited SAFTA agreement

In one of its largest intelligence-led operations in recent years, the Directorate of Revenue Intelligence (DRI) has busted a major network involved in large-scale customs duty evasion through the fraudulent import of areca nuts (supari). A month-long operation uncovered a scam resulting in a revenue loss exceeding Rs 2,500 crore; nine people have been arrested, and crucial evidence has been seized.

The fraud centered on exploiting the South Asian Free Trade Area (SAFTA) agreement. Under this pact, betel nuts imported from Bangladesh are exempt from the 100% Basic Customs Duty (BCD), provided they meet specific 'Rules of Origin' criteria. Investigators discovered that instead of importing Bangladeshi produce, the syndicate sourced areca nuts from Indonesia, Thailand, Malaysia, and other Southeast Asian nations, falsely declaring them as Bangladeshi products to claim the duty exemption.

Acting on intelligence gathered over several weeks, DRI officials conducted simultaneous raids at premises linked to importers, customs brokers, and Importer-Exporter Code (IEC) holders in Kolkata and Visakhapatnam. 

The investigation has revealed a vast international operation. According to the DRI, the masterminds would first ship the betel nuts from Southeast Asia to an Export Processing Zone (EPZ) in Bangladesh. There, the goods were merely repacked—with containers and bags changed—to make them appear as Bangladeshi products before being shipped to India. 

This network used to obtain forged SAFTA 'Certificates of Origin' from Bangladeshi officials and charged Indian importers hefty commissions to arrange the paperwork, customs clearance, transportation, and cash payments.

The raids yielded vital documents proving the imported betel nuts originated from Southeast Asian countries. Officials also recovered Rs 75 lakh in cash—suspected to be proceeds from the illicit trade—and seized a consignment of approximately 160 metric tonnes of betel nuts.

Investigators have also uncovered the use of hawala channels, dummy companies, and multi-layered financial transactions to conceal the proceeds of the operation. A customs brokerage firm was found to be handling the majority of the fraudulent imports identified in the case, leading the concerned authority to suspend its license.

Beyond the massive loss to the public exchequer, such illegal imports distort market prices, harm legitimate businesses, and adversely affect domestic betel nut growers, who struggle to compete against artificially cheap imports. 

The DRI operation has not only dismantled an organized network involved in smuggling and customs fraud but has also reinforced the importance of upholding fair trade practices, safeguarding government revenue, and preserving the credibility of India's trade agreements.

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