Executive Summary
The Directorate of Revenue Intelligence (DRI) has dismantled a major syndicate involved in the fraudulent import of South-East Asian areca nuts, resulting in a potential revenue loss of over Rs. 2,500 crore. By mis-declaring the country of origin as Bangladesh to exploit South Asian Free Trade Area (SAFTA) benefits, the network evaded a 100% Basic Customs Duty. Recent enforcement actions include nine arrests, the suspension of a Customs Broker’s license, and the seizure of 160 MT of areca nuts and Rs. 75 lakh in cash.
Key Points / Main Content
Modus Operandi of the Fraud
Syndicates imported areca nuts from Indonesia, Thailand, and Malaysia, then routed them through Export Processing Zones (EPZ) in Bangladesh.
Goods were repackaged and transferred to different containers to be passed off as Bangladeshi-origin products.
The network obtained fraudulent SAFTA Certificates of Origin to claim full exemption from customs duties.
Masterminds charged Indian importers substantial commissions for managing routing, documentation, and transportation.
Enforcement and Seizures
A month-long intelligence-led operation included simultaneous searches at premises in Kolkata and Visakhapatnam.
Authorities seized approximately 160 MT of areca nuts and Rs. 75 lakh in cash, believed to be sale proceeds from illegal imports.
Nine individuals have been arrested to date in connection with the investigation.
The license of the Customs Broker firm responsible for the majority of the fraudulent clearances has been suspended.
Financial and Regulatory Breaches
The investigation revealed the systematic use of hawala channels and dummy entities to move and layer financial proceeds.
The illegal activity bypassed the mandatory 100% Basic Customs Duty (BCD) normally applied to areca nut imports.
The operation disrupted a well-organized network that undermined regulated trade practices and regional economic security.
Impact Analysis
Government of India (Exchequer)Impact: Suffered a revenue loss exceeding Rs. 2,500 crore due to duty evasion and faced threats to economic security in border regions.
Action Required: Regulatory bodies and the DRI must continue investigating the identified hawala channels and dummy entities to recover lost revenue and dismantle financial networks.
Domestic Areca Nut Growers and Legitimate BusinessesImpact: Suffered from unfair price distortions and a disrupted level playing field caused by the influx of illegally duty-free imports.
Action Required: No direct action is specified, though these stakeholders are expected to benefit from the DRI's disruption of the illegal supply chain.
Customs Brokers and ImportersImpact: Firms found complicit in mis-declaration face immediate suspension of operating licenses and criminal prosecution.
Action Required: Importers must strictly adhere to the "Rules of Origin" criterion under the SAFTA agreement and ensure all declarations regarding the country of origin are accurate and verifiable.
Key Entities Referenced
South Asian Free Trade Area (SAFTA): A regional trade agreement under which areca nut imports are eligible for duty exemptions, a provision exploited by syndicates through fraudulent origin claims.
Directorate of Revenue Intelligence (DRI): The lead enforcement agency that dismantled the network involved in mis-declaring imports and identified a revenue loss of over Rs. 2,500 crore.
Rules of Origin: The specific regulatory criteria under SAFTA that imports must satisfy to qualify for tax exemptions, which were bypassed using fraudulent certificates.
Basic Customs Duty (BCD): The standard 100% tax rate on areca nut imports into India that the fraudulent network sought to evade.
Kolkata and Visakhapatnam: Key locations where investigative searches were conducted against importers, Customs Brokers, and IEC holders involved in the scheme.
Ministry of Finance
DRI uncovers large-scale illegal use of SAFTA
agreement in areca imports
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
Syndicates imported areca nuts into India from Indonesia,
Thailand, Malaysia and other South-East Asian countries by
mis-declaring country of origin as Bangladesh
Licence of Customs Broker firm responsible for clearance of
most of the fraudulent imports of areca nuts suspended
प्रव तथ: 16 AUG 2026 10:51AM by PIB Delhi
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.
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SR/KMN
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