DRI busts ₹2,500 crore arecanut import scam using fake Bangladesh origin
The Directorate of Revenue Intelligence (DRI) has dismantled a major network that illegally imported arecanut from South-East Asian countries into India by falsely declaring it as originating from Bangladesh. The fraudulent declaration allowed the importers to claim full exemption from customs duty under the South Asian Free Trade Area (SAFTA) agreement. According to the Union Ministry of Finance, the investigation has so far revealed a potential revenue loss of more than ₹2,500 crore.
India imposes a Basic Customs Duty of 100% on arecanut imports. However, arecanut imported from Bangladesh is eligible for complete exemption under SAFTA, provided it meets the prescribed Rules of Origin criteria. The network exploited this provision by routing South-East Asian arecanut through an Export Processing Zone (EPZ) in Bangladesh, changing containers and bags, and obtaining fraudulent SAFTA Certificates of Origin from Bangladeshi authorities.
The DRI conducted simultaneous searches at multiple premises linked to importers, customs brokers, and Importer Exporter Code (IEC) holders in Kolkata and Visakhapatnam. Officials recovered incriminating documents and substantial evidence establishing the true origin of the arecanut. They also seized around ₹75 lakh in cash, believed to be sale proceeds of the illegally imported goods, and a live consignment of approximately 160 tonnes of arecanut.
The investigation revealed that the masterminds charged substantial commissions from Indian importers for arranging the routing, documentation, clearance, and transportation of the consignments, collecting payments in cash. They also used hawala channels and dummy entities to move and layer the financial proceeds.
One customs broker firm was found responsible for clearing most of the fraudulent imports identified in the case. Following the DRI's ongoing investigation, the customs broker's licence has been suspended by the competent authority. So far, nine persons have been arrested in connection with the case.
The Ministry of Finance stated that such illegal imports adversely impact domestic arecanut growers and legitimate trade by creating unfair price distortions and disrupting the level playing field. They also cause huge revenue losses to the government and undermine regulated trade practices and economic security in border regions.
The DRI's month-long intelligence-led operation has effectively disrupted a well-organised network involved in systematic misdeclaration of country of origin, fraudulent availing of SAFTA benefits, and large-scale evasion of customs revenue.
