The Directorate of Revenue Intelligence (DRI) has uncovered a major alleged fraud involving the illegal use of SAFTA benefits on areca nut imports, with a potential customs revenue loss of over ₹2,500 crore.
· How Did the Scam Work?
According to DRI, syndicates imported areca nuts from Indonesia, Thailand, Malaysia and other South-East Asian countries but allegedly declared them as Bangladesh-origin goods.
The goods were reportedly routed through Bangladesh and presented as eligible for SAFTA customs duty exemption.
Normally, imported areca nuts attract 100% Basic Customs Duty (BCD), while eligible Bangladesh-origin imports can receive preferential treatment under SAFTA, subject to applicable Rules of Origin.
· DRI Action
DRI searches resulted in:
- 160 MT of areca nuts seized
- Around ₹75 lakh cash recovered
- 9 persons arrested
- A Customs Broker’s licence suspended
The investigation also reportedly found the use of dummy entities and hawala channels.
· Important Lesson for Importers
A Certificate of Origin alone does not automatically qualify goods for FTA/SAFTA benefits.
Importers must verify:
- Country of Origin
- Rules of Origin
- Certificate of Origin
- Supplier and transaction documents
- Correct Customs declaration
Simply routing goods through another country does not necessarily change their Country of Origin.
· Key Takeaway
The case is an important reminder that FTA/SAFTA duty benefits must be claimed only when all applicable origin requirements are genuinely fulfilled. Incorrect origin declarations can lead to Customs duty demands, penalties and other legal action