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In a statement issued on Sunday, the Finance Ministry said that the DRI investigation has so far revealed a potential loss of more than Rs 2,500 crore to the government revenue due to illegal import of betel nut. He said that nine people have been arrested in this case.

The ministry said sleuths of the Directorate of Revenue Intelligence (DRI) have busted a gang that was importing betel nut from South-East Asian countries, misrepresenting it as being of Bangladesh origin and fraudulently availing concessional customs duty under the South Asian Free Trade Area (SAFTA).

According to the Finance Ministry, DRI has revealed large-scale illegal use of SAFTA agreement in betel nut import. The directorate, in a months-long investigation, unearthed a fraud of about Rs 2,500 crore from the government treasury, seizing about Rs 75 lakh in cash and 160 metric tonnes of betel nut.

According to the ministry, intelligence received by DRI revealed that some gangs were fraudulently claiming SAFTA benefits on large scale import of betel nuts.

“These gangs were importing betel nuts from Indonesia, Thailand, Malaysia and other countries in South-East Asia, but were falsely declaring the country of origin of the betel nuts imported into India as Bangladesh,” the statement said.

The Finance Ministry said that during the search, several documents and concrete evidence proving the South-East Asian origin of betel nut were recovered. The license of the customs broker firm responsible for clearing most of the fraudulent imports of betel nut has been suspended.

It is noteworthy that 100 percent Basic Customs Duty (BCD) is levied on import of betel nut in India. However, eligible betel nuts imports are fully exempted from customs duty under the SAFTA agreement.

Areca nuts from Bangladesh also receive duty exemption under SAFTA, provided the imports meet the criteria of the prescribed origin rules.