CBI launches probe into smuggling of rotten betel nuts to India

The Central Bureau of Investigation (CBI) has launched a probe into a scam involving alleged evasion of customs duty worth ₹15,000 crore annually in the smuggling of substandard Betel Nuts/Areca Nuts in the garb of SAARC Preferential Trading Agreement (SAPTA) and South Asia Free Trade Area (SAFTA).

The agency has registered a First Information Report (FIR) naming unknown officials of Central Excise and Customs and unknown private persons for causing huge losses adding up to several hundred crores to the government exchequer. The High Court of Judicature at Bombay, Nagpur Bench, had ordered a CBI probe in the matter on February 25 on a Public Interest Litigation (PIL) which claimed that substandard, unsafe and unfit Betel Nuts/Areca Nuts were being smuggled to India by fake persons using fake bills.

Areca nut is widely consumed in India, particularly in the form of pan masala and gutkha.

As per the agreements under SAPTA and SAFTA, concessions are exchanged vide preferential rates on customs duty so as to promote mutual trade and the economic cooperation amongst the member countries. The customs duty at the rate of 13% is applicable on Betel Nut of origin of member countries whereas 113% customs duty is levied in case of non-member countries. The members include India, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.

The CBI FIR, reviewed by HT, states that “Unscrupulous traders, in connivance with the public servants, are indulged in smuggling of betel nuts/areca nuts of Indonesian origin falsely claiming the same to be originating from member countries, on the basis of fake Certificates of Origin, bogus and undervalued bills/invoices and forged clearance certificates and thus causing evasion of Customs Duty to the tune of ₹15,000 crore annually.”

Explaining the modus operandi, CBI FIR, lodged on Friday, adds - “Such illegal imports of Indonesian betel nuts are purportedly facilitated by fake entities registered in India, Indonesia and SAARC countries. Moreover, rotten betel nuts are being imported under the guise of cashew peels (combustible material) to circumvent the lab test”.

In June 2016, a stock of 23 wagons of substandard and hazardous betel nuts, smuggled internationally in the name of fake importers, was detected by Railways, Nagpur unit.

Instead of taking action, the concerned Customs department officials didn’t look into the matter earnestly and extended favours to the traders involved, CBI FIR says.

Subsequently, a Directorate of Revenue and Intelligence (DRI) probe in 2017 revealed import of betel nuts and evasion of customs duty in Nagpur. The four consignments investigated by DRI were related to smuggling of consignments of 106.11 MTs (metric tonnes), 109.273 MTs and 81.42 MTs of betel nuts of foreign origin from Indo-Myanmar border, and confiscation of 40 MTs of trucks carrying betel nuts on way to Nagpur.