Areca nut smuggling probe: firms in network show Rs 250-300 crore losses on books, DRI looks into accounts

Nagpur: The alleged areca nut smuggling network was not only about evading customs duty. Large-scale manipulation of the companies' financial records is also suspected. According to sources linked to the Directorate of Revenue Intelligence (DRI) investigation, some companies connected to the network have shown losses of about Rs 250 crore to Rs 300 crore in their business. A key question for the probe now is how such a large loss arose and what the companies' actual financial transactions were.

The alleged modus operandi is also under scrutiny. Sources said the documents showed areca nut as bought from Bangladesh at a higher price, while its sale in India was allegedly shown at half that price. The wide gap between purchase and sale prices on paper made the company appear to be making a loss, and the companies' financial records show heavy losses in this way. Investigators suspect such manipulation was used to hide the real business and profits and to mislead the Income Tax department. However, these allegations can be established only on the basis of examination of documents and statements of the parties concerned.

The heavy losses shown in the companies' accounts have given the probe a new turn. If the purchase and sale prices were deliberately misrepresented in the documents, the matter cannot remain limited to evasion of import duty. Income tax irregularities and financial transactions will also need a thorough investigation. It will be important for the DRI to find out what the actual purchase price of the areca nut was, at what rate it was sold in India, and on what basis the losses were recorded in the companies' accounts.

Sources said Dinesh Agrawal of Kolkata is being described as the mastermind of the alleged network. His arrest and a thorough examination of the financial documents could bring more clarity on the network's working and the role of other traders. Following the arrest of Tikku Panchamatiya, there is heightened activity in Nagpur's areca nut market. According to sources, some traders allegedly linked to the network are worried about possible action in the probe. However, any trader's involvement cannot be assumed merely on the basis of links or talk in the market.

The most important question in the case is what role each company played in the entire process of bringing areca nut from Indonesia to Bangladesh and then to India, and what the connection is between the alleged forged documents, import records, bank accounts and the companies' financial statements. If the investigation confirms these links, the case could go beyond the alleged evasion of customs duty and become a major financial irregularity case. For now, all eyes are on the DRI's action and the findings of its probe. After Anis, Tinku and Sunny of Nagpur, who are said to be involved in the case, were reached, the DRI is set to widen the scope of its investigation.