Massive Crackdown: Over 1,000 Copper Importers Receive Notices Over Alleged Customs Duty Evasion Under ASEAN Trade Pact

In a major crackdown, customs authorities across India have issued show-cause notices (SCNs) to more than 1,000 copper importers for allegedly evading customs duties. Some reports suggest that the number of importers involved could be as high as 2,000.

These importers, mainly dealing in copper tubes and pipes, are accused of wrongly claiming tax benefits under the ASEAN-India Free Trade Agreement (AIFTA). This agreement allows goods imported from ASEAN countries to enjoy lower or zero customs duties, but only if the goods meet strict rules about where and how they were made.

According to the Moneycontrol reports, Many of these importers falsely claimed their copper products came from Vietnam, an ASEAN member, to get zero percent Basic Customs Duty (BCD) and 18 percent Integrated GST (IGST). However, authorities believe the copper was actually sourced from non-ASEAN countries like China, making them ineligible for duty exemptions.

The alleged wrongdoing took place between 2019 and 2023. Customs departments are now demanding back payments of unpaid duties upto 35%, plus interest and penalties. The crackdown is part of a nationwide investigation.

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The move has created serious problems for industries that rely on copper, especially companies in the air-conditioning and refrigeration sectors. Big companies like Daikin, LG, Voltas, Bluestar, and Samsung may be affected.

Industry groups say the action is too harsh. The Bombay Metal Exchange (BME), which represents metal traders, has called it “disruptive.” BME President Sandeep Jain said that thousands of small and medium businesses could suffer heavy losses and may not survive if forced to pay large amounts suddenly. The BME has asked Finance Minister Nirmala Sitharaman to step in and help.

Lawyers and trade experts are also questioning the fairness of the crackdown. They say the importers had Certificates of Origin (CoO) from Vietnam, which are supposed to prove that the goods qualify for duty-free treatment. These certificates have not been officially rejected.

This issue could have wider consequences. Other industries that depend on free trade agreements, like electronics, automotive, and renewable energy, are watching closely. If this becomes a trend, it could scare away foreign investors and make India seem like an uncertain place to do business.

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