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G. Chandrashekhar

Mumbai , Aug. 26

RECENT news reports uncovering the highly irregular clearance of edible oil consignments at lower rate of customs duty than applicable, especially in minor ports such as Bedi in Jamnagar (Gujarat), have unnerved many players.

What has for some time been suspected in trade circles is finally in the open now. Some importers have allegedly been able to get away with duty evasion by misdeclaring the quality of cargo (as crude, when the consignment is not) often in collusion with officials in charge of revenue and quality inspection. This makes a mockery of the Ministry of Commerce and Industry notification issued June 14 whereby the Director-General of Foreign Trade notified a list of "high risk" items, imports of which will be subject to 100 per cent sampling.

Even prior to this notification, imported edible oils were subject to 100 per cent sampling. Currently, the rate of customs duty on crude palm oil is 65 per cent and that on refined palm oil 75 per cent ad-valorem. In addition, there is a stipulation relating to carotenoid content of the crude oil.

The implications of the unscrupulous activity are serious. First and most important, there is a huge loss of revenue for the exchequer. Second, the highly competitive vegetable oil market gets distorted because of the patently objectionable activities of a few. This prompts and occasionally forces, even generally honest players to examine the undesirable option in order to stay afloat in business.

What is the remedy? A serious rethink on allowing edible oil imports through all and sundry ports is necessary. Some restrictions may be in order and are actually called for. It is not unreasonable to assume that it is possible for influential importers to exploit human frailties, manipulate documents as well as officials and thereby obtain clearance at minor or smaller ports. Events at Bedi port strengthen the belief that minor or smaller ports are not adequately geared in terms of manpower and testing equipments for handling clearance of sensitive and revenue-oriented cargoes such as edible oil.

In order to closely monitor imports and clearance, four years ago, the Central Government had imposed restrictions on ports through which edible oils could be imported. Six major ports that were fully equipped to handle large inflows were designated. But this order was hastily withdrawn as the entire oil trade was up in arms against the restriction and the Government buckled.

As many as 15 ports including major and minor ports are currently utilised by importers to bring in 45 lakh-50 lakh tonne of various vegetable oils every year. Some of the smaller ports include Nagapattinam, Tuticorin, Mangalore, Mundhra, and Bedi. For some time, Visakhapatnam, Paradeep and Karwar ports were also used.

Customs revenue generated from vegetable oil imports is estimated at close to Rs 5,000 crore. If the Government is serious about preventing revenue loss and ensuring appropriate sampling and testing of imported vegetable oil consignments, some restriction on the point of entry is highly desirable.

The ports through which cargoes may be allowed should be those with adequate manpower to handle documentation and attendant clearance formalities in addition to qualified personnel and testing equipments to ascertain quality.

The Government should not shy away from its responsibility to ensure strict monitoring of imports. As far as edible oil is concerned, the issue is not restricted to mere misdeclaration of goods or payment of lower rate of duty.

Cases of adulteration, sale of substandard quality and palming off inferior oil as superior oil are said to be rampant.

In addition to monitoring imports through designated ports, there is need for tighter food law enforcement. The food inspection officials must get cracking. A series of festivals over the next three months expands demand manifold. It is the time to watch out for substandard oil.

More Stories on : Oilseeds & Edible Oil | Exports & Imports

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