• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Our Bureau

MUMBAI, March 15

WHILE being generally happy with the Budget proposals for 2002-03 that reduced peak rate of customs duty on raw material from 35 to 30 per cent and removed the 16 per cent special excise duty, the soap industry has objected to a Budget-related customs notification that seeks to stipulate revised quality standard for key raw material such as crude palm stearine and crude palm kernel oil.

According to notification 21/2002 dated March 1, 2002 importers will be able to avail of the lower duty of 30 per cent ad valorem subject to a new condition that free fatty acid (FFA) content of crude palm stearine and similar material is 20 per cent minimum, double the level stipulated prior to the Budget.

Industry representatives told Business Line that raising the FFA limit from 10 per cent to 20 per cent would impact the quality of light coloured soaps. Besides, it will impact the recovery of valuable glycerol, which has a wide industrial application in paints, cosmetics, pharmaceuticals and in ordnance factories.

Stating that the revised FFA norm was unwarranted, they pointed out to the position that crude palm stearine imports and usage were both already strictly monitored for last five years in terms of public notice dated June 6, 1997 which stipulated actual user condition, splitting facility and strict accounting of consumption.

"If the concern of the Government is to prevent suspected misuse of crude palm stearine by blending it with edible oil, the existing measures followed since June 1997 should be sufficient as the soap industry has always acquitted itself well,'' asserted Mr Jayant Lapsia, President of All India Liquid Bulk Importers and Exporters Association.

The oleo-chemical industry and soap majors such as Hindustan Lever and Godrej Industries apart from others are likely to feel the pinch as the supply chain is likely to be disturbed. Also, the quality of the imported raw material will have to be diluted by mixing with cheaper high-FFA material so as to push the FFA higher than 20 per cent. The matter is likely to be represented to the Government through the industry association, it is believed.

Meanwhile, the question is what happens to consignments that were shipped out of the exporting country prior to February 28 (when the FFA norm was raised) with the earlier FFA level of 10 per cent minimum. Importers are worried the consignments will not be cleared and they would be subjected to hardship.

Send this article to Friends by E-Mail

Stories in this Section
I-T rapped for slips in cement co assessments

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line