Financial Daily from THE HINDU group of publications
Tuesday, Aug 10, 2004
Industry & Economy - Breweries
Irked by delay in Customs clearance Importers divert alcohol cargo from Mumbai to Kandla port
Mumbai , Aug. 9
ONE port's loss is usually the neighbouring port's gain. This is precisely what the cargo-hungry Mumbai port is facing today, as it is losing out a significant flow of cargo in the form of imported industrial alcohol to Kandla port.
And all due to the intransigence of the Customs authorities here who have been refusing to clear imported de-natured ethyl (or industrial) alcohol consignments from the port for the last two months on the ground that these were potable alcohol and hence the importers had to pay a duty of 160 per cent.
This action has delivered a major setback to the 20-odd importers of industrial alcohol here, who are now forced to divert the cargo to Kandla port, as they are not facing any problems there on this score. "Why should we pay a duty of 160 per cent when the product is not potable alcohol? We have furnished enough evidence to prove our point," says an importer.
Industry sources say that over the last few weeks, some 50,000 tonnes of industrial alcohol had been diverted to Kandla and fresh imports of about 40,000 tonnes may also follow suit if the Customs authorities do not end the stalemate.
What has irked the importers is that the Custom authorities have not been able to have samples of the cargo tested to prove that these were potable alcohol, even while refusing to clear the cargoes unless the importers pay the 160 per cent duty that import of potable alcohol carries.
It all started in the aftermath of a steep fall in sugarcane production, which hit production of molasses and industrial alcohol, necessitating import of this vital raw material. The first consignment of 20,000 tonnes of de-natured alcohol arrived at Mumbai port in the last week of May, followed by another shipment in the first week of June.
Industry sources said the Customs refused to release the consignments, stating that these were potable alcohol, which attracts a duty of 160 per cent as against 15 per cent that de-natured alcohol carries. Maintaining that they were bringing in de-natured alcohol, the importers wanted the Customs to test samples of the consignment.
According to the sources, the Customs authorities have been trying to ascertain the "potability" of the product by sending the samples to various laboratories, including the Hafkins Institute and the National Chemicals Laboratory, Pune, during the last two months, but were not able to come out with anything concrete. And in the meantime, fresh consignments continued to pour in; by the last week of July some 60,000 tonnes of alcohol piled up at Mumbai port.
When importers protested over the delay in sampling the consignments, the Customs authorities agreed to release 70 per cent of the stocks on the condition that the importers add de-naturients before taking them out of the port. "Each of us had to spend some Rs 2 lakh to Rs 3 lakh in de-naturing the already de-natured alcohol, for we had our supply commitments to keep. We tried to explain that the entire movement of the product was under State excise supervision," an importer pointed out.
With Mumbai port not being able to take any more of the product due to lack of storage place, some 50,000 tonnes of industrial alcohol had to be diverted to Kandla port. With a large consignment of 25,000 tonnes expected next week and more to follow, Mumbai port faces the risk of losing about one lakh tonnes of cargo.
In the light of this, the port is now planning to take up the issue with the Customs Department to ensure that the cargoes are released one way or other.
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