Financial Daily from THE HINDU group of publications
Thursday, Sep 23, 2004
Agri-Biz & Commodities
Oilseeds & Edible Oil
Industry & Economy - Excise and Customs
Row over carotenoid level in palm oil deepens Customs authorities at JNPT levy 100 per cent duty
New Delhi , Sept. 22
THE confusion over what is the duty applicable on imported crude palm oil (CPO) consignments not meeting the minimum 500-mg per kg of total carotenoids specification, shows no signs of abatement.
Following the reported move by the Chennai Customs to charge a duty of 85 per cent on such consignments, it is now learnt that the authorities in Jawaharlal Nehru Port Trust (JNPT) have gone a step ahead and are levying a 100 per cent import duty.
"They are asking us to furnish a bank guarantee for the difference between 100 per cent and 65 per cent," said an importer.
CPO, classified under heading 18.104.22.168 of the Customs Tariff, is currently assessable to 65 per cent duty. However, this is subject to it confirming to the definition of "crude palm oil and its fractions, of edible grade," as per the Revenue Department's notification dated August 1, 2003. And that, in turn, requires the oil to have "an acid value of two per cent, or more and total carotenoid (as beta carotene) in the range of 500-2,500 mg per kg, in loose or bulk form."
On the other hand, both RBD (refined, bleached and de-odourised) palm oil and RBD palmolein falling under the heads 22.214.171.124 and 126.96.36.199, respectively attract 75 per cent customs duty. The Customs Tariff does not, at the same time, explicitly specify any duty on CPO not confirming to the definition contained in the August 1, 2003 notification.
As a result, individual ports are making their own interpretation of what is the appropriate duty to be imposed on CPO not meeting the minimum 500 mg per kg carotenoids specification. The confusion is compounded by the fact that over 80 per cent of the CPO consignments being imported now, are failing the carotenoid test, which means they cannot technically be classified as CPO, qualifying for 65 per cent duty. Further, they cannot also be categorised as refined oils under 188.8.131.52 and 184.108.40.206, attracting 75 per cent.
The importers (mainly vanaspati-makers and other vegetable oil processors) claim that CPO not meeting the minimum carotenoid standards would fall under the head 220.127.116.11 of the `other.' The duty applicable against this head is 75 per cent, as it is for RBD palm oil (18.104.22.168) and RBD palmolein (22.214.171.124). In any case, the import duty on CPO irrespective of whether or not it confirms to the official definition cannot be higher than what it is on the final product, i.e RBD palmolein, they say.
But with the Central Board for Excise and Customs (CBEC) yet to issue a formal clarification on the issue, individual commissionerates are drawing their own interpretation of what duty may be levied on CPO consignments failing the carotenoid test.
"As it is, they are under tremendous pressure to meet revenue targets. And given the sheer quantum of imports taking place, edible oils provide an ideal target," industry observers pointed out.
Edible oil imports annually fetch around Rs 7,000 crore of customs revenue for the Government, of which the palm complex accounts for over Rs 5,000 crore and the rest being contributed by crude soyabean, sunflower and other `soft' oils. This is incidentally higher than the combined Plan and non-Plan Budget of all departments under the Union Agriculture Ministry, which adds up to Rs 5,303.41 crore during 2004-05.
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