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Finance Ministry clarifies on palm oil imports — Consignments not meeting carotenoids norm to attract 75 pc duty

Harish Damodaran

New Delhi , Oct. 18

THE Finance Ministry has clarified that imported crude palm oil (CPO) or crude palmolein consignments not meeting the stipulated minimum 500 mg per kg total carotenoids specification would attract 75 per cent basic customs duty.

The clarification comes in the wake of reports about the customs authorities in Chennai and the Jawaharlal Nehru Port Trust (JNPT) levying duties ranging from 85 per cent to 100 per cent on imported oils not 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. 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''.

The duty on the oil consistent with this definition — and hence qualifying as CPO or crude palmolein — is currently pegged at 65 per cent. The confusion lay over the duty applicable on oil not confirming to this definition.

While domestic processors/refiners of imported vegetable oil have claimed that the duty ought to be 75 per cent — as it is in the case of RBD (refined, bleached, de-odourised) palm oil or RBD palmolein — the customs authorities have, however, been making their own interpretations on grounds that the Customs Tariffs does not explicitly specify the duty chargeable on oil that is officially neither "crude'' nor "refined''.

But in a circular issued to the Chief Commissioners of Customs at Chennai, Ahmedabad and JNPT, the Department of Revenue has clarified that "if a variety of palm oil does not meet the definition of CPO adopted by the Government of India and it is also not RBD palm oil, it will be classified under the residuary category under heading 151190.90 of the Customs Tariff and leviable to duty at the rate of 75 per cent".

The Department has held that this interpretation is "consistent with the intention of the Government of India and the purpose for which the parameters relating to acid and carotenoid content were introduced".

The vegetable oil processing industry has been seeking the Finance Ministry clarification considering that over 80 per cent of the crude oil consignments being imported by them now are failing the carotenoid test, which means they cannot be classified as CPO or crude palmolein qualifying for 65 per cent duty.

Compounding the situation has been the resort by some port authorities to seize the consignments of importers, citing mis-declaration and intention to evade duty. Among those whose consignments have been seized in this manner include Ruchi Soya's at Jamnagar and Food, Fats & Fertilisers Ltd's at Kakinada.

According to the importers, in most cases, the carotenoid content of the imported oil exceeds 500 mg per kg at the port of loading, but falls below this level when tested on arrival in India. The reason this, they say, is the "labile'' or unstable nature of carotene, which causes its deterioration by heating and during storage.

The importers have demanded that in all cases where the importer declares his consignment as CPO based on port load report, but the carotenoid level is found less based on tests conducted at the customs here, there should be no charge made of misdeclaration or seizure of cargo. Instead, the consignment should straightaway be leviable to 75 per cent import duty.

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