The Hindu Business Line : <I>Palmolein being imported from Bangla at concessional duty</I>

As a test case, two container loads of refined palmolein, packed in drums, were imported and cleared at Chennai port last month by a south-based refinery and at least seven more containers are said to be awaiting clearance.

Mumbai , Sept. 13

If you thought all loopholes known to cause revenue loss on edible oil imports have been plugged, think again; and do not underestimate the genius of India's edible oil importers to find newer ways to beat the system and evade payment of customs duty.

The latest phenomenon is that of refined palmolein coming into the country from Bangladesh, that too at a concessional rate of customs duty (one-half of the effective duty of 80 per cent on refined palmolein) under the South Asian Free Trade Area (SAFTA) agreement. Bangladesh is not a known producer of palm oil.

`Large-scale imports?'

This may well turn out to be the beginning of what can potentially snowball into large-scale imports from neighbouring countries under regional trade agreements entered into by India, although many of the regional trading partners do not produce the commodity sought to be imported, an alarmed local dealer told Business Line.

The domestic vanaspati producers are already reeling under the twin effect of imports from Nepal and Sri Lanka as also loss of market share to liquid oils. It could now be the turn of refineries.

Domestic processors, especially refineries that have invested in large capacities could be hit hard if refined products are allowed to be imported, that too with a big concession in customs duty, just because the consignment is shipped out of a country with which India has a trade agreement, opined a trade intermediary.

Grey areas

It is unclear what `rules of origin' and `value-addition' norms are applied to such imports. Equally unclear is whether revenue officials across the country (at various customs houses) are even fully aware of the nuances of the country's numerous trade agreements and the applicability of various conditions and caveats contained therein.

Quite apart from huge loss of revenue for the exchequer as a result of trade agreements that permit concessional imports, traders complain that ineffective enforcement of import rules further distorts the vegetable oil market that already faces tremendous price volatility and speculation.

While one trade representative lamented that the Government was unable to devise a foolproof system of imports, another demanded that refined palmolein imports purportedly from Bangladesh should be investigated for compliance with the import policy, rules of origin and value addition norms.