8/25/04 INDIA (Oilmandi) - The Directorate-General of Foreign Trade(DGFT) has been hauled to court by several corporates over irregularitiesin the allotment of quota for importing edible oils at concessional duty.

This is the first time the DGFT has been accused of openly bending therules to favour certain PSUs and their clientele of actual users overprivate companies.

Corporates that have gone to court individually against DGFT include TinnaOils, which is the Indian arm of global trading and edible oils majorArcher Daniel Midlands, MK

Agrotech, Parisons Foods Ltd, and Jhunjhunwala Vanaspati. A few others insouth India are also learnt to be approaching the courts to seek redress.

The bone of contention is the 1.50 lakh tonnes of sunflower that Indiaallows to be imported, under its WTO commitments to trading partners USA,Brazil and Argentina, at concessional duty every year. Corporates are keento get a part of this quantity this year as the domestic crop is expectedto be low and local sunflower oil prices too high to be affordable.

Till last year, the import of cheaper sunflower oil was wholly canalisedthrough PSUs like CWC, Nafed, NDDB, STCL, state cooperative civil suppliescorporation and state cooperative marketing federations. Companies had torequest these PSUs to bid or quantities on their behalf. From 2004, DGFThas allowed companies to start requesting allocation on their own account.

Bids were invited from both PSUs and private importers, and DGFT’s eximfacilitation committee was asked to allocate quantities once the June 30deadline was over. However, DGFT allegedly did not wait for the allocationcommittee to meet and decide the allocation.

Instead, it made a prior allocation of a huge 1.44 lakh tonnes to STCalone. The allocation was made without even the mandatory public notice.The remaining quantity was then distributed among other PSUs and privatesector bidders.

Irate corporates now say they have no option but to seek legal redress.

The DGFT is expected to inform the Delhi High Court on August 25 about theprocedures it followed while making this large allocation to just onebidder.

According to the terms of the preferential quota, refined rapeseed oil canbe imported at 45% duty and crude sunflower/safflower oil at 50%.Otherwise, these oils have to pay a Customs of 75% and 85% respectively.