8/7/04, Oilmandi - Even as crude varieties of palm group of oils arelevied with a 65% customs duty, many importers allege that they end uppaying 75% duty on it, which is being charged on the refined varieties.

They say they have to pay an additional 10% duty because by the time mostconsignments of crude palm oil and crude palmolein arrive Indian portsfrom Indonesia and Malaysia, the carotenoid content in it fall below thestipulated level of 500 parts per million (ppm).

Its content dissolves further while imported oils are being kept instorage tanks at ports pending the sample testing by the customsauthorities, which takes some time to initiate the procedures. As it is acolouring agent, drop in its content from the stipulated level makes crudepalm oils resemble like refined oils. Due to this, most of the importedconsignments of crude palm oils fail to pass the eligibility test, andhence are being slapped with the customs duty, which is applicable torefined oils.

It is very difficult to get crude palm oil which contain a minimum of 500ppm carotenoid at the time of import into India, as it gets reduced byheating and during storage. This has been vindicated by the findings ofsome tests carried out by two reputed independent laboratories namely,Shriram Centre for Industrial Research and Ganesh Scientific ResearchFoundation, New Delhi, an official of the Solvent Extractors’ Associationof India (SEA) said. The stipulation was imposed in August ’03 to preventmalpractice by a section of importers.

By that time, the duty differential between crude and refined palm oilshad been reduced to just 5%. Yet, some importers were reportedly engagedin malpractice. According to industry sources, those importers used toimport refined palm olein. But after blending stearine with it, they didmanage to pass it off as crude olein to pay 65% duty, instead of a 70%duty which was being charged on refined palm oils.

Though the stipulation on carotenoid value has been in vogue over the pastone year, importers, particularly who import crude palm oils in smalllots, have become critical against it as soon as the ’04-05 Budget widensthe duty differential between crude and refined palm oils by 10%. In thecurrent Budget, customs duty on refined palm oils has been raised by 5% to75% while that on crude palm oils continue to remain the same at 65%.

As it is impossible to meet the government’s stipulation on carotenoidcontent, we did not mind paying an extra 5% duty on crude palm oils. Butnow it pinches us a lot as we are now forced to pay an additional 10% dutywithout any fault of ours, an importer said. To mitigate the problem, thegovernment may prescribe crude palm oil and crude palmolein should have aminimum 2% free fatty acid (FFA) so as to distinguish it from its refinedvariants, SEA said.