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Wednesday, Feb 20, 2002

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Soap industry peeved at customs classification

G. Chandrashekhar

MUMBAI, Feb. 19

INCORRECT classification of a key raw material for soap manufacture — crude palm stearine (CPS) — by some customs commissionerates has upset the domestic soap industry, which has moved the Centre for redressal.

According to industry representatives, import of CPS has been going on for many years and the customs houses correctly classified the item under Chapter 15 of Customs Tariff Act, which covers "palm oil and its fractions whether or not refined, but not chemically modified."

However, with the opening of new ports and setting up of new customs commissionerates, some customs houses have started to classify CPS under Chapter 38 which covers Miscellaneous Chemical Products.

Under Chapter 15, CPS attracts customs duty of 35 per cent basic plus 4 per cent special additional duty, while under Chapter 38, in addition to the above, a 16 per cent countervailing duty is payable. Even though Cenvatable, levy of CVD locks up funds and involves avoidable paper work, importers complain.

In separate representations to the Ministry of Finance and the Central Board of Excise and Customs, both Indian Soap and Toiletries Makers' Association and the All India Liquid Bulk Importers and Exporters Association (AILBIEA) have pointed out that CPS was obtained by the process of fractionation from crude palm oil and was not chemically modified; and therefore, it would be incorrect on the part of some customs houses to classify the item under Chapter 38.

Talking to Business Line, Mr Jayant Lapsia, President of AILBIEA said: "Technical opinion within the country and worldwide has shown beyond doubt that CPS is not a fatty acid, but only a fraction of crude palm oil. We have already moved the CBEC to direct all customs houses to classify CPS correctly under Chapter 15 which will ensure uniformity across customs houses in the country and bring relief to aggrieved importers."

Interestingly, the Deputy Chief Chemist at the Bombay Customs House has held that CPS was a fraction of palm oil based on which Mumbai classifies CPS under Chapter 15. However, officials in ports such as Mundhra seem to have a different view. "We are confident that the discrepancy will soon be sorted out on the basis of overwhelming technical opinion," Mr Lapsia added.

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