The Hindu Business Line : Cloves from Pakistan detained; Spices Board finds tax evasion

SOME of India's neighbours are of late exporting several commodities to the country despite being net importers of the items. For instance, Pakistan now exports cloves of which it is a net importer, as it is not grown in that country at all.

Some domestic trading houses are importing the commodities from these countries to get duty concessions, depriving the country of substantial sums towards customs duty while the importers make huge savings on import duty.

These moves have come to the notice of the authorities recently when the Kochi Customs detained a consignment of 24 tonnes of cloves imported from Pakistan by a Bangalore-based company, suspecting its country of origin, and sought clarifications from the Spices Board. The Board had then taken up the issue with the Karachi Chamber of Commerce and the Indian Embassy in Islamabad seeking clarification "whether the cloves that arrived in the consignments are of Pakistan origin."

While the Chamber remained silent on the issue, the Embassy responded, saying: "Local enquiries revealed that clove is not grown in Pakistan,'' sources from the Commerce Ministry , told Business Line. They said the samples from the consignment received from the Customs were tested in the Board's laboratory and it was found out to be of inferior quality. The Spices Board, he said, conveyed its findings to the Customs authorities on Tuesday along with the report of the Indian Mission in Pakistan. However, they added that the country of origin certificate issued by the authorities in Karachi showed that cloves exported were of Pakistan origin.

Indian traders who import such commodities for domestic consumption from their neighbours would get 90 per cent concession on the 70 per cent duty imposed by the Government. Given that the value of the produce in the invoice is Rs 74.92 a kg, at a normal duty rate of 70 per cent, the import duty amounts to Rs 52.44 a kg. However, under concession, the importer has to pay only Rs 5.25 a kg. At this rate, there is a tax evasion of Rs 11.32 lakh, the sources pointed out.

According to market observers here, copper consignments have been arriving in India from Sri Lanka as the produce of that country. When the malpractice was brought to the notice of the Government by the copper lobby, copper imports were stopped. Still Sri Lankan marbles are being exported to India, the sources said.

Further, pepper is also landing in the Indian market as produce of the island-nation, as imports could be made duty free from there, they alleged.

Exploitation of the duty concessions by such practices is depriving the Indian spice growers of the benefits of the good domestic market, the observers said.

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Cloves from Pakistan detained; Spices Board finds tax evasion