The Hindu Business Line : Spurt in PFAD, palm stearin imports: Covert CPO shipments?

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Spurt in PFAD, palm stearin imports: Covert CPO shipments?

G. Chandrashekhar

Mumbai , Sept. 8

There is more than what meets the eye in the unusual increase in import of palm fatty acid distillate (PFAD) and crude palm stearine (CPS) in the last several months as reported in this newspaper (BL, September 7).

It is not just that imported PFAD and CPS are diverted for purposes other than what they are imported for — soap making etc. Apparently, there is more. Those in the trade closely associated with import and marketing operations confide in private the "trade secrets" of unscrupulous dealers.

The modus operandi is something like this. Imports of these so-called industrial purpose oils are made in containers — usually 200 kg drums.

While the first two or three rows of drums contain the declared goods (PFAD or CPS), majority of other drums contain crude palm oil (CPO) of edible grade. However, the entire consignment is declared and cleared as PFAD or CPS.

While statistics show PFAD or CPS imports, only a small part of the arrival actually answers the description. Often, the major portion is actually CPO, which is sold in the market as such.

Misdeclaration of imported goods results in loss of revenue. Obviously, revenue authorities have to be lot more vigilant than they currently are.

It is clear that sampling methods are unscientific and quality verification method at the point of entry suspect. Because the goods are declared as industrial oils, the PHO (whose duty it is to test imported vegetable oil for compliance with food quality norms) may not even be aware of what's happening, that is clandestine import of edible grade crude palm oil in the guise of industrial grade oil.

The development must make the revenue officials and port health authorities across the country sit up and take notice. Ports where there is a spurt in arrivals deserve closer attention. A closer coordination between agencies charged with the responsibility to ensure integrity of revenue collection and food quality is necessary.

Misdeclaration of goods is not unusual for the country's vegetable oil trade. The fact that traders are able to continue to indulge in malpractices exposes the official laxity in enforcing clearance systems.

This also brings to the fore another issue peculiar to the vegetable oil sector — too many categories of like goods and too many rates of customs duties and tariff values. Unless categorisation of oils is simplified and rates of customs duty rationalised, resourceful traders will continue to explore newer ways to beat the system.

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