The Hindu Business Line : Valuation disputes may hurt Mumbai port use

Mumbai, Dec. 9 Even as commodity markets are still to come to terms with an extraordinary price collapse since July, with rates dropping lower by the day and domestic importers continually renegotiating contracts and prices, Indian Customs houses seem to be out of sync with reality.

Revenue officials tasked to appraise imported goods and valuate customs duty are reportedly not only unwilling to accept lower invoiced prices but are loading the value of the cargo, often arbitrarily, complain importers.

As a result, importers are forced to pay a higher amount of customs duty than due.

Importers using the Mumbai port and the Customs house here have complained of arbitrary loading of valuation in some cases despite published evidence of falling market and low invoice prices. Even industrial goods that are critical inputs for manufacture of chemicals, pharmaceutical and polymers have not been spared, pointed out irate importers.

Many importers Business Line contacted were unwilling to go on record for fear of reprisal by Customs officials. Speaking on condition of strict anonymity, some importers pointed out that they have been in this business for long but have begun to face valuation problems only in recent months.

“Appraisers and other revenue officials have no idea of what is happening in the global and Indian commodity markets; but, worse, they are unwilling to accept the current reality in terms of lower prices, often renegotiated from earlier high-priced contracts,” lamented an importer of industrial goods.

Arbitrary loading of the value of imported goods would mean the importer will have to shell out more money towards customs duty, especially at a time when a number of industries are suffering the pangs of economic slowdown and liquidity crunch.

“Under the circumstances, the attitude of the revenue department in arbitrarily loading the value hurts even more,” rued a market participant.

Winners in deal

Stung by the callous attitude of the Mumbai Customs house, some importers are now beginning to divert their imports to ports and customs houses that are more user-friendly. Kandla and Mundhra have emerged favourites.

To be sure, commodity prices have collapsed across the board. Energy products (mainly crude), industrial metals (steel), base metals (copper, aluminium) and agricultural products (soyabean oil, palm oil, grains) have all witnessed price decline of 50 per cent and more. Industrial products such as methanol, glycerine and styrene are no exception. “This market reality is being overlooked by revenue officials in their excessive zeal to garner revenue,” commented an importer.

Hoping for best

Ironically, it was only a couple of weeks ago that the Mumbai Customs house convened a meeting of over a dozen top importers to seek their co-operation to ensure that import volumes through Mumbai are expanded so that revenue collections meet the target.

When contacted, Mr Jayant Lapsia, President of All India Liquid Bulk Import Export Association, said he was in constant touch with the Customs house on the issue of valuation and was hopeful the issue would be sorted out soon in a fair manner.