With customs duty hike, cement importers in the south in a bind

The imposition of 200 per cent customs duty on all imports from Pakistan has left cement importers high and dry. The move has resulted in nearly 200 containers of cement, lying idle at the Kochi port since February.

According to trade sources, the cargo has not been cleared due to a technical issue following a Central Government order imposing additional customs duty in the wake of Pulwama attack on February 14. Acting on the Finance Ministry’s notification of February 16, the Customs authorities in Kochi have slapped 200 per cent additional duty on the cement cargo.

However, the trade is firm that the cement from Karachi had reached Indian waters before February 16 and the call for additional customs duty is not justified. The issue is not just confined to the Kochi Port alone, according to information, with importers using various other ports in the south to import cement from Pakistan finding themselves in similar straits.

The Cochin Port Users Forum – comprising chambers of commerce, Customs brokers, importers associations and other trade bodies – pointed out that cement importers had already made their payments for the cargo prior to the issuance of the government notification. Ordering for additional duty for taking delivery is uncalled for. Moreover, the date of applicability was not clearly mentioned in the notification and as per the bill of lading, the revised charges would be exempted for the cargo originated/moved from source prior to the date of notification.

Since the cargo had reached Indian shores before February 16, the authorities can at best impose the prevailing tax rates as per the trade agreements with Pakistan, said Arun Jimmy, Proprietor of the Kochi-based Choice Associates which has imported 85 cement containers. The Kochi Port is handling cement from Pakistan from 2010 and the traffic, on an average, has been around 6,000 tonnes per month valued at ₹3 crore. Compared to Indian cement, the Pakistan product is cheaper by ₹30 per bag and is in demand in Kerala.

The Port Users Forum said that the huge variation in the revised duty would cause heavy financial burden to the trade, forcing them to pay various other charges such as port/cfs storage, container detention to the shipping lines and even demurrage. Availability of Pakistan cement has helped to balance rates in the region, besides bringing more revenue to the port and business opportunities for the trade including shipping lines, Container Freight Stations, the transport sector and loading and manual workers.

Perishable commodity

As the cement is a perishable commodity, any undue delay in clearing the cargo would result in its value degradation and damage. Moreover, it would be difficult to destroy the entire damaged stock considering the ecological impact, officials at the Cochin Chamber of Commerce and Industry said.

The Forum has approached the Kerala High Court seeking a legal remedy in the matter. As importers are losing heavily, it urged the government to look into the matter urgently by reissuing the notification.

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