Dispute over 20% export duty on parboiled rice holds up over 100 containers in Chennai

Over 100 containers of parboiled rice meant for exports have been held up in Chennai port in a dispute over the payment of 20 per cent export duty which came into effect on August 25.

The dispute over the payment continues despite a clarification from the Department of Revenue, Ministry of Finance, on September 6 that export duty will not be applicable to goods that have entered the port or the container freight station before 10.49 p.m on August 25. 

• Also read: India imposes 20% export duty on parboiled rice, MEP of $1200/tonne on basmati soon

August 25 order

The Official Gazette had published the imposition of 20 per cent export duty at that time. The August 25 order said the duty would come into force from October 16. It said goods should have entered the customs station for exports before the said time on August 25 and it should be backed by irrevocable letters of credit(LCs). Communications from banks on the opening of the LCs should be clear that they were opened before August 25.

The September 6 order said the goods should have been loaded before 10:49 pm on August 25. Chennai Customs officials, who did not wish to be identified, told businessline that the consignments would be permitted only if “let export go” orders had been passed.

“You have to amend the shipping bill under duty for the goods to be cleared,” an official, who did not wish to be identified, said.

The official said consignments should not only have entered the port premises by August 25, but should have got the “let exports go” orders. 

• Also read: Indian parboiled rice prices surge as global buyers look to shift from white rice

Delaying tactics?

According to trade sources, exports would be allowed duty-free till October 15 if shippers had LCs. “So, where is the need for the cargo to be inside the Customs area?” wondered an exporter.

Trade analysts said the hold-up could be one way of delaying shipments and curbing exports. “The 100-odd containers hold up is only for Chennai. There could be similar hold-ups in other ports too,” an analyst said.

The Centre imposed the 20 per cent export duty as part of its efforts to curb rice exports and ensure ample supplies in the domestic market. The move followed after it banned exports of white rice on July 20. In September last year, it banned shipments of broken rice. 

• Also read: Rice prices top $600/tonne in global market except Indian parboiled

A couple of days after imposing 20 per cent export duty on parboiled rice, the Government fixed $1,200 a tonne as the minimum export price for basmati exports. 

India’s move to curb the cereal’s exports has resulted in the global rice market soaring to a 15-year high. According to the Food and Agriculture Organisation, India’s rice exports could drop to a four-year low in view of the curbs. 

The government imposed 20 per cent duty on parboiled rice exports from August 25.  The Department of Revenue clarified that consignments that entered the ports before 10:49 p.m. on August 25 need not pay the duty. But Chennai customs says duty-free export will be allowed only if the consignments had been given ‘let exports go’ clearance. As a result hundreds of containers are held up.

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