Top officials at the Indian Drug Manufacturers' Association (IDMA), the apex domestic pharma body representing around 1,000 members, say that customs officials are insisting on payment of duty in cash to clear imported goods. This, they say, is despite the fact that these importers have adequate credit under the passbook scheme or hold valid duty entitlement pass book/advance licences.

Customs officials have also apparently disregarded a policy circular (a clarification on the erstwhile pass book scheme of the Exim Poicy 1992-97 and utilisation of credits) issued by the ministry of commerce in July 1998. This circular, issued by the deputy director general of foreign trade,stipulates that credit earned under the pass book scheme shall be valid for a year from the date of grant of credit or up to March 1999, whichever is earlier.

But customs officials, it is learnt, claim that their department technically falls under the purview of the ministry of finance and hence are not bound, per se, by the above circular.

Commissioner of Customs (Exports) Rakesh Sharma, however, told The Financial Express that he was "unaware" of the use of such coercive methods. "Such misinformation is being merely spread by junior functionaries. Such affected parties must come up to me. We are not, to my knowledge, denying clearance under the pass book scheme," he said.

IDMA president Gopakumar G Nair said that most of these imported inputs are usually required for honouring export commitments and such delays could hit exports worth several hundred crores or result in cancellation of orders. Besides, there has been an increase in the surety/bank guarantee rates from 25 per cent to 100 per cent formanufacturer exporters, Nair said and added that a representation had already been made to the principal commissioner (Customs) on this front.

"Industry is already reeling under recessionary pressures and huge credits earned under the pass book scheme will simply lapse if the situation is not remedied," another official added. Significantly, IDMA says that it may be forced to examine the legal route to assist the industry if it has no other option left.

"Industry is always made the scapegoat to meet their (customs) targets. This is nothing but highway robbery. Government must clarify whether it is actually serious about export growth, before harassing industry. And this cannot happen unlesss both arms, the finance and commerce ministry, work in unison," an official with an Indian chemicals firm said.

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Excise too gets into the act: If customs authorities have been using "unfair" methods to meet revenue collection targets, brethren at the excise office are making sure that they are one stepahead.

Excise officials have allegedly threatened confiscation of goods and even the arrest of company directors where goods are being attempted to be cleared availing Modvat. Excise officials, IDMA sources say, insist that goods be cleared only after cash payment (through the PLA).

Sources also claim that excise officials are increasingly disputing and disallowing process losses on pharmaceutical formulations and seeking a reversal of Modvat for five years. This again is being done backed by a threat of raids. The differential is being demanded in cash through the PLA only.

Similar threats are being sounded out in the case of settlement of pending cases under the Kar Vivad Samadhan Scheme, sources added.