CITA Cautions Govt On Sugar Imports Disguised As Stuffed Molasses

New Delhi, Aug 25: | Updated: Aug 26 2002, 05:30am hrs
The inventory-loaded sugar industry has woken up to the recent attempts being made by some trading houses in the country to import raw sugar against zero duty. They have suggested to the government several ways to plug loopholes in the system and cautioned against possible illegal imports.

The Centre for International Trade in Agriculture and Agro-based Industries (CITA) has cautioned the government that there may be a possibility of stuffed molasses being conveniently used as a medium by unscrupulous overseas trading houses to export sugar to

India. There have already been such cases of illegal sugar imports entering the US and Canada. It has, therefore, demanded an increase in custom duty on molasses to 60 per cent from the existing 15 per cent.

According to CITA executive director Vijay Sardana, two years ago, a British firm in Canada had exported sugar to the US under the guise of stuffed molasses, circumventing the then prevailing US sugar quota regime. This game was, however, halted when the US Customs Services in 2001 extended the import quota regime to molasses also and the Court of Appeals for the Federal Circuit in Washington upheld the decision. Thereafter, the US Senate passed a legislation imposing tariff rate quota on molasses and sugar containing products.

Similarly, the Canadian International Trade Tribunal (CITT) is already seized with the problem of dairy blends having 49 per cent butteroil and 51 per cent sugar being imported, circumventing the tariff quota regime on sugar.

Further, Mr Sardana stated that already the industry which is having a huge inventory of 10.50 million tonne is concerned over the duty free import of 35,000 tonne of Brazilian raw sugar by the French multi-national in India, Sucden. Sucden has taken advantage of the loopholes in the advance license (AL) scheme and this raw sugar being imported by them are not subjected to the usual duty of 60 per cent.

Sugar imports have been steadily on the rise. Earlier, as per AL scheme, trading houses could import every 1.05 tonne of raw sugar against the gaurantee to export one tonne of processed refined sugar.

These norms have now been changed and importers can import 1.2 tonne of raw sugar against a gaurantee for export of every one tonne of processed refined sugar with allowance of 20 per cent for wastage in the process of refining.

This increase in quantity of imports allowed under

AL scheme to 1.2 tonne and allowing 20 per cent for processing loss was unwarranted, he said. As per international norms, the processing loss is only seven to eight per cent. If the raw sugar has high polarisation value, refining loss will be much less.

Another anomaly, as per customs classification, raw sugar is defined liberally to mean "sugar whose content of sucrose by weight in the dry state corresponds to a polarimeter reading of less than 99.5". This is close to the 99.8 polarisation value for plantation white sugar.

Mr Sardana said that in view of such existing ambiguities in law and prevailing low global prices, import of 120 tonne of high polarised value raw sugar will result in offloading of at least 15 tonne in domestic market even after meeting the export obligation of 100 tonne.

Concerns over reported imports of raw sugar at zero duty under the advance license (AL) scheme was expressed at the Sugar Development Council (SDC) on Wednesday chaired by the Union Food Secretary, Rishi Dev Kapur.

The SDC was unamimous in its view that the government should not give any inland transport subsidy for the export of refined sugar processed from the imported raw sugar.

The SDC deliberated on limited options before it. SDC is under the food ministry and food ministry defrays the cost of inland transport of sugar meant for exports.

In this situation, the food ministry can at best withdraw transport subsidy in case of export of those products processed from imported raw sugar. There are larger issues involved apart from defraying the cost of inland transport, said Mr Sardana.

He said that the government must immediately raise the custom duty on molasses to 60 per cent. Options for increasing import duty on sugar should be reviewed in context of the depression in global prices.

Mr Sardana also demanded imposition of excise duty on processing of imported raw sugar and withdrawal of all incentives for processing of imported raw sugar.