The Indian Customs Department, an arm of the Finance Ministry, has fined two exporters ₹75 lakh for “misleading” authorities by attempting to ship non-basmati white rice as non-basmati white rice. biological.

In an order placed last month (a copy is available with sector of activity), the Commissioner of Customs (Appeals) also imposed an additional fine of ₹95 lakh on Reliteaur Foods Private and ₹65 lakh on Elite Agro Specialties for the violation. The two exporters were asked to pay ₹95 lakh and ₹65 lakh to avoid confiscation of their cargoes of 25,500 tonnes and 16,700 tonnes, respectively.

However, industry experts believe that customs authorities should have acted more harshly and the sanctions should have been lighter than those they could have imposed.

Detained shipments

The Commissioner of Customs (Appeals) issued the order after the shipments of the two exporters on board merchant vessels Della and SW South Wind-I were detained by Customs along with the vessels. Customs authorities stopped the shipments because they suspected that non-basmati white rice, banned from July 2023 to September 2024, was being exported as organic non-basmati rice.

On August 12, sector of activity reported alleged irregularities in organic rice exports after their April-July 2024 shipments exceeded those of the entire 2023-24 fiscal year. Questions were raised about the buyers, mainly from African countries, and the price of shipping.

In his order, Additional Commissioner Vishwajeet Singh said he was taking a lenient stance on the buyout fines as each of them was paying “heavy” detention and demurrage charges of ₹17 lakh per day for the detained vessels at Kandla port.

Singh said he found that the exporters had indulged in “misdeclaration of goods by declaring non-basmati white rice as organic non-basmati rice (white rice)”, making their goods, totally valued at ₹165.34 crore , liable to confiscation under the law. provisions of section 113(d) of the Customs Act of 1962.

The role of APEDA

Stating that Customs had cleared exports on the basis of ‘provisional’ transaction certificates, the exporters obtained from the Sikkim State Organic Certification Agency (SSOCA), authorized by the nodal agency for organic exports, the Agricultural and Processed Products Export Development Authority (Apeda).

Apeda confirmed that SSOCA had issued the provisional transaction certificates to the two exporters, which were valid at the time of filing the shipping invoice. However, on September 19, Apeda informed the customs department that the certificate issued to it was withdrawn for two years.

The Additional Commissioner accepted the exporters’ argument that the certification was valid at the time of application for shipment. He said Apeda had not provided a copy of the order despite various emails.

On September 30, the Apeda president wrote that, based on a detailed investigation into the matter, it was conventional rice. Referring to the exporters’ request to file fresh documents to export the product as conventional non-Basmati rice, the Apeda chairman urged the additional commissioner to look into it as the shipments were no longer classified as organic.

“Serious violation”

However, Singh said exporters admitted that their consignments were conventional rice, due to fumigation carried out while loading into the vessel. And based on this evidence, it had been established that the shipment of non-basmati white rice was wrongly declared in the shipping invoices as “organic non-basmati rice (white rice)”.

Industry experts have stressed that a provisional certificate is not final. Declaring an organic product on the basis of a provisional certificate does not guarantee that it is correct and the customs authorities should therefore not have taken the provisional transaction certificate into account.

They said Apeda authorities had failed to take action against the exporters, despite their initial complaints of “serious violation” of the regulations. They also questioned why the Apeda authorities asked the customs authorities and the Directorate General of Foreign Trade (DGFT) to look into the matter.

Experts said the customs department had issued its orders regarding the exporters’ appeal without a copy from the National Accreditation Board (NAB), responsible for accreditation, assessment and implementation of export programs. accreditation of certification bodies.

“In accordance with Apeda’s letter, a thorough investigation was conducted. Why didn’t he share the copy of the NAB order with Customs? » asked an expert, who did not wish to be identified.

Adjective weak

The expert claimed that Apeda kept his investigation report secret. “Apeda’s lack of transparency affects the system. For example, the U.S. Department of Agriculture and European Union systems are very open about issues and orders,” the source said.

Others wondered how exporters could be allowed to change the description of their shipments from organic to non-organic. “How can the nature of freight change? What would they have done if the Center had continued restrictions on white rice exports? » asked a second expert.

Industry experts criticized the fact that the customs order used the weak adjective “appeared” when the case was conclusive and questioned whether this was done to “issue a weak order”.

Economic delinquency?

Referring to the order stating that the exporters had “deliberately misdeclared” the cargo, they said such “misrepresentations” amounted to “deception and fraud”. “Isn’t this an economic crime? », asks a second expert.

Referring to the Customs order that consignments were cleared on the basis of transaction certificates issued by SSOCA, the traders said the exporters appeared to blame their “misdeclaration” for the issuance of the provisional transaction certificates.

The second expert said huge quantities of white rice had been exported as organic rice and government agencies should conduct a thorough investigation.

Industry experts wonder whether the customs order is blaming Apeda for the fiasco and taking a lenient stance. “Will the organic rice affair also be buried like the cotton and sugar scam? » asked the first expert.