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  • Karnataka cashew importers allege over-billing by Customs

    Jun 3rd, 2019

    The Karnataka Cashew Manufacturers’ Association (KCMA) has said that its members are facing problems in getting imported raw cashew nuts (RCN) cleared by the Customs department in Mangaluru.

    In a representation to the Chairman of the Central Board of Indirect Taxes and Customs, KCMA said the Customs officials have arbitrarily fixed the floor price for import of RCN (HS Code 08013100). The price fixed by the authorities is almost 30 per cent higher than the market price.

    ‘Value increased’

    Subraya Pai, KCMA president, said in the representation that though the association had made several representations to the authorities in Mangaluru Customs to value RCN on the basis of present market prices, the same has not been considered by the them. The bill of entries filed by the importers are reassessed, and value is increased mechanically. It is being done for almost 100 per cent of the bill of entry filed by the importers.

    “The arbitrary actions by the Custom authorities have resulted in grave injustice to the industry as to the export competitiveness of the industry is totally eroded as exporters are not being able to effectively utilise the Advance Authorisation Scheme,” Pai said in the representation.

    Duty-free imports

    The Advance Authorisation Scheme allows duty-free imports of raw material for exports with a value addition of 15 per cent. “Since the Customs authorities are arbitrarily increasing the import value by 30 per cent, the exports are now required to attain a value addition of 45 per cent, which is practically impossible,” the representation said.

    Exporters are forced to use duty-paid material for exports. As a result of this, they have lost the export competitiveness totally.

    The importers are forced to pay additional import duty and IGST over and above what is legally due, the representation said. With almost 30 per cent value increase, IGST that is paid can never be recovered as the total value addition in the industry in less than 15 per cent. So there is perpetual carry over of input IGST.

    ‘No incentive to undervalue’

    Most imports of RCNs take place from the least developed countries with nil import duty. The importers are required to pay only IGST, which is refundable as input tax under GST system. Hence, there is absolutely no incentive to undervalue the imports, the representation said.

    Stating that the industry is sailing through a crisis situation due to sudden fall in prices, Pai said many units in Kerala have already closed down, and industries in other places are on the verge of being closed.