The Directorate of Revenue Intelligence (DRI), Kolkata, has seized a consignment from Titan Steel Corporation of the US, on account of duty evasion.
Sources close to the development said, 32 packets were examined at Haldia and selected at random, totalling approximately 160 tonne, declared as tin free steel (TFS) seconds/ defectives/ mislacquered. None of the packets, apparently, contained material as declared. Instead, they contained electrolytic tinplate seconds/defectives in plain misprinted, lacquered or coated conditions.
Further, the invoiced price of the material examined was $225 whereas the applicable duty based on the floor price imposed by the government to deter the entry of such products is $465 per tonne. The intention therefore was duty evasion to the tune of Rs 4032 per tonne. The consignees of the material are Trade Link Implex of Tinsukhia, Assam, and Shekhawat Enterprise of Boraj district in Jaipur.
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Sources said, traders are increasingly importing defective tinplates under the declaration of defective TFS since the latter category does not come under the purview of the floor price imposed by the government.
Tinplate is mainly used by the foodstuff tinning and canning industry, and defective tinplates come at rock bottom prices. The government had imposed a high floor price on defective tinplates taking into consideration its harmful effects on health from poisoning of food canned in defective tin material.
Imports of steel declared as TFS seconds have risen from 18,500 tonne in 1997-98 to 48,000 tonne in 2000-01. Between April and September this year, 25,000 tonne of the so called TFS have already landed, and total imports under this category are likely to exceed 50,000 tonne by the fiscal-end.
As the Haldia case has shown, the government was being deprived of around $240 per tonne (a duty incidence of Rs 4,032 per tonne) as a result of false invoicing. Customs penalty of Rs 17 lakh has been imposed on the two importers.
Sources said, on an annualised basis, duty evasion by such unscrupulous traders would amount to around Rs 16 crore (taking 80 per cent of the material being imported as misdeclared).
Sources added that not only is the government losing revenue, the imports of secondary/defective tinplate poses a severe threat to people consuming canned or tinned food.
"Perhaps the customs officials at Haldia, Nava Sheva and Chennai ports, as points of landing of such material, should be more vigilant to avoid loss to both the government and citizens at large. Also, the government should take note of the serious problem and perhaps include TFS in the floor price mechanism" sources said.