T N C Rajagopalan: Tough scrap import norms likely

EXIM MATTERS

The death of several labourers in explosions while unloading imported steel scrap containing explosives at Bhushan Steel Industries in Ghaziabad raises a number of questions besides the role of supervisors, who have been suspended on grounds of negligence. The repercussions could also be significant.

Metal scrap can be imported without a licence. If the scrap originates from a country affected by war, the contract between importer and exporter and a pre-shipment inspection certificate in the prescribed form, from any of the notified agencies, have to be produced stating that the consignment does not contain any type of arms, ammunition, mines, shells, cartridges or any other explosive material in any form, either used or otherwise, and that the imported item(s) is actually metallic waste/scrap/seconds/defective as per the global parameters for such a classification.

The director-general of foreign trade (DGFT) is required to regularly review the working of the notified inspection agencies.

In practice, it is difficult to de-stuff containers containing metal scrap at the port or inland container depots and stuff them again. Generally, inspectors open one side of the container and inspect the consignment.

Without the aid of technology, they cannot detect the explosives buried under the heap of scrap. They are also under constant pressure to expedite clearances and facilitate trade. So, the Customs rely on the pre-shipment certificates and clear the consignments.

Barely seven weeks back, the Kolkata Customs, (through public notice No. 54/2004 of August 19, 2004) mandated a 100 per cent examination for imported metal scrap, after removal to a separate yard or bonded warehouse.

Importers were warned that in case of any explosion during transit, de-stuffing or examination, they would be held responsible. They were asked to give an undertaking to that effect.

The Central Board of Excise & Customs (CBEC) does not permit the Customs commissioners to issue public notices prescribing such restrictive procedures. Even if they do, the CBEC and other Customs houses should be informed and get a copy.

Many questions arise. Did the Kolkata Customs issue the public notice on the basis of any specific information regarding explosives concealed in metal scrap consignments and expected problems? Was the CBEC aware of the public notice before or after its issue? Why other Customs houses were not asked to issue similar public notices? When did the DGFT last review the working of the concerned pre-shipment agency? Is it fair to blame the junior officials, whose constraints are well known?

It is now certain that the government will impose stringent terms for imports of metal scrap. The government might insist that metal scraps can be imported only in shredded condition and that the consignments must be subjected to 100 per cent examination before clearance.

Without equipments like "container scanners" such restrictions might lead to more congestion at the ports. As it is, since last two months, metal scrap imports are not being allowed at the Nhava Sheva port to overcome congestion. In turn, scarce availability of metal scrap might cause rise in prices, affecting smaller units severely.

tncr@sify.com