Mindless ways of state apparatus

The government says it is trying to make it easy to do business — sometimes in a manner that makes it more difficult to do business.

The Union Budget proposals in July included amendments in the First Schedule to the Customs Tariff Act, 1975, to  create specific tariff lines for specific products classified as ‘others’, rectify some errors and align Customs Tariff with the global Harmonised System of Nomenclature (HSN). On enactment of the Finance (No 2) Act, these changes were to take effect from a date to be notified in the official gazette.

So far, the finance ministry has not notified the changes. However, on November 13, the commerce ministry notified the changes in the Indian Trade Classification based on HSN, known as ITC (HS), to align the Exim Code entries with the amendments envisaged in the Finance (No 2) Act.

Thus, for the same item, the Exim Code in ITC (HS) became different from the classification in the Customs Tariff. For example, for Zinc Dross, the ITC (HS) classification is 26201910; the Customs tariff entry stays at 79020010. Indeed, the Customs EDI System has no entry for 26201900, as the changes are yet to be notified under Customs laws.

Second, zinc dross that was allowed for import under 79020010 without a licence by entities holding necessary permissions from a State Pollution Control Board, has now become restricted under 26201910. Also, its import is now subject to the ‘import of zinc ash and zinc skimming permitted as per Policy Condition of Chapter 26’ condition. Which does not make any sense; zinc dross is different from zinc ash/skimming. It appears the condition for import of zinc ash/skimming has simply been copied as the condition for import of zinc dross, without any application of mind.

The net result is confusion and hold-up of several consignments of zinc dross at ports. This is despite the transitional arrangements in Para 1.05 of the Foreign Trade Policy that protects shipments made before the date the import of an item gets restricted.

The entire fiasco raises several questions. How did the commerce ministry unilaterally notify changes in ITC (HS) Exim Codes when the finance ministry had not yet given effect to the provisions of the Finance (No 2) Act for making necessary changes in the Customs Tariff? Why has the finance ministry not notified the necessary changes in Customs Tariff even weeks after the commerce ministry amended the ITC (HS) Exim Codes?

When the objective of the changes is to create specific tariff lines for specific products classified as ‘others’, rectify errors, align the Customs Tariff with HSN and bring the ITC (HS) Exim Codes in sync with the Customs Tariff, how have new restrictions crept in? How is it that a condition for import of zinc ash/skimming found its way as a condition for import of zinc dross through a mechanical copy-paste exercise?

A notification is drafted at a junior level and goes through several layers in the bureaucracy before it is signed by the minister. How is it that no one in the entire chain of command goes through the draft or raises any relevant questions before the changes are notified?

It is time those at the helm wake up and take corrective action.

Email: tncrajagopalan@gmail.com