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"The exchange does not have any liability regarding these stocks," said the National Commodity & Derivatives Exchange (NCDEX).
"The exchange is also not liable for non-compliance by any member and market participant with all applicable laws on the underlying commodity as it only provides a trading platform in forward contracts and does not own, deposit or deal with the goods in the warehouses," it added.
The exchange, in a statement late this evening, said it wants the government to allow them to clean the stock.
"We will seek government intervention in the interests of the industry and recommend that holders of the stock and market participants be given an opportunity to remove the mineral oil coating and improve quality."
NCDEX claimed the exchange has always ensured delivery of commodities in accordance with its contract specifications.
Last week, the Kerala Food Safety Commissioner ordered NCDEX to destroy 900 tonne of adulterated black pepper worth about Rs 350 crore.
With seizure of six of its warehouses in Kerala, black pepper traders of NCDEX made representation to commodity market regulator FMC and also to the exchange demanding delivery of valid goods or refund of the pepper's value. The agri-bourse is promoted by NSE, ICICI Bank, LIC and Nabard.
According to the Prevention of Food Adulteration Act, use of any mineral oil in pepper is prohibited. Mineral oil, used in adulterated black pepper, is made of burnt diesel, paraffin oil, white petroleum and other un-digestible and insoluble petroleum products.
Black pepper coated with mineral oil is considered carcinogenic, and even otherwise harmful for human consumption.
The exchange said in December that the Food Safety and Standards Authority of India (FSSAI) had seized pepper stock from some Kerala warehouses accredited by it after buyers complained that the stock contained mineral oil.
Since then, FSSAI had been testing the stock with help from Spices Board and the exchange. FSSAI has now issued an order for destroying 93 lots found with mineral oil traces, the NCDEX release said.
The exchange claimed that following the order, the respective owners have been informed to take up the matter with FSSA and undertake appropriate action. Lots that have been found to meet the FSSA standards are to be released to the respective owners as per the order.
In fact, most of the stocks in the godowns sealed by FSSAI were bought by the holders in off-market transactions outside the exchange platform, the release claimed.
However, industry players have informed the exchange that farmers/traders engaged in cultivation, production and trading of pepper adopt various methods to preserve the spice, including by adding small quantity of mineral oil.
Traders routinely use a process of steaming to later remove the mineral oil coating.
Last December, six warehouses accredited by NCDEX in Ernakulam and Alappuzha districts of Kerala were sealed over complaint of adulteration of pepper stock.
"We have ordered that black pepper found to be adulterated with mineral oil be destroyed immediately in concurrence with Spice Board," Kerala Food Safety Commissioner Biju Prabhakar said in an order last week.
Accordingly, about 6,000 tonne of black pepper was sealed. The Commissioner sealed six warehouses and issued notice to NCDEX to ensure the commodity does not enter the market. Spices Board was asked to examine the samples of the black pepper.
Meanwhile, the Indore Bench of Madhya Pradesh High Court will hear on September 17 a petition filed by the Kalimirch Vyapari Association, which represents traders suffering due to non-delivery of black pepper by NCDEX.
The association members have reportedly bought black pepper on NCDEX by paying about Rs 350 crore.
