A K Banerjee : Customs sidesteps DGFT orders, sends basmati rice to pvt labs for tests

A few months ago, more than 50 containers were detained by the Customs, Export Division, Tughlakabad, New Delhi for drawal of samples in order to ascertain whether the rice being exported was basmati or non-basmati. 

The wisdom of the department is questionable here as it completely ignored the DGFT circular (see box) in violation of which the drawn samples were sent for examination to a private agency, and not the government agency, AGMARK.

Customs may draw random samples for testing and send these to AGMARK testing centres.  But during that period, Customs cannot hold back export consignments for want of test reports, and export will be allowed after samples are drawn. 

According to the notification, in cases where test reports of samples are found at variance with the export declaration, Customs shall report the matter to the nearest Zonal Joint DGFT.

Did Customs follow the same procedure as mentioned in the DGFT circular?

            Continued on Page 15

ernmknown if SGS, Gugaon is equipped enough to carry out such tests, and on whose orders were the samples sent there.

The firm apparently is not listed on the panel of the Customs Departmentt for f samples either. Ironically, the department, while passing the order, took the view that the Agmark website shows that the maximum limit of tolerance for other rice in basmati rice for export purpose is 20 per cent. And, the department, on the basis of this, says that the rice exported is not conforming with the parameters of basmati rice as per Agmark specifications. The department, thereafter, says that the export should be disallowed and goods be confiscated under the Customs Act, 1962. 

Is it not strange that while the department uses the AGMARK specifications as its yardstick, it trusts a private agency over a government agency to test the rice samples? The department, while passing the orders, had also mentioned that the Supreme Court holds that it is a basic and settled law that “what is admitted need not be proved”, and since the test report proved that the goods was misdeclared, no further evidence is requited to substantiate the offence.  It has also been learnt that a few exporters disagreed with the report sent by the SGS Pvt Ltd. Gurgaon, on the pretext that they were unaware of the methodology used by the firm for the classification of alternative varieties of basmati rice. They also claimed it to be a difficult task to know this by usual physical inspection parameters of the rice unless and until DNA tests have been carried out.

The exporters also claimed that the specifications — of grainlength not being less than 7 mm and the ratio of length and breadth of the grain being more than 3.6 mm — was more than met in their case, and that they had not violated the notification in this respect.

Besides, the private agency also took a long time to send reports of some cases. During that period, the containers were kept at the ICD, Tughlakabad, for which the exporters had to pay heavy demurrages. It has also been learnt that the private agency found some samples of the rice as being non-basmati and, accordingly, the Customs Export Division, ICD, Tughlaqabad booked cases against the defaulting exporters and fine and penalties, too, were imposed on them. Here, it may be mentioned that the DGFT says in case ofvariance, the matter shall be brought to it. However, it appears that the Customs Department has taken an unilateral deciision in this case on its own as rice exported are sent through free shipping bills. 

In a few cases, however, exporters went ahead and challenged the report of the SGS, Gurgaon, as they were firm that they were exporting basmati rice. Consequently, the samples were again drawn and sent to AGMARK, which confirmed them to be basmati. Reportedly, a number of importers imported rubber oil and in these cases, too, samples were drawn and were sent to private labs for tests.

It has also been learnt that after a few exporters challenged the report, the department began sending the samples for testing to Agmark, a government agency.  The department now needs to make clear as to reports of which of the two agencies should be believed.