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TN uniform floor rates likely to hit edible oil imports

M.R. Subramani

CHENNAI, Nov. 29

THE Tamil Nadu Governments decision to bring edible oil under the uniform floor for sales tax is likely to affect the commoditys imports, particularly of RBD palmolein and sunflower oil, into Chennai port, traders and industry officials said on Thursday.

``All these days, there was no sales tax on edible oil and lot of oil was imported into Chennai port. Importers faced no problem from sales tax officials. But the decision now to impose the uniform floor rate will hit imports, a trading source told Busin ess Line.

On Wednesday, the Tamil Nadu Government, in a press release, said among other things, the State would levy a uniform floor rate sales tax of four cent on edible oil. The tax would come into effect from December 1.

Traders said they were awaiting a notification from the State Government to know the exact implication of the levy.

Imports of RBD palmolein were higher into Chennai port during the just-concluded crop year (November 2000-October 2001) at 4.01 lakh tonnes, though it was lower than the 4.91 lakh tonnes recorded the previous year.

Chennai also topped in imports of sunflower oil at 1.09 lakh tonnes. After Chennai, Kakinada port imported 3.28 lakh tonnes of RBD palmolein and Mumbai a little over three lakh tonnes.

``Imports may now be made at some other ports, the sources said.

Another edible oil importer said the shipments may now be diverted to Kakinada or Mangalore ports. ``Sales to Karnataka and Andhra Pradesh from Chennai may now come to a halt, the importer said.

Besides Chennai, edible oil imports through Tuticorin could be hit. ``Maybe, the importers will have to foot a higher freight cost but it will still be less when the floor tax is taken into consideration, the sources said.

According to trading sources, the erstwhile DMK Government had resisted the implementation of the floor rate but the importer said the decision was under probe by the State CB-CID as the State Government was reported to have suffered revenue loss.

Trading sources said the floor rate would result in a hike of Rs 1.20 per kg of palmolein. ``The hike would include the floor rate, additional duty and two per cent turnover tax.

However, the Government would have to clarify on imports made before December 1. ``The State will have to clarify if sales after December 1 of consignment imported now would attract the sales tax, trading sources said.