Date:15/12/2004 URL: http://www.thehindubusinessline.com/2004/12/15/stories/2004121500461000.htm

Back Carotenoid norms on crude palm oil imports may go

Harish Damodaran

New Delhi , Dec. 14

THE Union Government may do away with the minimum 500 mg per kg carotenoid specification currently applicable on imported crude palm oil (CPO) for it to attract 65 per cent basic customs duty, as against the 75 per cent charged on refined oil.

The Ministry of Consumer Affairs, Food and Public Distribution has already mooted a proposal to `delete' the 500-2,500 mg per kg total carotenoid requirement (as beta carotene) on imported CPO consignments imposed by the Revenue Department since August 1, 2003. The Ministry has suggested that this specification may be retained only for crude palmolein. Further, it has sought that the minimum acid value specification on both CPO and crude palmolein be raised from two to four.

According to sources, the proposals are currently being examined by the Finance Ministry and "a decision would be taken very soon".

The carotenoid specification on "CPO and its fractions" (which covers crude palmolein as well) was imposed following reports that the bulk of the CPO or crude palm oil being imported into the country was in reality degraded refined oil. The main incentive to do this was the huge duty difference (92.4 per cent versus 65 per cent) then prevailing between imported refined and crude oil, which has since then been narrowed down to 10 percentage points (75 per cent versus 65 per cent).

Since under the Prevention of Food Adulteration (PFA) Rules, refined vegetable oil is subjected a maximum acid value of 0.5 (corresponding to a free fatty acid or FFA content of about 0.23 per cent) and moisture content not exceeding 0.1 per cent by weight, the importers were basically bringing in refined oil, whose acid value was enhanced through admixture of PFAD.

To tackle the problem, the Revenue Department's August 1, 2003 notification, therefore, imposed two conditions for an imported oil to be classified as "CPO and its fractions", in order to be assessable to the lower 65 per cent duty. Firstly, a minimum acid value of 2 (FFA content of 0.91 per cent) was clamped, so that the oil being imported was crude and not refined.

But that in itself was seen to be an inadequate safeguard, considering that it was always possible to manipulate acid value or FFA levels by simply adding PFAD. It was for this reason that the second condition of total carotenoids of 500-2,500 mg per kg was put forth. The logic offered here was that the carotenoid content, which indicates the presence of Vitamin A, cannot be adjusted by artificial means. Once the oil is refined, the carotenoids get destroyed, which means the importer has no choice but to bring in genuine crude oil to be charged 65 per cent duty.

What the Ministry is now mooting is to completely do away with the second condition (carotenoid) for CPO, while tightening the acid value norms for both CPO and crude palmolein. While the minimum 500 mg per kg carotenoid requirement for crude palmolein may continue, even the may be re-examined once the Thiruvananthapuram-based Regional Research Laboratory (RRL) submit its report regarding the extent of reduction in carotenoid content taking place during the transit period from Indonesia and India.

The coming days would decide whether the Finance Ministry would accept what has been recommended by the Food Ministry.