By TIOL News Service

KOLKATA, MARCH 01, 2020: THE DRI sleuths here arrested one Prodipto Majumder in a scam of fraudulent imports of Canola Oil in the guise of “Crude Mustard Oil” by showing it wholly produced in Bangladesh (Category-A, as per SAFTA Rules of Origin) to avail undue benefit of Zero Customs Duty under SAFTA Agreement – Totally Duty evaded Rs. 9 crores.

DRI unearths a major scam involving misuse of SAFTA by certain unscrupulous importers involved in import of Canola oil of Canadian origin by mis-declaring it as ‘Rapeseed Oil/ Mustard Oil’ of Bangladeshi origin leading to evasion of around Rs 25 Crores of Customs duty

Intelligence developed by DRI indicated that certain unscrupulous firms are importing Crude Canola Oil of Canadian origin, by mis-declaring it as “Crude Rapeseed Oil / Mustard Oil ” of Bangladesh origin through Ghojadanga Land Customs Station at the Indo- Bangladesh border in West Bengal. Thus, while on imports of Canola oil from Canada, Customs duty of about 35% is applicable, by showing the goods to be of Bangladeshi origin, benefit of full Customs duty exemption was being fraudulently availed by these importers under the aegis of South Asian Free Trade Agreement (SAFTA) [Notification No. 99/2011 dated 09/11/2011 read with Notification No. 75/2006-Customs (N.T.) dated 30/06/2006 refers].

In support of their claims for the benefit of duty exemption under SAFTA agreement, these importers have been submitting SAFTA Certificates of Origin (SAFTA), after showing the “Origin Criterion” as Category “A” i.e. wholly produced in Bangladesh, in terms of Rule 5 of Rules of Determination of Origin of Goods under the Agreement on South Asian Free Trade Area (SAFTA).

Canola oil is a completely different product than the ‘Natural Rapeseed oil’. There are two major differences:

• Canola oil is 100% GM (Genetically Modified) product, whereas ‘Rapeseed oil’ is made from a naturally found plant. Canola oil cannot have its origin in Bangladesh, as Bangladesh has only one GM food crop, that of Eggplant aubergine or Brinjal. The major producers of Canola oil are CANADA, USA, AUSTRALIA, GERMANY.

• Canola Oil is a vegetable oil derived from a specific variety of Rapeseed (GM crop) that is low in erucic acid (maximum of 2%). The change in name serves to distinguish it from natural rapeseed oil, which has much higher erucic acid content (30-60%), making the latter inedible.

In the past two months (i.e. Dec, 2019 & Jan, 2020) around 15000 MTS of ostensible ‘Crude Rape Seed oil’ have been suddenly imported (a consipcous spurt) through Ghojadanga LCS from Bangladesh availing duty exemption under SAFTA. Further analysis of the imports of the same goods for 2017, 2018 & 2019 (upto November 2019) indicates that only a minimal quantity of imports had happened through out the country (all ports included) from anywhere in the world. The quantum of these imports has been to the tune of around 500-1500 MTs per year. Therefore, this sudden spurt of import of the ostensibly declared ‘Crude Rape Seed Oil’ from Bangladesh under SAFTA raises more than suspicion with regard to the description of the goods and their actual identity.

Investigations have accordingly been initiated by DRI against M/s. Gannet Traders Private Limited. The Directors of this firm i.e. Shri Suresh Halder and Sri Pawan Shaw were found to have education qualification of 7th standard & 10th standard respectively. Investigations reveal that they are in reality working as drivers of the main person Shri Pradipto Majumder, owner of M/s Shouvik Exports controlling the affairs of the company. These ostensible Directors do not have the financial means to own the company or the wherewithal to manage the affairs of the company. During investigation, it was also found that one of the authorised persons of the company who was shown to have been given the powers of carrying out the day to day activities was found out to be an illiterate person, who is actually working as a labourer with the person actually controlling the affairs of the company.

Following evdiences revealing the massive fraud executed by the said company have been revealed during the course of investigations by the DRI :

• The importer does not have any contracts with Bangladeshi suppliers that could reveal the identity of the products imported by them or other commercial modalities.

• Test report of the samples drawn from the Live consignment of M/s. Gannet Trader Private Ltd, tested by three different laboratories have confirmed that the said Oil contains Erucic acid nil or near to zero and further added that “The sample does not conform to the standard of Mustard oil under FSSR 2011 and contain zero Erucic acid”

• From the office premises of M/s Soubhik Exports Limited, papers relating to Canola Council of Canada with respect to price of Canola Seeds and Canola Oil were recovered.

• From the ultimate buyer of the said imported oils i.e. M/s Gupta Solvents Pvt Ltd of Morena, some incriminating test reports in “kachha” form have been recovered, which shows that the Oils procured from M/s. Gannet Traders Private Ltd (through middle-company Abhilasha Exports), directly from Ghojadanga LCS, is “Degum Canola Oil” and the Tanker/ Vehicle nos. in the said test reports matches with the Tankers / Vehicles into which goods imported by M/s Gannet Traders were sent from Gojadanga.

Investigations also reveal that the syndicate responsible for this fraud was earlier on involved in fraudulent import of Refined Soyabean Oils / Refined Palm Oil, from Bangladesh by abusing the provisions of SAFTA. In the said fraud, Shri Prodiptio Majumder had used his two companies in the name of M/s. Soubhik Exports Limited and M/s Remo Exports Enterprise to import Refined Soyabean Oils / Refined Palm Oils from Bangladesh by adopting the same modus operandi of showing these oils were (sufficiently) processed in Bangladesh. The total Customs duty evaded by these two firms is Rs. 187.52 Crores. Shri. Prodipto Majumder along with his son was then arrested under Sec. 104 of Customs Act,1962.