Government Allows Duty-Free Import Of Crude Soybean, Sunflower Seed Oils Under TRQ

The government on Wednesday exempted the levy of customs duty and agriculture infrastructure and development cess on crude soya bean oil and crude sunflower seed oil, subject to tariff rate quota authorisation.

The nil customs rate will be applicable from May 11 till June 30.

This would apply to both degummed and non-degummed soya bean oils. Detailing the conditions for imports under TRQ, the government said the importer should have a valid TRQ authorisation for 2022–23 allotted by the Directorate General of Foreign Trade.

The TRQ refers to the tariff rate quota, which is the volume of imports that come into India at a specific or nil duty. However, upon achieving the quota, the normal tariff applies to additional imports.

Earlier, the government discontinued imports of crude soybean and sunflower seed oils under TRQ in January and March, respectively.

Ankur Gupta, who leads indirect tax practice at SW India, said the government had invited applications for the allocation of a TRQ of 20 lakh tonnes for both 2022–23 and 2023–24 in May 2022. TRQ gives benefits to importers with a nil or concessional rate of duty.

However, due to the massive production of these products this year, the government has withdrawn the TRQ allocation for 2023–24, but it has extended the timeline to utilise the already allotted TRQ, Gupta said.

Gautam Khattar, principal, Price Waterhouse & Co. LLP, said the move was led by domestic availability and increasing prices, with about 60% of Indian edible oil requirements being met through imports.

Edible oil prices have been rising in the past few months due to increasing prices in Indonesia and Malaysia, which have introduced biofuel mandates. The Russia-Ukraine war impacted sunflower oil imports from there. "Though the prices had recently moderated, the domestic industry did not reduce prices immediately," Khattar said.

Gupta said once the exemption is withdrawn, "we might see a slight increase in the prices of these products as the customs duty could be in the range of 5% to 20%."

Other conditions outlined in the annexure are as follows:

• The TRQ is allotted to the importer by the Directorate General of Foreign Trade in accordance with the relevant procedure as specified in the Hand Book of Procedures, 2015–20 or 2023, as applicable.

• The TRQ authorisation shall contain the name and address of the importer, IEC code, customs notification number, sub-heading or tariff item as applicable, quantity, and validity period of the certificate.

• The TRQ authorisation shall be issued electronically by the Directorate General of Foreign Trade and transmitted to the ICES system.

• Imports made against the TRQ shall be allowed only upon debiting electronically in the ICES system.