Ammonium Nitrate: The Beirut incident is a wakeup call for Indian customs
By Ajay Agnihotri
The deadly accident in Beirut (Lebanon), the utter destruction of everything in the vicinity, and the massive loss of life and property carries a lesson for all public authorities. The catastrophe has shown to the world the outcome of neglect and callous disregard in storing hazardous cargo.
Within a day of that tragedy, news broke of an untended consignment of ammonium nitrate seized in 2015 at the Chennai Port by customs. As per a notice issued by Chennai Customs, the chemical had been kept in safe custody at a container freight station (CFS) in Manali near Chennai. It was said “they had seized 740 tonnes of imported ammonium nitrate in 2015 due to import policy restrictions prescribed by the Government of India under the Customs Act 1962 read with Explosive Act 1884 and Ammonium Nitrate rules, 2012.” The customs notice denied any delay in disposal and claimed that it was taken up promptly.
Nonetheless, customs are now in hyper-drive by targeting time-bound disposal of all seized and uncleared cargoes. In an instruction issued to all field formations dated August 10, 2020, the Central Board of Indirect Taxes and Customs (CBIC) directed field offices to complete disposal between August 11 and September 15, as per prescribed guidelines. This is not for the first time that the CBIC has launched such a drive. These are a regular occurrence in the professional lives of officers in the field and this shows that the underlying cause remains unaddressed. In fact, as a response to any crisis, the easiest thing for policymakers is to issue such directives to wash their hands off and throw the blame on the hapless officers in the field.
The CAG’s Audit Report No. 16 of 2018 tabled before Parliament in January 2019 noted that a check conducted on March 31, 2017, in 85 inland container depots (ICDs) and CFSs revealed that there were 469 containers of hazardous waste lying undisposed for periods ranging from 1-17 years. These included live bombs, war material scrap in three ICDs in Rajasthan, 92 containers of used tyres, metal scrap and hazardous chemicals in one CFS under JNPT Port, 15 containers of hazardous cargo at ICD Tughlakabad in Delhi, and 50 containers of mixed waste in ICD Moradabad, UP.
It’s not that the CAG has raised these concerns for the first time. Its earlier reports (10 of 2004, 12 of 2014, five of 2016) have repeatedly prodded the department to improve compliance. The CBIC ought to have removed legal hurdles in speedy disposal of goods. The field formation detections of such cargo have highlighted the vulnerabilities in the policies relating to handling of import cargo. Earlier this year there were reports of a large operation by Mundra Customs in which it found 300 containers with nearly 3,000 tonnes of filth, showing that India is becoming a dumping ground for solid municipal waste generated by developed countries. Officials were quoted having said that most importers were from Rajkot and Morbi districts and they were getting handsome incentives for accepting the waste. Such imports could cause an epidemic or even risk radioactive substances being dumped in India.
The problem is not so complex as to defy the solution. It is the general ineptitude and obstinacy in not correcting missteps, which exacerbates any problem. We need to divide the cargo into two classes. There is cargo that has been seized due to an offence punishable under the Customs Act and becomes a matter involving courts and judicial proceedings. Any actions relating to such cargo are, so to say, sub judice. Let’s ignore this category for now. The other class is what we call unclaimed/abandoned (like Mundra cases). And these are not few.
When cargo lands at any Indian port, the master of the ship files a cargo manifest. This document contains the name of the importer and but no business identification number. All countries require shipping lines to declare such identification numbers in manifests, for example a VAT number in the case of the EU (in India’s case, it should be Import Export Code Number). Globally, such data is a key element for risk management based on which crucial decisions on cargo surveillance are taken. The absence of this crucial data link that connects imported cargo to its importer in India is owed to the Import Manifest Regulations 1971, and remains to be corrected till date.
Apparently, the CBIC attempted to fix this anomaly by issuing the Sea Cargo Manifest and Transhipment Regulations, 2018. This piece of work is regarded by trade and industry as so complex that it attracted multiple representations. Even customs field offices continue to struggle with them and even after two years these are still to be implemented. One fails to understand why a new regulation was necessary when an amendment in the existing regulation would have achieved as much.
The second checkpoint for customs is to monitor cargo of ‘interest’; it is at the point of storage at ports or container depots (that’s where ammonium nitrate in Chennai was found stored). Law is clear that if any cargo is not claimed by any importer within 30 days, the custodian shall auction the same. Now, that’s a hoodwink. Custodians can’t go about disposing the cargo on their own. A notice has to be served upon the importer, and the process is dependent on customs inspections, compliance and assessment. Customs have absolute regulatory control over the custodians, though through a badly drafted regulation—the Handling of Cargo in Customs Area Regulation 2009. The regulations even require the custodians to provide “free of cost furnished office accommodation with required amenities and facilities and residential accommodation and transportation facilities for customs staff” (in which part of the civilised world could such a regulation have been made). There are hundreds of cargo custodians ranging from airports to ports and ICDs/CFSs. Each of the custodians has a ‘regulator’ in the form of local commissioner. So how do scores of commissioners and hundreds of custodians stacked in a myriad of micro-regulatory ecosystem lead to good implementation? But customs policymakers don’t like addressing difficult questions. The fall-back is classical bureaucratese by way of directions to their subordinates in the field to ‘ensure compliance’ and report that all is well!
The Beirut incident is a wakeup call for Indian customs. Every crisis carries within a seed of opportunity. It’s time that policymakers focus on building improved IT systems for tracing and accounting of goods. It’s time to stop re-labelling old wine in new bottles and instead fundamentally tone up customs. Launching new programmes for the sake of tweets and eyeballs is not for the bureaucracy. The focus should be on the larger question: the failure of policy and putting in place a robust and technology-driven mechanism to trace and investigate all such unclaimed cargoes, which inherently involve either dumping of toxins into India or some form of banking fraud or money laundering.
The author, an advocate, is a former IRS officer