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Exchequer to suffer Rs 100-crore loss over exchange rate goof-up

 Central Board of Excise and Customs (CBEC) that issues revised exchange rates every month, failed to issue new rates for this month, thereby holding up the multi-billion dollar daily export-import trade on June 1. The problem was sorted out in the evening, but top officials claim that the damage has already been done. Sources claim that the delay would lead to a loss of over Rs 100 crore, both for the exchequer and for traders.

The problem began yesterday morning when the export-import trade submissions were rejected at all 106 centres across the country. Traders were told that new currency rates for the month of June were not updated on the system. “This is something, which has never happened before and everyone was shocked. Export and import documents across the country could not be moved due to the system not being updated with the revised rates. The problem was sorted out at around five in the evening yesterday,” said Bharat Thakker, president, Air Cargo Agents Association of India (ACAAI).

Costly delay
Chairman, Shipping and Aviation Committee, Indian Merchant Chambers, Mark S Fernandes, said the delay in updating the Customs EDI (Electronic Data Interchange) system with the revised exchange rates resulted in rejection of Bill of Entry, cargo being detained and importers being forced to incur huge warehouse, container and port detention charges. “It is shocking that the EDI system, which is based in New Delhi, is unable to upload the new exchange rates,” Fernandes said. According to CBEC sources, the multi-billion dollar export-import trade, better known as EXIM trade, is one of the largest contributors to the national exchequer and even a single minute of non-operation results in lakhs of rupees in losses for the exchequer. “If the new rates are not updated, files cannot be processed. Trade was affected yesterday because the revised monthly foreign currency rates were not updated in the system by the CBEC. As far as losses are concerned, both the exchequer and traders are going to suffer,” said a senior CBEC official.

The official added that to start with, the daily revenue collection from import across India is between Rs 300 to Rs 400 crore, and sometimes even much more. “Despite the new rates being updated in the evening, and even if working hours are extended, the loss cannot be controlled and could exceed Rs 100 crore. In export we receive foreign currency and a loss of foreign currency is a major loss in itself, both for the exchequer and the trade,” the CBEC official said.

Heavy backlog
Most of the big ports including Nava-Shiva are closed during the weekend, and with the problem starting yesterday, trade is likely to suffer till Monday. Until then, the backlog of cargo will increase the losses for the traders. “The problem started from June 1, because we were using May’s rates till the last day of the month. Export and import trade will suffer badly as the cargo is not cleared. Material cost will increase and traders will have to pay demurrages as well. With the weekend ahead, the problem for traders and trade is likely to continue till Monday,” said R Radhakrishnan, chairman Western India Shippers Association (WIDSA)

The other side
When contacted, Arun Sahu, Director General (DG), Systems, CBEC said that the system has been updated. He however, did not say why the system was not updated on time. Commissioner (import) at Mumbai airport cargo, Ajit Kumar, replied in exactly the same words.  

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