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The Rediff Special/Ehtasham Khan

October 27, 2004

Part I: An explosive pile of scrap

When live rockets, missiles and shells originating in Iraq, Afghanistan and other war-ridden countries started showing up in India, the government blamed the police and customs authorities for failing to perform their duty.

Two customs inspectors at the Inland Container Depot at Tughlaqabad in south Delhi have been suspended pending an enquiry into how dangerous scrap got past them. The duo had cleared the consignment containing the explosives involved in the Ghaziabad accident. The Intelligence Bureau is probing the case.

Ghaziabad-based Bhushan Steel Company had imported the scrap from Dubai-based Lucky Metals. The consignment was sent to Mundra port in Gujarat from Bandar Abbas port in Iran. The customs house agent involved was New Delhi-based KMS Limited.

Since KMS had given a written request to the authorities at ICD, Delhi, for 100% scrutiny of the consignment, the onus fell on the officials who cleared it.

An investigation by rediff.com revealed how the system works in India.

The Inland Container Depot is an extension of the customs office at the ports. Since the ports cannot inspect the thousands of consignments being imported daily, they are sent to ICDs spread across the country for quicker disposal and reducing the congestion at the ports. There are 100 such depots in India; four in Delhi.

Once the consignment arrives at the ports, authorities check certain documents -- invoice, packaging list, purchase order, payment details, an undertaking by the importer, exporter and the customs house agents that the consignment does not contain illegal or any banned product, and one mentioning the value of the consignment.

The sealed containers are then sent to the ICDs via train or trucks for a detailed inspection. The importer can indicate the ICD of his choice and pick up the containers once it is cleared by customs officials posted at the ICD.

The ICD in Tughlaqabad area in south Delhi is the biggest of them all.

rediff.com visited the depot, which looks like a typical port sans water.

Huge metal containers stacked one above the other are stored on several acres of land. A 3 km long line of trucks wait on both sides of the road outside the depot to collect the cleared consignments.

Each day, the Tughlaqabad depot receives around 1,000 containers, carrying everything from electronic goods to clothes, edible products to scrap. Nearly 2,000 metric tonnes of scrap passes through this ICD every day.

And how many inspectors have been employed to check the containers? Just 10!

Commissioner of Customs (ICD Tughlaqabad) Sahab Singh says: "We have to verify the value of the consignment and see that we get the correct duty. Our priority is to ensure that there is no loss of revenue.

"Security is a secondary issue. We don't have the resources and manpower to check each consignment. If we start checking every container, then the whole system will come to a standstill. We do risk-based random checking."

While the documents are examined electronically, inspectors manually check the containers. The officer explained the steps involved in importing a consignment to India.

The exporter is the first person to check the consignment and issue a clearance certificate, which states that the consignment does not contain any illegal or banned item. The certificate is shown to authorities at both the port of origin and destination port, the vessel that carries the goods and the customs officials of both the countries.

The importer accepts the goods only after the carrier vessel shows the certificate issued by the exporter at the destination port. Once the cargo reaches its destination port, the customs house agent hired by the importer submits, on the latter's behalf, a declaration about the contents, its value and other relevant details to the customs department and seeks custody of the same. Customs officials either release the consignment accepting the declaration at face value or examine it and then release it to the importer.

A senior customs officer said, "When the consignment reaches us after going through so many checks, how are we alone responsible if something goes wrong? Having said this, I don't mean that we are not at all responsible. There is something wrong in the system."

Generally, customs authorities of the destination country do not check each consignment, accepting at face value the certificate issued by the exporter.

In the case of loose scrap, the government has a policy of 25% checking. This means only one out of four containers would be randomly selected and manually checked thoroughly.

The inspector needs to unload the entire consignment and check it. Rest of the three containers are left unchecked. Hence, there is a good chance that illegal or banned items get past customs officials.

Thus the risk factor, both for the importer and the government: the importer because there is a 25% chance that illegal cargo may be detected and for the government because, there is a 75% chance of illegal cargo going undetected.

But in the case of Bhushan Steel Company, its agent had requested for 100% checking in which case the entire cargo is taken out of the containers and checked. But how does this benefit an importer?

Since the containers are huge, large trucks are hired to transport them. These trucks are expensive to hire and also cannot reach every part of the country owing to their size and the lack of infrastructure.

Secondly, a container cannot be opened in the ICD premises if the customs authorities chose to clear it without checking. It has to be loaded on to a big truck, taken out of the ICD and then the contents are transferred to smaller trucks, which are a cheaper means of transport.

In case a container is opened and checked, the cargo can be loaded on to small trucks and taken out of the ICD. So, if an importer sought 100% checking, he got this facility, thus reducing his overall expense.

Thirdly, iron scrap can be imported only in mutilated form so that it can be used only after melting. However, rockets and missiles found in the scrap were very much in their original shape and size, though partly rusted.

Intelligence agencies are now probing how the explosives got past undetected if 100% checking had been carried out.

Customs officials privately admit it is not possible to do 100% checking due to shortage of resources and manpower.

A hi-tech scanning machine used to trace such elements such as explosives is currently installed only at the Nhava Sheva port near Mumbai. Even that, say officials, is not foolproof.

"Even the US has stopped electronic scanning. They are doing it manually after the September 11 attack. There is no fool-proof system," the official said.

Importers have their own tale of woes.

An agent of Delhi-based RCI Industries said: "We book certain goods from a foreign land. We don't know what they are sending to us. We basically depend on the clearance certificate given by the exporter. Customs officials should examine the cargo and stop the consignment if there is something wrong. This way we will also not suffer losses.

"But they (customs) basically delay the consignment and don't even check it thoroughly."

What is intriguing is that the Tughlaqabad depot claims to have informed the police in August about the presence of explosives in a container carrying iron scrap imported by a Jaipur company. The consignment included 61 shells and 25 fuses and was imported from Somalia through a Dubai-based company.

The police rushed to check this container only after the blast at Bhushan Steel Company in Ghaziabad on September 30.

It took three days for 60 National Security Guards personnel to scan two containers at the depot. The explosives were separated and stored in a trench dug inside the depot premises. A case was registered at the Okhla police station.

What happens to the explosives stored in the trench?

"We don't have the expertise to defuse rockets, missiles and bombs," Deputy Commissioner of Delhi Police Praveer Ranjan said. "It has to be done by the army. We will assist them in taking the material to an isolated place for defusing the explosives."

Until then, it stays where it is.

At the same time, containers are piling up at ICDs across India awaiting the government's new norms for importing metal scrap.

What we now have in hand is an explosive issue.

Tomorrow: Is business above national security?

Image: Rahil Shaikh



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