Gujarat HC orders ‘arrest’ of SW South Wind I ship as exporter seeks damage for held up rice cargo

The Gujarat High Court has asked the Deenadayal (Kandla) Port office and Customs officials to “arrest” merchant vessel SW South Wind I which is lying at the port and within Indian territorial waters until further orders.

A single judge bench of Justice Nikhil S Kariel passed an oral order following a petition filed by MEIR Commodities India.  MEIR Commodities moved the Gujarat High Court as its consignments of about 460 tonnes of parboiled rice got held up after the vessel was detained by the Department of Revenue Intelligence (DRI) officials, who suspected that white rice was being exported as organic rice. 

The DRI officials action followed a businessline report on irregularities in export of organic rice as some exporters were allegedly shipping out white rice in the garb of organic rice. Besides SW South Wind I, they have detained another ship MV Della. The suspicion of irregularities arose after organic rice exports in the first four months of the fiscal exceeded the total shipments in the entire 2023-34 fiscal.  

No clearance

MEIR told the court that it had offered to sell 450 tonnes of Indian Long Grain IR-64 parboiled rice to JKT Foods Europe MDCC at $604 a tonne and had entered into agreement with OK International Logistics LCC to charter the cargo, which was a small part of the entire cargo of 50,670 tonnes. 

The cargo was to be shipped between June 20 and July 10 and Customs authorities cleared it for export on July 13. On July 20, the company was told that the entire consignment had been loaded in the vessel and it received the bill of lading on August 8. The ship was ready for departure on August 9. 

However, since then the vessel did not leave the port, and a shipping firm told MEIR that it did not get “clearance for the cargo”. The company’s counsel argued that his client’s cargo was duly compliant with the Export Standards. “It is only because of some other prohibited cargo on board the defendant vessel, it has been detained,” the counsel said. To add to its woes, the buyer sent an e-mail on September 18 saying it cannot accept the cargo at the contracted rate and threatened to cancel the contract if the vessel did not set sail in the next 15 days. 

Cargo of penalised firm

Stating that the vessel had been detained not because of MEIR’s cargo, Justice Kariel observed that on account of no fault of the company, it may probably suffer a huge loss, and the vessel is solely responsible for the precarious position of the exporter. 

The judge ordered the arrest of MV SW South Wind I along with its hull, engines, gears, tackles, bunkers, machinery, apparel, plant, furniture, equipment and all appurtenances at the port, where it is lying. In case of the vessel owners coming forward to pay $3,67,503, the arrest order would not be executed, Kariel said and posted the next hearing on October 21.

A list of the cargoes in the vessel show that Reliteaur Foods is one the companies that has about 6,700 tonnes of rice cargo in the vessel. Reliteaur was suspended from exporting organic rice and fined ₹10 lakh by Agricultural and Processed Food Products Export Development Authority (APEDA) last week.

Reliteaur has also moved the Gujarat High Court against the detention of its shipments, which were headed for Benin, Africa. 

Didn’t reach destination

DRI officials detained rice consignments as white rice was being exported in the garb of organic rice. Some of the shippers are reported to have violated the ban on white rice. (The ban was lifted on September 28, 2024). In the case of parboiled, they had dodged the 20 per cent export duty.

Data revealed that 22,126 tonnes and 16,547 tonnes of organic rice shipments had set sail for Vietnam and Kenya, respectively, but hardly 2,000 tonnes reached the destinations.

According to trade experts, as per Customs Act, in the case of export of goods that are prohibited the shipments can be confiscated and penalty not exceeding three times the value of the goods can be imposed. They said exporters trying to ship out banned goods can be criminally prosecuted under the Foreign Trade Development and Regulation Act, 1992.