Intelligence raids at Alang beach, 6000 toxic ships dumped so far

To

Shri A C Buck
Director General of Central Excise Intelligence (DGCEI)
Union Ministry of Finance
Government of India
New Delhi

Through Shri Arun Kumar, Additional Commissioner, DGCEI

Subject- Intelligence raids at Alang beach, 6000 toxic ships dumped so far

This is with reference to the news report 'Dawood Ibrahim active in Alang ship-breaking business' (The Economic Times, 17 Jul, 2012, Ankur Jain & Arun Janardhanan), 'Intelligence sharing on Alang operations needed, say officials' (Ankur Jain, The Times of India July 18, 2012) and the notification of Director General of Central Excise Intelligence (DGCEI) seeking change in system of invoicing by ship breakers at Alang, Gujarat to ensure more transparency. The Public Notice No. 01/2010 dated 26/7/2010 reveals non-transparency in the industrial activity at Alang beach. The document is attached. The White Paper on Black Money forgot to examine this unregulated industry that relies heavily on fake documents.

I wish to draw your attention towards the ship Exxon Valdez (now named MV Oriental N, IMO No. 8414520) after being under the flag of USA and Marshall Islands, it took Panama flag. As per the last information, this vessel is under Sierra Leone flag. The atomic energy regulatory board has found 60 numbers of smooth detectors containing AM 241, a radioactive material. The provisional certificate of registry issued by the Republic of Sierra Leone shows that the vessel was granted permission for “one single voyage from Singapore to Bhavnagar, India”. The date of place and issue of the said certificate is at Cochin, India dated 04.04.2012 which is valid until 03.07.2012. This information is part of the records of the Supreme Court. It is apprehended that it is in Indian waters using fake documents.

I submit that in an Office Memorandum No.29-3/2009-HSMD, Government of India, Ministry of Environment & Forests, (HSM Division) dated 9th May, 2011 relating to implementation of Supreme Court directions in respect of ship breaking activities, it has come to light that Ministry of Environment & Forests (MoEF)’s Standing Monitoring Committee (SMC) on Shipbreaking has suggested that since Gujarat Maritime Board (GMB) and Customs were not able to verify the authenticity/genuineness of ship’s registry/flag in the fast in respect of some ships referred to them, this task in respect of each ship may be referred to the Directorate General Shipping, Ministry of Shipping ought to undertake such verification henceforth. The GMB officials informed MoEF that “the suggestion of the committee is acceptable to them subject to such verification by DG Shipping is done within a period of 2 working days. If no information is received from the DG Shipping within 2 working days, it will be presumed that the certificate submitted is authentic and genuine.” Such presumption cannot be accepted as it will amount to acceptance of a fake document.

I submit that international crime syndicates worldwide are earning an estimated US$22-31 billion annually from hazardous waste dumping, smuggling proscribed hazardous materials, and exploiting and trafficking protected natural resources as per INTERPOL documents. It
is apprehended that ship breaking has some relationship with this syndicate. A report 'India's shipbreaking industry controlled by organised crime' refers to the involvement of one of Forbes' world's top 10 most dreaded criminals list of 2011. The shipbreaking yards at in Alang beach has virtually devastated the sea and fishes with pollution.

I submit that parliamentary committee on coal and steel headed by Shri Kalyan Banerjee and the other parliamentary committee on transport headed by Shri Sitaram Yechury are looking into the issue of how many of these ships continue to enter Indian waters on false documents thereby also raising issues of national security.

I submit that it is quite significant that Directorate of Revenue Intelligence that functions under the Central Board of Excise and Customs in the Ministry of Finance took note of "problems such as import of hazardous substances that will occupy centre stage in the future as the emerging global threats."

I wish to draw your attention towards the news item 'Customs seize Greek vessel at Alang for under-invoicing' (The Times of India, September 15, 2011). A Greek vessel 'Syros' was seized off Alang coast which was brought for salvaging. This is just the tip of the iceberg.

I also wish to draw your attention towards 'Pirates' scare hits Alang' (The Times of India, Vijaysinh Parmar, July 13, 2012). It has come to light that watchman of one of the ship beaking plots on Alang beach Sitaram Devmurari was killed on June 28, 2012.


In such a context, the notification assumes huge significance as it will end up helping systematic quantification of material flow and help detect and segregate goods of hazardous nature.

I wish to draw your attention towards the 23rd December, 2010, Press Note (attached) issued by Mr Raju, Commissioner, Central Excise, Bhavnagar referring to “ a number of cases of Revenue leakage in Alang against Ship Breakers of Alang, who fraudulently passed on Cenvat Credit worth crores of Rupees. They were also not showing production, clearance, transportation and Service Tax related information in their statutory records. The investigations are going on and some notices have been issued by ADG (CEI). In order to curb these malpractices, the Public Notice No. 02/2010 was issued on 13.12.2010 by the Central Excise Commissionerate, Bhavnagar. The public notice requires them to maintain certain records which would make it difficult for those who choose to evade duties by clandestine clearances.”

I submit that the Press Note says, “around 100-150 persons came to Central Excise, Head Quarters office, Bhavnagar and informed that they were from the Alang Ship Breaking Association”, “they continued shouting slogans and fearing damage to public property, and a as matter of abundant precaution, police force was called to ensure peace and security of the Government office”.

In such a backdrop, it appears that under pressure due to strike, DGCEI decided to put the notification seeking change in system of invoicing by the ship breakers for transparency, in abeyance for one month after the intervention of Chief Commissioner, Ahmedabad.

In view of the recent news reports based on credible security concerns, any amendment in the notification or delay in the enforcement of the notification of 13.12.2010 compromises national interest.

I submit that most ship breakers are law abiding and they support this notification.

I am an applicant in the related matter of ship breaking and the illegal entry and anchorage of ex-US Ship Exxon Valdez is listed for hearing in the Supreme Court on 23rd July, 2012.

It is noteworthy that Office of the Commissioner of Central Excise & Service Tax, Bhavnagar, Department of Revenue, Union Ministry of Finance issued on 26/7/2010, a Public Notice No. 01/2010 saying, “It has been brought to the notice of this Commissionerate that the Ship Breaking Units situated in Alang, Sosiya and other areas falling within its jurisdiction are not issuing their Central Excise invoices by declaring correct value and description of the scrap, plates etc generated as a result of their manufacturing activities. Investigations recently initiated by Director General of Central Excise Intelligence, Ahmedabad Zonal Unit revealed that the documentation and procedures followed by the ship breaking units are suffering from several infirmities resulting in substantial loss of Government Revenue.”

As per power conferred under Central Excise Rules, 2002, it said, “All ship breaking units are directed to discontinue their present system of mentioning general description of ship breaking materials in their invoices. They should declare the correct and full description of the goods...”

It was indeed quite a matter of satisfaction that for the first time since 14th October, 2003, in compliance of the Supreme Court order, this Public Notice sought proper inventory saying, “Ship breaking units are also directed that as soon as they complete dismantling and clearance of materials obtained from each imported ship, vessel or any other floating structure, they should submit a statement to the jurisdictional Range Superintendent indicating the LDT of the imported ship, nature of the imported ship [cargo, passenger, tanker etc], total quantity of scrap of each metal obtained and cleared, total quantity of plates of each metal and different sizes [thickness] obtained and cleared, total quantity of each item of non-excisable goods obtained and cleared [wood, furniture, old engine, machinery, stores etc.], and the percentage difference of total weight of goods and materials obtained and cleared vis-a-vis the LDT of the imported ship etc.”

I submit that the four-day-long strike by ship breakers at Alang happened to protest this notification asking for a ship-wise break-up of material obtained from dismantled vessels. The notification was issued in July 2010 and ship-breakers were asked to periodically submit details of excisable and non-excisable items obtained from the ships they bring for scraping. Ship-breakers were told to maintain ship-to-ship stock register. At present, ship-breakers submit details goods-wise, and not ship-wise. The notification was issued after a multi-crore excise duty evasion ''racket'' at Alang came to light. The ship breakers were allegedly hiding value addition to scrap and were inflating the quantity of items exempted from excise duty. The strike ended on 31st December, 2010 evening after the representatives of ship-breakers met officials of central excise and other departments. The work at Alang yard was resumed on 1st January, 2011. Ship breaking at Alang came to a halt on December 21, 2010 remained suspended for four days in protest of the notification.

I submit that the Inter-ministerial Committee (IMC) on Ship breaking, Union Ministry of Steel noted in the minutes of its meeting dated 17th September, 2010 that “The Coast Guard representative brought out some security concerns and incidents of communication sets from ships reportedly finding their way to the local fisherman. It was advised to the Ship recyclers to ensure that such equipment are immediately destroyed by the Customs as per the prescribed procedures. The Chairman also advised the Naval, Coast Guard and GMB to regularly interact as per the decisions taken in the earlier IMC meetings and to resolve the major security issues in the Coastal Security Committee meetings conducted at the State Level.” In its minute dated 4th February 2009, the IMC noted the Security Concerns, saying, “Both the representative of the Coast Guard and the representative from Naval HQ raised concerns over the entry of ships carrying hazardous cargo to Alang for ship breaking and how no information is made available to them regarding the movement of ships to Alang. Besides this there was no information regarding whether the Alang Port is compliant with the International Ship and Port Facility Security (ISPS) Code. In the context of the present security concerns in the country, the Chairman advised the representative of the Ministry of Shipping, the GMB officials, the Coast Guard representative and the Naval HQs to address the issue expeditiously so that the security gaps are taken care of and also to verify whether the port at Alang has implemented the ISPS codes. The Coast Guard representative and the Naval HQ representative also expressed apprehensions that the vessels coming in for beaching sometimes ply very close to the oil rigs, which could be a potential for accidents.” It also mentions that the Chairman of the IMC “directed that the Ministry of Shipping may organize a meeting on the matter with GMB, Naval HQ and Coast Guard HQ, Custom etc. immediately and ensure that gaps in the security frame-work issues are addressed immediately.”

I submit that no action has been taken so far to plug the existing the loop holes.

I submit that if the notification is enforced it will address some of the concerns of the IMC. On the issue of radioactive materials, IMC observes, “Regarding report of a huge quantity of Smoke Detectors containing radioactive material lying in the Plots at Alang, the AERB informed that due to large volume of non-radioactive materials contained in the smoke detectors, it is difficult for them to accept the material in the present shape for disposal at the BARC facility.” The issue remains unresolved so far.

I submit that in the case of ex-Exxon Valdez ship, admittedly 60 radioactive material containing smoke detectors have been found. This merits examination.

I submit that even as the Union Steel Ministry has failed to prepare the Code on Regulations for Safe and Environmentally Sound Ship Recycling prepared in compliance of the Supreme Court's order dated September 6, 2007 to improve the situation, death toll of migrant workers from Bihar, UP, Jharkhand and Orissa in Alang keeps on rising. It underlines the fact of non-improvement of situation on the Alang beach.

I submit that on December 9, 2011 Bajrangi Jha (35) was killed at Alang. Such deaths are a routine affair. In 2011 alone 28 workers got killed on Alang beach due to the criminal callousness of ship owners, ship breakers, Gujarat Maritime Board and other concerned agencies. The inquiries in such deaths are never made public.

I submit that Alang coast is a litmus test for government’s sensitivity towards country’s environmental borders in which it has failed miserably so far.

I submit that foreign entities like Japanese Ship-owners' Association and US Maritime Administration are encouraged by lax regulatory regime at Alang beach. They are in the process of turning Alang's 170 ship breaking plots on the beach, spread over a 10 km stretch into a disposal ground for their hazardous wastes and end-of-life vessels.

I submit that while such state of affairs prevails, more than 6000 end-of-life ships have been dismantled without complying with financial, environmental and occupational health regulations since 1983. The theft of excise duty has also been going on since then. The quantum of black money generated in this industry ought to be ascertained besides enforcing the notification.

In view of the above, to begin with I urge you to examine the authenticity of all the papers submitted by ex-Exxon Valdez else it will set a bad precedent and open the flood gates for such vessels in Indian waters with impunity.

Thanking You

Yours Faithfully
Gopal Krishna
ToxicsWatch Alliance (TWA)
Mb: 9818089660
E-mail: krishna1715@gmail.com,
Web: toxicswatch.blogspot.com

Cc
Secretary, Union Ministry of Finance
Chairman, CBDT
DGCEI, Chennai
Additional Director General, HQ, DRI
Additional Director General, DRI, Ahmedabad