NCDEX pays Rs 1 cr to clear clients' dues

In a first instance of its kind in the country’s commodity derivatives market so far, the National Commodity & Derivatives Exchange (NCDEX) has paid a sum of Rs 1 crore to settle its traders’ dues with warehouse keeper in Ghaziabad, west of Delhi, in Uttar Pradesh.

With this payment, the delivery of steel billet from the Ghaziabad-based India International Steel Centre (IISC), the sole delivery centre for steel billets in North India, has resumed after a deadlock that lasted over a month.

Faced with IISC denying delivery of steel billets for the contract expired in October due to unpaid duty for the past several months, the three clients trading through the Delhi-based little known commodity broker Nokha Commodities had — early last month — threatened to take legal action against the exchange.

“We initially paid the dues of Rs 1 crore which will be recovered from clients later. According to the procedure prescribed by the exchange, each seller and buyer intending to make/take physical delivery of steel is required to appoint a C&F agent for compliances under the Excise and VAT legislation. The terms of appointment are to be settled by such a participant with the C&F agent. One of the C&F agents brought it to our notice that several intermediary sellers and buyers had not paid C&F charges in full,” said Ananda Kumar, chief (corporate services), NCDEX.

Earlier, 250 tonnes of steel billets, worth Rs 85 lakh, had remained undelivered even after nearly a month of contract expiry. Ideally, the delivery should take place within three days, steel billet being a compulsory delivery contract.

Even though the exchange is not liable to pay C&F charges as these are to be paid by sellers and buyers concerned, the exchange stepped in to ensure smooth physical lifting of steel by members/clients. There is no question of non-payment of excise duty, which is paid before steel moves from the manufacturer to exchange-accredited godown/s, Kumar said.