Duty exemption on DEPB scheme may be restored

The combination of new faces at the top in the finance and commerce ministry has worked. We understand that the department of revenue has agreed to the restoration of the 4% Special Additional Duty (SAdd) exemption on DEPB scheme exports. What is more, the measure will be enforced with retrospective effect, that is, from 22 April â€˜02 when the exemption was withdrawn by the 45/2002 notification. The Customs must now return the Rs 1,000 crore or so Special Additional Duty collected on the DEPB account in the current year to the exporter. This will just about make up for the crash in DEPB premium from 110% to 95%. The formal notification on the subject is under issue from the DGFT. The finance ministry has given the nod on the subject. The government has kept its promise to insulate exports from the effect of Customs and Excise. DGFT officers are burning midnight oil to revise the DEPB rate schedule covering nearly 2,000 product groups. The SAdd incidence varies from 6.032% on a 30% basic duty item to 5.1 % on a 10% item, after considering the 16% countervailing additional duty. Our calculations show a DEPB rate hike of 3% on a 30% basic duty item whose final product is eligible to 15% DEPB after one-third value addition over raw material cost. Exporters must now file supplementary claims, they hope that the DGFT and customs officers will rise to the task and develop special software packages to retrieve the closed files. Over one lakh DEPB licences must be opened again for the supplementary claim. The question is, who took the ill-advised step to withdraw the exemption without revising the DEPB rate? Garlic Politics: The DGFT moved swifly on 17 January to open the import of fresh garlic and shift the item from the restricted list to free list. According to the DGCIS, Kolkata, 34,200 tonnes of garlic valued at Rs 73.62 crore entered the country last year. Almost all the shipments were from China. The land of the dragon accounts for 65% of world trade and 45% of world production. This year, import is well over Rs 100 crore. The licensing restriction served little purpose, the domestic price of Rs 36 per kg is far ahead of the landed import price of Rs 26 per kg., after accounting for the maximum 30% duty. The farmers were not able to deliver garlic in sufficient quantity to the market. The State Government Cooperative Marketing Societies too entered the fray and started selling import rights to traders. In the name of protecting the garlic farmer, even advance licence imports were subjected to the â€œprior import before exportâ€� condition. However, the garlic story is not over. Restrictions have returned in the form of 100% tariff. The department of revenue raised the customs duty to the maximum WTO bound rate of 100% on 15 January, just two days before the DGFT notification. The stiff tariff brings the landed value to Rs 40 per kg which is above the domestic price of Rs 36 per kg. Official import will come to a grinding halt for the moment. Goods in transit will suffer sever losses. The US anti-dumping duty of 385% on Chinese fresh garlic on 1 January 1995 resulted in a shift in import composition to dehydrated garlic even though the day variety is difficult to sell to the final consumer due to poor cosmetic appearance. In India too one can expect pressure on the customs appraiser to accept bills of entry for dried garlic which is subject to only 30% duty on a low price base. The sorry state of the garlic trade may yield another crisis on the lines of the onion problem in 1998. The final impact on consumer prices will depend on the size of the winter garlic crop due in the market soon. Drought and the cold wave may reduce the market surplus resulting in another round in the sorry affairs of the garlic trade. SEZs and EOUs: The Export Promotion Council for EOUs and SEZ Units has been notified in the Handbook of Procedures with its office at 20/34 East Patel Nagar, New Delhi 110 008. EOUs and SEZ units must now register with the new body to work under the government policies. DGFT has tightened the screws on the EOUs saying that an email id and website are necessary conditions for duty-free import and sale into DTA facilities. The commerce ministry has streamlined the interface between the SEZ and the DTA (Domestic Tariff Area) for sensitive products. The access of polyester yarn based units to the DTA for job work or sale through the third party exports route has been severely limited. Power generating units must cater to the SEZ and not build capacities for DTA market. Surplus power sale into the DTA will require approval from the SEB and also attract a duty of customs on clearances based on a future Department of Revenue notification. The processed granite segment of the EOUs is holding a granite monument Stone Fair in 25 acres of land at the Chennai Trade Fair from 23 to 26 January. Over 100 buyers are expected. This event will be followed up by a marble stone fair at Jaipur on 31 January. Both granite and marble provide a lasting smooth surface to monuments, mausoleums and building fronts. World markets prefer granite but the Indian consumer loves the white marble of the Taj Mahal. Granite industry of the South is young and bubbling with energy from exports, on the other hand, the marble of Rajasthan is fighting hard to stop the barrage of imports through licensing restrictions. The latest is that marble is among the 101 items named by the European Communities in a dispute with India on remaining QRs in a 23 December 2002 request for consultations at WTO. Academy of Business Studies

Duty exemption on DEPB scheme may be restored

The combination of new faces at the top in the finance and commerce ministry has worked. We understand that the department of revenue has agreed to the restoration of the 4% Special Additional Duty (SAdd) exemption on DEPB scheme exports.

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