Govt working to help exporters deal with countervailing duty cases
Govt working to help exporters deal with countervailing duty casesFile/PSUWatch

Govt working to help exporters deal with countervailing duty cases

The government is working on a verification system to help exporters deal with countervailing duty cases, said an official

New Delhi: The government is working on a verification system to help exporters deal with countervailing duty cases on domestic products over the RODTEP scheme, an official said. The exercise is important as countervailing or anti-subsidy duties were imposed on certain domestic units by the US and European Union (EU).

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The products which were investigated by these countries involved reimbursement of levies like electricity duty, VAT on fuel or APMC taxes under the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP).

The scheme is a WTO (World Trade Organisation) compliant measure. The official explained that the duties have been imposed on certain units only and that too because they could not produce the right documents to the investigation authorities.

The commerce ministry is helping Indian exporters to keep proper documentation to deal with these cases. "We will be giving guidance notes from DGTR (directorate general of trade remedies) to units so that whenever an investigation happens, they should be in a position to give the proper documents," the official said.

Besides checking the documents of units, investigation authorities also look at the official verification mechanism to ascertain whether the government is randomly checking the incidence of duties or not.

On the government side, the official said, "We are trying to put up a joint verification mechanism of DGFT (Directorate General of Foreign Trade), DGTR and DoR (Department of Revenue), where officials would randomly verify certain units on the issue and keep record".

The system would help to verify the claims which a unit is availing under the RodTEP scheme. "Suppose we are giving RodTEP reimbursement of 1.7 per cent, then I need to convince myself from time to time that the unit's actual incidence of duties is not below 1.7 per cent," the official explained.

"So we will be setting up this verification system. We will keep the records to show that we also have an official verification to check the incidence of duty," the official added.

Before imposing countervailing or anti-subsidy duty (CVD), a country carries out detailed investigations on products which it believes that its trading partner is subsidising for export purposes. Subsidising exports is a kind of unfair trade practice.

Countervailing duties can only be imposed if the investigating agency of the importing country determines that the imports of the product in question are subsidized and are injuring a domestic industry.

Imposition of this duty does not prohibit or restrict imports. World Trade Organisation (WTO) allows its member countries to use these tools to provide a level-playing field to their domestic players.

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The US had conducted countervailing investigations and submitted final determination on three Indian products -- paper file folders, common alloy aluminium sheet, and forged steel fluid end blocks.

The European Commission too had conducted a similar probe on certain graphite electrode systems from India. The Indian government and the affected exporters have strongly defended the subsidy allegation against various programmes and schemes of the government, both at central and state levels, in their written and oral responses during the conduct of investigations.

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