The Hindu Business Line : Vegoil tariff values raised by $10-24/t

The increase of $10 a tonne on crude soyabean oil and between $16 and $24 a tonne on various palm oils (crude palm oil, refined palm oil, refined palmolein) will mean that landed cost of these oils will be higher by between Rs 450 and Rs 900 a tonne. The tariff values are the base prices on which the Customs authorities work out the import duty for various vegoils.

Today's change is the third in the last one month with the previous ones made on September 30 and September 16. Hopefully, a pattern has been established as a result of which uncertainties relating to tariff value revisions have been minimised.

In the past, players in the market had been known to speculate about the timing and quantum of the revision, which led to rumour-mongering and avoidable distortions in the marketplace. Fortnightly announcement of tariff values should bring about some sobriety to the otherwise volatile and speculative market.

Going one step further, the Finance Ministry must announce the parameters on which the decision to revise tariff values is based. If the rationale of imposing tariff values is to prevent invoice manipulation, then tariff values must reflect market prices. The industry and trade has a right to know the basis on which changes are made.

The latest revision is indeed welcome because of the commencement of the kharif oilseeds harvest. Crop prospects are less than satisfactory. Firm edible oil prices will help support growers. This view, in addition to firming international market prices resulting from bio-diesel demand and revenue considerations, has obviously weighed in favour of an upward revision.

For the resourceful, there still are ways to fool the system. Interestingly, with fixed dates for announcement of tariff values, importers are likely to either delay or advance the submission and assessment of import documents at the customs house.

If there is an expectation of upward revision, documents will be submitted prior to the scheduled date of revision or if lowering of tariff values is expected, such submission will be delayed to benefit from lower rates. However, there is little that revenue officials can do to prevent this type of behaviour.

It has often been noticed that the news of tariff value revision spills out 24 hours to 48 hours before the actual issue of notification. Overseas suppliers are the first to know what's happening in North Block.

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