Shelves tariff rate quota move due to high global prices

Our Bureau

Sweet `n' bitter

Countervailing duty

of Rs 850 a tonne to apply for imports.

Nil customs

duty imports only till September 30 this year.

Move to

ensure sufficient availability during festival season.

New Delhi, June 27

The Union Government's plan to institute a tariff rate quota (TRQ) regime for sugar imports has been temporarily shelved.

Under the proposal originally mooted by the Department of Economic Affairs (DEA), sugar imports up to 10 lakh tonnes annually would be allowed at a concessional basic customs duty (BCD)of 20 per cent.

Any excess imports would attract the regular 60 per cent rate.


In both cases, the countervailing duty (CVD) of Rs 850 a tonne, equal to the excise duty payable by domestic mills, would be levied in addition to BCD.

On June 22, following the meeting of the Cabinet Committee on Prices (CCP), the Finance Minister, Mr P. Chidambaram told reporters that the proposal to allow sugar imports "under the TRQ principle" had been approved. Further, "the tariff rate and the quota will be decided later and announced".

Later that day, the Food and Agriculture Minister, Mr Sharad Pawar said the decision taken was to allow duty-free import of sugar. While not specifying any quantity (as per the TRQ principle), he merely mentioned a time limit up to September 30 for nil duty.

Mr Pawar clarified that even at zero basic duty, the importers would have to pay Rs 850 a tonne CVD.


But with the Finance Ministry finally issuing a notification, it is clear that there is no TRQ regime for sugar at present.

The notification, dated June 23, merely specifies nil import duty for white sugar (tariff lines `1701 91 00' and `1701 99 90'), with the added proviso that this rate would not be applicable on or after October 1, 2006.

In other words, from the next crushing season (October-September), the import duty would revert to 60 per cent.

High global rates

Sources said the main reason why TRQ had been shelved for the moment was the high international prices.

With spot white sugar (London daily price) quoting at around $480 a tonne and adding $50-60 ocean freight and $10 a tonne discharge costs, the landed price of sugar would be nearly $550 a tonne or Rs 24-25 a kg.

Thus, imports are not feasible even at zero duty, let alone 20 per cent.

"By announcing duty-free imports, the Government has at least made a statement, if not anything else. TRQ would not have accomplished even that," the sources noted.

The other drawback with TRQ, they added, was that imports would take place only through designated state agencies such as STC, MMTC, PEC and Nafed.

That again would have militated against the Government's objective to ensure sufficient sugar availability in the immediate term till the festival season.

G.S.R.379(E).- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 21/2002-Customs, dated the 1 st March, 2002 which was published in the Gazette of India, Extraordinary, vide number G.S.R.118 (E), dated the 1 st March, 2002, namely:-

In the said notification,-

(i) in the preamble, in the proviso, after clause (f), the following clause shall be inserted, namely:-

"(g) the goods specified against serial No.38A. of the said Table on or after the 1 st October, 2006."

ii) in the Table, after S.No.38 and the entries relating thereto, the following shall be inserted, namely:-

(This article was published in the Business Line print edition dated June 28, 2006)
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