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CHANAKYA NATIONAL LAW UNIVERSITY

,
PATNA

CUSTOM DUTIES AS TRADE BARRIERS

Subject- Indirect Tax

Faculty Mr. G.P. Pandey

Submitted by:
Name – Shrey

Apoorv
Semester 8th

Roll No 5463

ACKNOWLEDGEMENT

It is my greatest pleasure to be able to present the project topic “Custom
Duties as trade barriers” of Indirect Tax. It very interesting to work on this
project.

I would like to thank my teacher, Mr. G.P. Pandey, for providing me with
such an interesting project topic and for his constant support and
guidance.

I would also like to thank my librarian for helping me in gathering data for
the project. Last, but not the least, I would heartily thank my family and
friends for their unwavering support without which this work would not
have been possible.

I hope that the readers will appreciate this project work.

Shrey Apoorv

2 | Page

Aims and Objectives: The aim of the project is to present a detailed study and analysis of the “Custom duties as Trade Barrier” Sources of Data: The following secondary sources of data have been used in the project1 Books 2 Websites Method of Writing: The method of writing followed in the course of this research paper is primarily analytical. The researcher has made extensive use of the library at the Chanakya National Law University.RESEARCH METHODOLOGY Method of Research The researcher has adopted a purely doctrinal method of research. Mode of Citation: The researcher has followed a uniform mode of citation throughout the course of this research paper 3 | Page .

however. except perhaps those considered necessary for health or national security. In practice. then a trade war results. 4 | Page . If two or more nations repeatedly use trade barriers against each other. including the following:  Tariffs  Non-tariff barriers to trade  Import licenses  Export licenses  Import quotas  Subsidies  Voluntary Export Restraints  Local content requirements  Embargo  Currency devaluation[2]  Trade restriction Most trade barriers work on the same principle: the imposition of some sort of cost on trade that raises the price of the traded products. even those countries promoting free trade heavily subsidize certain industries.[1] The barriers can take many forms. free tradeinvolves the removal of all such barriers. Economists generally agree that trade barriers are detrimental and decrease overall economic efficiency.INRODUCTION TO TRADE BARRIES Trade barriers are government-induced restrictions on international trade. such as agriculture and steel. this can be explained by the theory of comparative advantage. In theory.

Trade barriers such as taxes on food imports or subsidies for farmers in developed economies lead to overproduction and dumping on world markets. Because rich-country players call most of the shots and set trade policies. Trade barriers may occur in international trade when goods have to cross political boundaries. There is also a category of nontariff barriers. goods such as crops that developing countries are best at producing still face high barriers. An ad valorem tariff is one that is calculated as a percentage of the value of the goods being imported or exported. thus lowering prices and hurting poor-country farmers. The most common form of trade barriers are tariffs. which are usually imposed on imports. and a compound duty (also known as a mixed tariff). Another negative aspect of trade barriers is that it would cause a limited choice of products and would therefore force customers to pay higher prices and accept inferior quality. or volume of goods.Trade barriers are often criticized for the effect they have on the developing world. which also serve to restrict global trade. also known as nontariff measures. which is based on the quantity. Tariffs also tend to be anti-poor. A duty or tariff may be categorized according to how it is calculated. Duties and tariffs are also categorized according to their function or purpose. while an import duty is charged on goods entering a country. with low rates for raw commodities and high rates for laborintensive processed goods. a 20 percent ad valorem duty means that a duty equal to 20 percent of the value of the goods in question must be paid. A trade barrier is a restriction on what would otherwise be free trade. An antidumping duty is imposed on imports that are priced below fair market value and that would damage domestic producers. A countervailing 5 | Page . An export duty is a tax levied on goods leaving a country. Antidumping duties are also called punitive tariffs. For example. or duties (the two words are often used interchangeably in the context of international trade). The Commitment to Development Index measures the effect that rich country trade policies actually have on the developing world. weight. which is calculated as a combination of an ad valorem duty and a specific duty. There are several different types of duties or tariffs. Duties that are calculated in other ways include a specific duty.

labeling. and orderly marketing arrangements. is designed to substantially reduce or stop altogether the importation of a particular product or commodity. The third type of NTB covers technical regulations that apply to such areas as packaging. or quotas. another type of punitive tariff.duty. These include quantitative restrictions. and government procurement practices. These include a variety of requirements that must be met in order for trade to occur. Examples of quantitative restrictions include international commodity agreements. which is based on the use of an imported product. also known as the Standards Code. financial bonds and deposits. In addition to duties and tariffs. It may be used to protect domestic producers. It is typically used when the amount of an imported good exceeds a certain permitted level. including fees. came into effect for the purpose of ensuring that administrative and technical practices do not act as trade barriers. The purpose of a countervailing duty is to offset the subsidy and increase the domestic price of the imported product. safety standards. that may be imposed by one country or as the result of agreements between two or more countries. licenses. voluntary export restraints. By the end of 1988 the agreement had been signed by 39 countries. A prohibitive tariff. also known as an exclusionary tariff. Additional work on promoting unified standards to eliminate these NTBs was conducted by 6 | Page . the same product may be charged a different duty if it is intended for educational use as opposed to commercial use. there are also nontariff barriers (NTBs) to international trade. domestic content requirements. In 1980 the Agreement on Technical Barriers to Trade. and multilingual requirements. Administrative regulations constitute a second category of NTBs. A countervailing duty is specifically charged on imports that have been subsidized by the exporting country's government. is levied after there has been substantial or material damage done to domestic producers. Another type of tariff is the end-use tariff. For example. permits.

The U. health. As a result more than 131 governments accepted the provisions of the Technical Barriers to Trade (TBT) Agreement enforced by the WTO. especially for markets in Latin America and Asia.S. has presented examples where narrow regional or market interests have resulted in standards forced on international trade. Department of Commerce' s 1998 report. 7 | Page .S. however. Standards and testing practices can become technical barriers to trade when they are developed by national or regional interests and then imposed on the international trading. which in 1994 was succeeded by the newly created World Trade Organization (WTO). In Europe such requirements range from banning imported beef from cattle raised with hormones to not allowing older airplanes to land because of noise pollution concerns. The Department of Commerce. and governments and regional economic blocs such as the European Union (EU) have openly used standards and related practices to achieve market domination.and trade neutral standards. competitiveness abroad. The United States was among those countries calling for technology. and safety certification requirements. Under the TBT Agreement the WTO is supposed to guarantee due process and transparency in the establishment of international standards. "National Export Strategy." identified "the global manipulation of international standards and testing practices by governments and regional economic blocs" as a major threat to U.the General Agreement on Tariffs and Trade (GATT) Standards Committee. Other types of existing technical trade barriers include environmental.

An example of an ad valorem tariff would be a 15% tariff levied by Japan on U. automobiles. This price increase protects domestic producers from being undercut.500 to Japanese consumers.000 vehicle now costs $11.Types of Tariffs and Trade Barriers There are several types of tariffs and barriers that a government can employ: Specific tariffs Ad valorem tariffs Licenses Import quotas Voluntary export restraints Local content requirements SpecificTariffs A fixed fee levied on one unit of an imported good is referred to as a specific tariff. Ad Valorem Tariffs The phrase ad valorem is Latin for "according to value". so a $10. a country could levy a $15 tariff on each pair of shoes imported. but levy a $300 tariff on each computer imported. 8 | Page . but also keeps prices artificially high for Japanese car shoppers. For example.S. and this type of tariff is levied on a good based on a percentage of that good's value. This tariff can vary according to the type of good imported. The 15% is a price increase on the value of the automobile.

The standard of comparison is value added under free trade.may not attract much tariff where as their final products will be subject to higher percentage of tariff. is the percentage increase in an industry’s value added per unit of output that results from a country’s tariff structure . They may be i Import duties imposed on goods imported into the country ii Exports duties imposed on goods originating from the duty levying country and exported to other countries. Tariffs on imports may differ depending on the type of a commodity or the stage of manufacturing process that a commodity has undergone.It is possible a raw material may have no or very low tariff. Tariff which is imposed on the basis of value of a commodity is a nomnal tariff. 9 | Page . For example on an import of manufactures a tariff of 20 percent is nominal tariff. The rate of tariff may increase as the commodity undergoes higher states of manufacturing process where the value added increases. rubb er etc. Domestic producers are usually protected by a higher rate of tariffs on final goods and a very low rate on imports of inputs. Raw materials like cotton. Larger the difference in the value of raw materials and final output greater is the degree of effective tariff thereof. iii Transit duties levied on goods crossing the national frontiers. The effective tariff rate refers to “The value of protection provided to a particular process of production by the given nominal tariffs on a product and on material inputs used inits production. or the effective rate of protection.TARIFF AND NON TARIFF BARRIERS Tariffs include any schedule of duties imposed on goods passing through national frontiers. This encourage the manufacturing of final goods at home by importing the required inputs.” The process of production involves adding up values to the initial input in the form of raw material. The effective tariff rate. leather. originating from abroad and meant for some other country. Among all these duties the most important are the import duties Effective tariffs Tariffs are imposed on imports on or the other basis as mentioned above.

which means it does not allow the markets to function properly.are another way for an country to control the amount of trade that it conducts with another country. Tariff and Non – Tariff Barriers Overview  2. Non Tariff .Tariff and Non – Tariff Barriers 1.Trade Barriers Non Tariff barriers . 10 | P a g e . Any barrier to trade creates an economic loss. Trade Barriers Used to encourage and protect existing domestic industry Trade barriers are Tariffs that Increase Trade Weaken Trade Restrict Trade Quotas Boycotts and Embargoes .  3. Impact of Tariff (Tax) Barriers Tariff Barriers tend to Increase : Inflationary pressures Special interests’ privileges Government control and political considerations in economic matters The number of tariffs they beget via reciprocity Tariff Barriers tend to Weaken : Balance-of-payments positions Supply-and-demand patterns International relations (they can start trade wars)  4. either for selfish or altruistic purposes. Six Types of Non-Tariff Barriers 2) Customs and Administrative Entry Procedures: Valuation systems Antidumping practices Tariff classifications Documentation requirements Fees 1 ) Specific Limitations on Trade Quotas Import Licensing requirements Proportion restrictions of foreign to domestic goods (local content requirements) Minimum import price limits Embargoes.  5.

guarantee maximum hygienic conditions&quot. labeling.  10.) (3) Standards: Standard disparities Intergovernmental acceptances of testing methods and standards Packaging. For instance. a crop pest.  7. to &quot. and marking ( 4) Government Participation in Trade: Government procurement policies Export subsidies Countervailing duties Domestic assistance programs . — an unsubtle effort to identify the Global 11 | P a g e . ran a print ad campaign featuring overweight cowboys complaining about the fact that McDonald's France refuses to buy American beef but uses only French. New Zealand's apples account for a third of its agricultural exports but have been banned from Australia since 1921 due to fears about the spread of fire blight. Philippine mangoes and bananas have to meet strict phytosanitary requirements from the US and Australia. Mangoes Philippines – Restrictions It is a common practice in many countries to use non-tariff barriers to control the entry of imports. Apples Banned .Non Tariff Barrier By Doug Latimer in Sydney Published: 1:00AM BST 13 Apr 2010  9. Six Types of Non-Tariff Barriers (cont'd.) 5) Charges on imports: Prior import deposit subsidies Administrative fees Special supplementary duties Import credit discriminations Variable levies Border taxes 6) Others: Voluntary export restraints Orderly marketing agreements  8. 6. McDonald France – Big Beef McDonalds France in 1998. Six Types of Non-Tariff Barriers (cont'd.

NON TARIFF BARRIERS 12 | P a g e . Canada has proposed agreements for forest products. the non-agricultural market access (NAMA) negotiating group’s mandate is "to reduce. in particular on products of export interest to developing countries.” Tariff Barriers: By late June 2006. in keeping with the Doha mandate.Tariffs and Non-Tariff Measures Under the WTO's Doha Development Agenda. and tariff escalation. eliminate tariffs. The negotiations shall take fully into account the special needs and interests of developing and least-developed country participants. Canada is a leading supporter of sectoral agreements. We have been advocating high ambition by all members with respect to environmental goods. with two coefficients (one for developed countries and one for developing countries) that would reduce high tariffs by proportionately more than low ones. and other members’ sectoral proposals are also being considered. including through less than full reciprocity in reduction commitments. as well as a developing country coefficient that. fish and fish products. or as appropriate. while somewhat higher. high tariffs. To take ambition beyond what a formula would likely achieve. chemicals (including fertilizers) and raw materials. as well as non-tariff barriers. there was an emerging consensus that the best mechanism to achieve the Doha mandate would be a “Swiss formula” applied to all tariff lines. would still deliver meaningful gains in major emerging markets. Product coverage shall be comprehensive and without a priori exclusions. in which tariffs for certain industrial sectors would completely eliminated or at least harmonized and reduced by greater-than-formula cuts. including the reduction or elimination of tariff peaks. Canada favours a Swiss formula with an aggressive (low) coefficient for developed countries in order to improve our access to those markets.

have the effect of tariffs once they are enacted. although they are called "non-tariff" barriers. export subsidies.Non-tariff barriers to trade (NTBs) are trade barriers that restrict imports but are not in the usual form of a tariff. countervailing duties. Some of non-tariff barriers are not directly related to foreign economic regulations. export restrictions. or North American Free Trade Agreement (NAFTA) that restrict the use of tariffs. or to protect depletable natural resources. technical barriers to trade. Their use has risen sharply after the WTO rules led to a very significant reduction in tariff use. safety. but nevertheless they have a significant impact on foreign-economic activity and foreign trade between countries. services and factors of production. Some common examples of NTB's are anti-dumping measures and countervailing duties. Some non-tariff trade barriers are expressly permitted in very limited circumstances. In other forms. Trade between countries is referred to trade in goods. limiting the activities of state trading. which. etc. bureaucratic delays at customs. Sometimes in this list they include macroeconomic measures affecting trade. or sanitation. special licenses. Non-tariff barriers to trade include import quotas. sanitary and phyto-sanitary measures. unreasonable standards for the quality of goods. when they are deemed necessary to protect health. they are criticized as a means to evade free trade rules such as those of the World Trade Organization (WTO). rules of origin. the European Union (EU). Non-tariff barriers today 13 | P a g e .

while use of other NTBs increased from 55% in 1994 to 85% in 2004. TRENDS IN TARIFF AND NON TARIFF BARRIERS 14 | P a g e . available to the governments of industrialized countries. the use of NTBs. as well as a wide range of trade restrictions. such as externalities and information asymmetries information a symmetries between consumers and producers of goods. According to statements made at United Nations Conference on Trade and Development (UNCTAD. NTBs in the field of services have become as important as in the field of usual trade. NTBs are most similar to the tariffs. Tariffs for goods production were reduced during the eight rounds of negotiations in the WTO and the General Agreement on Tariffs and Trade (GATT). as well as GATT articles. which originated in the Uruguay Round (the TBT Agreement. based on the amount and control of price levels has decreased significantly from 45% in 1994 to 15% in 2004. Many NTBs are governed by WTO agreements. and putting serious obstacles to international trade and world economic growth. the Agreement on Textiles and Clothing). Most of the NTB can be defined as protectionist measures. forcing them to resort to use the NTB. The need to protect sensitive to import industries. An example of this is safety standards and labelling requirements. After lowering of tariffs. unless they are related to difficulties in the market. 2005). NTBs can be referred as a “new” of protection which has replaced tariffs as an “old” form of protection. Increasing consumer demand for safe and environment friendly products also have had their impact on increasing popularity of TBT. Thus. SPS Measures Agreement.With the exception of export subsidies and quotas. the principle of protectionism demanded the introduction of new NTBs such as technical barriers to trade (TBT).

anti-dumping duties. · Government interventions in trade . internal taxes. this rather simple categorization often obscures a very broad array of individual measures that are potential trade barriers. trade diverting aid. etc.industrial standards.will depend on the circumstances in which the specific measure is employed. Trends in Non-Tariff Barriers 15 | P a g e .quantitative restrictions. embargoes. etc. Such a range of trade measures is clearly diverse. consular and customs formalities and requirements. etc.i. etc. export subsidies or taxes. prior deposits. · Standards . whether it intentionally or unintentionally leads to discrimination against or restriction of trade . minimum price regulations. variable levies. This will clearly vary from country to country as well as from product to product. etc.e.government procurement. licensing. packaging. · Customs and administrative entry procedures . countervailing duties. health and sanitary regulations. export restraints. sample requirements.tariffs. which makes it extremely difficult to analyze and quantify the potential effects on trade of the use of such measures. stock trading. special duties on imports. customs classification. Bourke (1988) provides a more comprehensive classification of trade measures that are relevant to the global forest products trade: · Specific limitations on trade .customs valuation.Although trade barriers are conventionally separated into tariff and non-tariff measures. labelling and marking regulations. · Charges on imports . Whether any implemented measure actually is a fully fledged trade barrier .

Imports of all green coniferous softwood were prohibited to most EEC countries unless they were either kiln-dried at 56 o C or received a phytosanitary certificate. However. including newsprint. · US countervailing duties on Canadian softwood lumber. since 1985 there has been a general increase in the use of such barriers. · EEC phytosanitary standards. The EEC quantitative restrictions were applied to a wide range of forest products. In July 1992 the US International Trade Commission determined that Canadian softwood lumber was being subsidized through low stumpage prices for logs and export rest 16 | P a g e . A number of quality controls and quantitative restrictions have been applied to plywood and veneer in Japan.While tariffs applied to global forest products trade may have been declining as a result of the Tokyo Round negotiations and during the lead up to the Uruguay Round. fibre-building boards. builder's woodwork and some furniture items. whether the recent trend of increasing non-tariff import measures has had a significant impact on the forest products trade has again proved difficult to determine. Some of the more important measures include: · The use of tariff quota/ceiling system by the European Economic Community (EEC) and Japan. non-tariff measures have proliferated. plywood (separate ones for coniferous and nonconiferous). Table 1 indicates the extent to which the general direction of movement in non-tariff trade barriers to forest products has been the opposite to the reductions in tariff barriers. although many non-tariff import barriers were generally static or declining in the 1979-85 period just after the Tokyo Round. Most alarming is that.

especially tariffs. By the year 2000. The rapid growth of the Internet and electronic commerce (e-commerce) represented some of the most challenging new issues in the international trade arena. Free-trade advocates and the WTO have held that WTO-sponsored agreements offer the best means of providing lower prices for consumers across a wide array of products while creating fairer competitive conditions for international suppliers. In 1997 the WTO’s Information Technology Agreement (ITA) and Basic Telecommunications Agreement (BTA) reduced the tariffs on computer and telecommunications products and some intangible goods considered to be drivers of the developing knowledge-based economy. steel. Advances in information technology since the 1990s have altered the focus of many trade agreements. 17 | P a g e . A round of negotiations known as the Uruguay Round (1986–94) finally led to the creation of the World Trade Organization (WTO) in 1995. in part because many countries were slow to adopt bilateral freetrade agreements that included provisions covering e-commerce. Washington. A major impetus to the global growth of trade was the General Agreement on Tariffs and Trade (GATT). processed foods. The early trade agreements were largely directed toward tangible goods such as agricultural products.Tariff reduction and the growth of international trade For goods and services alike. especially after 1999. The work of the WTO came under increasing scrutiny from its critics. The ITA and the BTA represented a dramatic departure from earlier national economic policies. The system created under GATT encouraged a series of trade negotiations focused on tariff reductions. when trade talks were disrupted by globalization protesters during the WTO ministerial conference in Seattle. were reduced or in some cases eliminated across the globe. especially in cases where countries used prohibitively high tariffs and subsidies to protect their technology industries from foreign competitors. This increase in multilateral international trade occurred at the same time that trade barriers. a series of trade agreements adopted in 1948. international trade grew dramatically in the second half of the 20th century. total world trade was 22 times greater than it had been in 1950. and automobiles.

Weighted average tariffs are a purely quantitative measure and account for the basic calculation of the score using the following equation: Trade Freedomi = (((Tariffmax–Tariffi )/(Tariffmax–Tariffmin )) * 100) – NTBi where Trade Freedomi represents the trade freedom in country i. and the upper bound was set as 50 percent. 15. The weighted average tariff uses weights for each tariff based on the share of imports for each good. and often do. face different tariffs. 10. or 20 points is assigned according to the following scale:  20—NTBs are used extensively across many goods and services and/or act to effectively impede a significant amount of international trade.  10—NTBs are used to protect certain goods and services and impede some international trade.  15—NTBs are widespread across many goods and services and/or act to impede a majority of potential international trade. Different imports entering a country can. Tariffmax and Tariffmin represent the upper and lower bounds for tariff rates (%). The minimum tariff is naturally zero percent. An NTB penalty is then subtracted from the base score. The penalty of 5. and Tariff i represents the weighted average tariff rate (%) in country i.Trade Freedom Trade freedom is a composite measure of the absence of tariff and non-tariff barriers that affect imports and exports of goods and services. The trade freedom score is based on two inputs:  The trade-weighted average tariff rate and  Non-tariff barriers (NTBs). 18 | P a g e .

 5—NTBs are uncommon. 19 | P a g e .  0—NTBs are not used to limit international trade. protecting few goods and services. and/or have very limited impact on international trade.

developing countries have fewer people who have the wealth to buy the goods made in local industries. 1 A quota is a limit on the amount of goods a country can export to another country 2 A tariff is a tax on imports Other problems that developing countries face are they are short of the money that is needed to set up new businesses and industries. These problems include  Relying on only one or two primary goods as their main exports  They cannot control the price they get for these goods  The price they pay for manufactured goods increases all the time  As the value of their exports changes so much long term planning is impossible  Increasing the amount of the primary good they produce would cause the world price to fall . 20 | P a g e .Trade Problems for Developing Countries Developing countries believe they get a raw deal when it comes to international trade. There are two types of trade barrier . Developing countries that try to export manufactured goods find that trade barriers are put in their way.quotas and tariffs. Also.

1988 follow the GATT provisions thereunder the norm is the transaction value or invoice price but the invoice value to be acceptable should be a fully commercial and genuine price. Goods have. 1/. (iii) surcharge and (iv) additional duty of Customs  Additional duty of Customs @ Rs. at the request of the importer be intimated to him). 1975. to be valued for purposes of assessment. Valuation Rules.CUSTOM DUTY Custom duties are levied on the imported goods and in a few cases on export goods at the rates specified in the schedules to the Customs and Tariff Act. will. therefore. (ii) basic duty. Import duties generally consist of the following  Basic Duty  Additional Custom Duty equal to Central Excise duty leviable on like goods produced or manufactured in India. Where the Customs Officer has reasonable doubt about the truth and accuracy of the declared transaction value (grounds for which.  Countervailing Duty  Surcharge @ 10% of Basic Duty  Special Additional Duty @ 4% to be computed on the aggregate of (i) assessable value. The taxable event is import into or export from India.per litre on imported motor spirit (petrol) and high speed diesel oil. he may ask the importer to furnish further information and evidence to substantiate the declared transaction value and in the event of the importer’s failure to do so. Valuation Most of the Customs duties are .  Anti dumping duty/safeguard duty for import of specified goods. he may after 21 | P a g e .ad valorem.

b value iii) Where actual insurance is not ascertainable : 1. Insurance charges paid on the Customs duty are. these elements have to be added as under as per Notification No. Landing charges realized by Port authorities have also to be added at the prescribed flat rate of 1% of C.) to make it C. size of the comparable consignment(s) is more or less similar and importers belong to same commercial level (i.(N. only sea freight is to be added.o.39/90-Cus. 22 | P a g e . are of same quality and specification and from same manufacturer and country of productions.o. not includible in the assessable value since they relate to post-importation factor.e class of buyers). is the date of importation or exportation and not the date of contract between the buyer and the seller. however.I.b value Where goods are generally imported by sea but due to urgent demand they were imported by air.o.T.F value. 1962. but not exceeding 20% of f. Reliance on prices in other invoices is permissible only if imports chosen for comparison are contemporaneous. it is the high seas sale price inclusive of canalising agency’s service which would form the basis of assessment. Unless the invoice price already includes ocean freight and insurance. In case of high seas sale.Where several contemporaneous import values are available. Date for Determination of value The relevant date for determination of value for the purpose of assessment of Customs duty under Section 14 of the Customs Act. the lowest of the values has to be accepted.b value ii) Where actual sea/air freight is not ascertainable : 20% of f. Proforma invoice/quotation being only an offer for sale of goods at the price mentioned therein is a relevant evidence for sale price.hearing the importer reject the declared transaction value and proceed further under the Valuation Rules.125% of f.I. it may even be necessary to value unbranded goods on the basis of the known price of branded goods and also the goods of one country or origin (or manufacturer) on the basis of the known price of the goods of another country of origin (or manufacturer). But where the declared price is very low and totally unrealistic.F value:i) For Air Cargo : Actual air freight. or on actual basis unless seller or his agent is under obligation to bear it as part of CIF value.

Interest amount (charged for delayed payments made after the permitted credit period of 90 days) was held to be not includible in assessable value. pending verification of books of accounts and influence of relationship on price. charges for dismantling. Date of determination of rate of duty The rates of duty and tariff values as in force on the date of presentation of Bill of entry for home consumption will be the rate applicable for rate of duty. However. In case of import of second-hand plant. In case the bill of entry has been filed in advance of entry inwards of the vessel or the arrival of the aircraft. in the case of clearance of goods from a bonded warehouse. there are two exceptions to it so far as rate of duty and tariff value are concerned. procurement charge or commission of 3% paid to foreign agent was held to be not includible in assessable value. there is no special relationship between the importer and the exporter and there is no evidence that the interest has influenced the sale price.10 lakhs require a Certificate from an internationally reputed inspection and certification agency/Chartered Engineer. Imports of second hand machinery of value above Rs. where the Indian importer checked the quotations of all proposed suppliers and finally approved the supplier party (out of those listed by his agent abroad) and entered into purchase transaction directly with the selected supplier. packing. Board has also accepted that interest charged to importers by foreign suppliers under deferred payment scheme is not addable to assesssable value provided such interest charges are shown separately in the invoice. For calculating additional Customs duty. proportionate abatement in value is allowable. Regarding agency commission.Loading on account of royalty or foreign collaboration fee (now reduced to 1% of value of the goods) is permissible only if such royalty etc. the value base would comprise of the transaction value CIF plus basic Customs duty plus anti-dumping duty plus surcharge. forwarding. the crucial date will be the date of entry inwards of the vessel or the date of arrival of the aircraft. insurance and compulsory inspection expenses incurred in the country of export are includible in assessable value. Government has the power to fix tariff values for goods in which case duty is assessed on such tariff value. payment has nexus with the imported goods. Secondly. the date of actual removal of goods from the warehouse is the crucial date provided the goods are removed 23 | P a g e . For goods found damaged or deteriorated before clearance.

The rate of duty applicable in that case will be the rate prevalent on the date when the warehousing period (including permitted extension) came to an end. the rate notified by the Government and as in force on the date of presentation of the bill of entry (for home consumption or for warehousing) will be the one applicable. the goods cease to be warehoused goods and they are deemed to be improperly removed from the warehouse. As regards exchange rate.during the permitted warehousing period (including extension allowed. 24 | P a g e . But once the permitted warehousing period expires. if any).

The extent of the decline in tariffs differs with the market and product. 25 | P a g e . also because of the higher domestic price. They serve to reduce consumption of the imported product. Tariffs and other trade barriers have a definite effect on consumption and production. particularly in the post-Tokyo Round era. They also serve to stimulate domestic production of the product when that is possible. However. while opponents argue that it is inefficient from an economic standpoint. Proponents of free trade argue that both of those results are undesirable. Proponents of tariffs argue that such an increase in domestic production is desirable. The overall effect of tariffs and trade barriers on international trade is to reduce the volume of trade and to increase the prices of imports. tariff escalation has continued in most developed countries. There is also a category of nontariff barriers. builders' joinery. The most common form of trade barriers are tariffs. In developed country markets tariff rates had fallen generally to very low levels even before the Uruguay Round schedules were agreed. also known as nontariff measures. with specific products such as wood-based panels. Tariff barriers to forest products trade have continued to decline in recent years. A trade barrier is a restriction on what would otherwise be free trade. and furniture generally receiving relatively higher rates. because the tariff raises the domestic price of the import. while proponents of protectionism argue that tariffs may be necessary for a variety of reasons.Conclusion Trade barriers may occur in international trade when goods have to cross political boundaries. or duties (the two words are often used interchangeably in the context of international trade). which also serve to restrict global trade. kraft. coated and corrugated paper. which are usually imposed on imports.

Most tariff reductions have led to a general decline in the MFN rate. One important impact of the decline in tariff rates for forest products in developed country markets is that the tariff differential between MFN and GSP rates has been reduced significantly. tariff rates have consistently been higher in developing country markets. Although tariff escalation is a feature in most markets.Compared to developed country markets. 26 | P a g e . This suggests that exporters facing the full MFN rates may have gained more from falling forest products tariff rates than developing countries that previously benefitted from GSP and other preferential schemes. while the GSP rate has been left largely unchanged. some developing countries have preferred a high uniform rate to applied across all forest products. This effect is examined explicitly in the analysis of the effects on the forest products trade of the Uruguay Round tariff reductions in Section.

Montek S. Sam. 27 | P a g e . "Tax reform in India: achievements and challenges Pursell. Macmillan. Yeats. "Trade policies in India. Quantitative methods for trade-barrier analysis. and Phillip Swagel. "Trade barriers and trade flows across countries and industries. and Alexander J. Garry."    Ahluwalia.BIBLIOGRAPHY BOOKS REFERRED  Rao. Jong-Wha." Lee." Laird. Govinda. "India's quiet economic revolution. M.