Dhruv GuptaPartner
Bhargav MansattaCounsel
Bhava SharmaConsultant
Key Developments
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Trade remedy actions on imports into India in the fourth quarter of 2024
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Initiation of investigations
The Directorate General of Trade Remedies (DGTR) initiated five anti-dumping investigations in the fourth quarter of 2024 to examine whether anti-dumping duty needs to be imposed or continued on certain imports into India. These investigations focus on products such as 4,4 Diamino Stilbene 2, 2 Disulphonic Acid (DASDA), Toluene Di-Isocyanate (TDI), Liquified Natural Gas Fuel Tank (LFT), Nylon Filament Yarn, 2,2,4-Trimethyl 1,2- Dihydroquinoline (TDQ).
The DGTR has also initiated a safeguard investigation on imports of Non-Alloy and Alloy Steel Flat Products. A safeguard measure is a temporary restriction on imports of a product when a domestic industry is threatened or harmed by a sudden increase in imports. Unlike anti-dumping measures, safeguard measures apply to all countries without discrimination, although developing countries with low import shares may be excluded from their ambit.
The governments of exporting countries, exporters, and importers of these products in India are expected to actively respond to these investigations to avoid or minimise the impact of trade remedy measures on their businesses.
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Issuance of recommendations for imposition of trade remedy measures
The DGTR has recommended definitive anti-dumping duty/countervailing duty on Poly Vinyl Chloride Paste Resin, Soft Ferrite Cores, Saccharin, Trichloro Isocyanuric Acid, Vacuum insulated flasks and other vacuum vessels of stainless steel. The DGTR also recommended imposing provisional anti-dumping duty on Polyvinyl Chloride Suspension Resins from China PR, Indonesia, Japan, Korea RP, Taiwan, Thailand and the United States of America.
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Imposition of anti-dumping and countervailing duties
The Ministry of Finance has imposed anti-dumping/countervailing duty on Cellophane Transparent Film, Epichlorohydrin, Isopropyl Alcohol, Digital Offset Printing Plates, Sulphur Black, Thermoplastic Polyurethane, Unframed Glass Mirror, Telescopic Channel Drawer Slider, Textured Tempered Coated and Uncoated Glass and Welded Stainless-Steel Pipes and Tubes.
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Imposition of safeguard duty on imports of Low Ash Metallurgical Coke
Following its final findings in an investigation into the import of Low Ash Metallurgical Coke, the DGTR had recommended imposing quantitative restrictions on future imports.
Subsequently, through a notification dated 26 December 2024, these restrictions have been imposed. The notification stipulates that imports of Low Ash Metallurgical Coke will be permitted only with an Import Authorisation issued by the Directorate General of Foreign Trade, specifying the permitted country of origin and adhering to the quota allocated to that country in the notification. The quantitative restrictions will be effective for six months, from 1 January 2025 to 30 June 2025.
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Clarification on origin procedures under Free Trade Agreements
A Certificate of Origin (COO), an official document used in international trade to certify that the goods being exported originate from a specific country, is essential for claiming preferential rate of customs duties under Free Trade Agreements (FTA).
Sometimes, invoices for goods are issued by a third party located in a country other than the exporting or importing country, while the goods are still originating from a member country of the FTA. While some FTAs, like the ASEAN-India Free Trade Agreement (AIFTA), permit third-party invoicing subject to conditions, customs authorities have expressed concerns about verifying origin and value addition in these cases, leading to disputes. To address these issues, the Central Board of Indirect Taxes and Customs issued an instruction1 on 21 October 2024. The instruction clarifies origin procedures under FTAs, specifically the uncertainty surrounding third-party invoicing. The key highlights of the instruction are discussed below.
- Acceptance of third-party invoicing: The instruction clarifies that third-party invoicing is a recognised practice, explicitly allowed under some FTAs, including AIFTA (Article 22 of Operational Certification Procedures). Field formations should not question origin status solely based on third-party invoicing.
- Certificate of Origin as sufficient proof of origin: The COO serves as primary proof of origin, regardless of invoicing arrangements. The invoice, whether issued by the exporter or a third party, is relevant for customs valuation, not origin determination.
- Verification of origin: If doubts arise about origin, customs officials may request information from the importer, following the FTA provisions. If information is insufficient, verification will be conducted as per the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR) and Section 28 DA of the Customs Act, 1962, involving the FTA Cell and the COO issuing authority.2
- Verification process and confidentiality: The verification process must comply with the respective FTA. Importers are not obligated to disclose commercially sensitive information of the exporter. There is also no requirement for uniform currency across COO and invoices.
- Denial of preferential treatment: While Rule 5(5) of the CAROTAR allows preferential customs duty rate to be denied without further verification, FTA provisions take precedence. If an FTA mandates verification, it must be conducted. Previous instructions reinforcing FTA's precedence over CAROTAR in case of conflict have also been reiterated.
- Non-compliance procedures: If non-compliance with the origin criteria is established, a reasoned order must be issued by the Authority adhering to the principles of natural justice and FTA obligations. The clarification also notes that allegations of artificial value inflation in the Regional Value Content addition are not enough to establish non-compliance.3 To prove non-compliance with the origin criteria, authorities must demonstrate that the required value addition, as specified under the FTA, has not been achieved.
[1]Instruction No. 23/2024
[2]The COO is typically issued by an authorised body in the exporting country. The authority responsible for issuing the COO may vary depending on the country and the type of COO (preferential or non-preferential).
[3]Regional Value Content addition refers to the percentage of the product's value that must be contributed by the originating countries within the region specified in an FTA for the product to qualify as 'originating' and be eligible for preferential tariff treatment. This is one of the key criteria used to determine the origin of goods under the FTA.
