World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

Reply: These exemptions do not discriminate between the WTO Members.

24. The report notes that it has created an electronic filing system for customs clearance thus facilitating trade and substantially reducing time taken. However, the report also states that the system of licenses, permits and fees is very complex. What steps are being taken to reduce this complexity? (Page xi, paragraph 9)

Reply: The system of licenses and permits is not as complex as has been reported. The Government has started EDI with Customs and is now working with banks and other related agencies etc. The applications and fees can be paid online and thereby reducing the interface between the exporter/importer with the DGFT. DGFT is the first organisation in India to have a 2042 bit digital certificates.

25. In addition to the base rate tariff, importers must pay an additional duty ("countervailing duty") and special additional duty in lieu of local taxes. Could India explain the implementation of these taxes? On what products these additional duties apply? (Page xi, paragraph 10 and page 57, paragraph 43)

Reply: The additional duty ("countervailing duty") and special additional duty are in the nature of charges equivalent to internal taxes applied at the border in order to provide level playing field for the domestic industry. Additional customs duty is applied on the imported goods in lieu of the excise duty applicable on domestically produced goods, while special additional duty is levied in lieu of taxes such as state VAT, sales tax, levied or collected by state government or local taxes/charges.

These duties are equivalent to internal charges and are permissible under WTO provisions. While CVD is levied at rates equal to the excise duty rates applicable to domestically manufactured goods, special CVD is charged at 4% ad valorem or 1% in the case of jewellery articles. Both aim at providing a level playing field for the domestic industry vis à vis imported goods. Thus these duties apply only on like goods which, when produced domestically, are subject to excise duty or state VAT/local levies. Goods/items that are exempt from excise duty or state VAT are also exempt from additional duty or special additional duty respectively.

26. Are there cases where there is local tax exemptions given to certain products, but additional duties on the importer is maintained? (Page xi, paragraph 10)