15/09/04 INDIA (Oilmandi) - The government has decided to reduce thetariff value for edible oil and the duty entitlement passbook schemebenefits for steel exporters while maintaining the present level ofbenefit for the textile sector.

The tariff value reduction, to mirror the fall in international edible oilprices, would help in reducing the landed price of the commodity.

Following the norms of the World Customs Congress, India has adopted asystem of tariff value to avoid revenue losses due to price fluctuationsand under invoicing. The tariff value is changed in case internationalprices move by 12-15 per cent.

The government is expected to notify the changes over the next few daysfollowing a meeting convened by Prime Minister Manmohan Singh todayevening.

Finance Minister P Chidambaram and Commerce & Industry Minister Kamal Nathalso discussed the issue of lowering DEPB rates for steel and garments.

Senior government officials said that the DEPB rates would not be adjustedon the basis of revenue considerations and that the level of assistanceavailable to exporters in the pre-Budget scenario would be maintained.

But it was decided that the DEPB rates would be adjusted to the extent ofany duty relief given.

This would imply a reduction in the rates for steel since customs dutieson steel were reduced in the Budget. Value caps could also be fixed inrespect of 32 steel items. However, rates for textiles are likely toremain the same since there was no reduction in customs duty in textiles.

The broad principles of fine-tuning the DEPB for the remainder of thecurrent fiscal year has been agreed upon. Details will be worked outtonight and announced by the Cabinet secretary tomorrow, Finance MinisterP Chidambaram told reporters after the meeting.

Officials said that one of the options being considered is that for highduty items like edible oil, 25 per cent of the duty could be paid on theDEPB scrip and the balance through cash.

A section within the government was, however, of the opinion that therewas no justification for providing any value limit for payment of duty forimport of high duty items like edible oils.

The decision to adjust the tariff value in case of edible oil is beingtaken since DEPB is increasingly being used to pay import duty on theproduct in lieu of cash.

The department of revenue has been arguing against continuation of DEPB ongrounds that it is based on the deemed export concept wherein exportersare claiming DEPB benefits even though they are using indigenous inputs.

The Commerce Department on the other hand has pointed out that all theexport promotion schemes account for only 13.6 per cent of India’s totalexports of over Rs 2,91,582 crore