The Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion Council (Chemexcil) has proposed the Union Government an amendment of the Exim Policy to provide for payment of anti-dumping duty to the extent inputs are used in the finished goods sold in Domestic Tariff Area (DTA). The plea has come in the wake of alleged misuse of the provisions of duty free imports by the EOU / EPZ units to dispose off the imported raw material in the domestic markets.

In an official communication to the Commerce Ministry, Satish W Wagh, chairman, Chemexcil, pointed out the practice of EOU/EPZ units routinely importing raw materials, which otherwise would attract anti-dumping duty if imported by normal importers, without paying any duties. "We understand that while clearing the manufactured products in DTA, no-anti-dumping duty is paid by the units and also no demand by the excise authorities is made. In the absence of clarity, EOU/EPZ units are indulging in rampant imports of items attracting anti-dumping duty, with an ultimate goal to dispose off most of it, if not all, in the DTA," he stated.

The chairman said that the Exim Policy provision for sale of goods by EOU/EPZ units in the DTA is being used to circumvent the levy of anti-dumping duty nullifying the protection afforded to the domestic industry against dumping of goods by overseas suppliers. Since the extent of DTA sales of EOU/EPZ units could be as high as 50 per cent of the exports effected by them, the sales turnover could be substantial to negate the very rationale behind levy of anti-dumping duties. At the same time there is a heavy loss to the exchequer. Hence there is an urgent need for the government to provide a level playing field to the domestic industry by recovering anti-dumping duty on the inputs used in sale of goods in DTA by EOU/EPZ units, he explained.

Noting that the Public Notice (PN No 16/2002-7) dt 5-6-2002 says that "Items to be cleared in DTA shall undergo tariff change at four digit level", he wanted a similar proviso to be made applicable across the board for all products. "The complaints of the bulk drug manufacturers will be taken care of then as there is no tariff change after micronisation/granulation, which are the normal processes adopted by EOU/EPZ units before selling the units in DTA. This will also take care of complaints from domestic manufacturers of items currently in negative list of imports as the same mode of operation is used by EOU/EPZ units to sell the imported items in DTA," he said.

The chairman also wanted the government to ban the DTA sale for negative list items.