At a time when the government is vigorously striving to bring as much revenue as possible, some of its own departments have policy loopholes, contradicting government's objectives and initiatives, it has been learnt.
As per available data, sector of imported diapers depicts a downward trend in duties for the last three years. Economic experts have failed to understand the reason behind reducing duties on finished products when every other factor such as prices, cost of raw materials and exchange rate are increasing.
It is to be noted that the customs issue valuation rulings for imported diapers from time to time whereby minimum value of diapers imported from different origins and brands is fixed.
Under the valuation scheme, diapers used to be categorized as high value brands and low value brands. According to the documents available to this scribe, the customs vide its ruling No. 870/2016 revised the valuation of low-end diapers and made some changes on June 14, 2016.
On August 4, 2016, the customs had passed an order-in-revision (No. 224/2016) against Valuation Ruling No. 870/2016 wherein based on market inquiry the value was increased from $3/kg to $3.85/kg for high value brands and for low value brands it ranged between $2.20 to $2.90. This allowed government to collect higher duties on imports of finished diapers. But, the custom appellate tribunal vide its order dated November 18, 2016, set aside the above order in revision (No. 224/2016). Subsequently, on May 25, 2017, the customs passed another ruling (No. 1169/2017) based on valuation method under Section 25(9) of Custom Act, 1969, and reduced the value of diapers.
The new valuation was $3.20 for high value brands imported from Taiwan and $3.15 for those imported from other countries. And the valuation for low value brands ranged from $1.96 to $2.75. Later this year, importers requested to the customs to review the value of diapers stating that the prices of raw material used for diaper have shown a downward trend. Hence, the customs again reassessed the valuation and passed a ruling under section 25(7) of the act with new determined values.
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