Higher tariff value on edible oils

Subject – Economy

Context – Higher tariff value on edible oils to lower benefit of cut in import levies

Concept –

After lowering import levies, the Finance Ministry has upped the tariff value for edible oils. This means the benefit of lowering duty for retail prices will be less than expected.
Tariff values refer to the base on which ad valorem (percentage of value) duty is calculated for an imported good. Change or no change in the value is notified every fortnight keeping in mind the prices in the international market.
- Sub section (2) of Section 14 of the Customs Act 1962 empowers the Central Board of Indirect Taxes & Customs (CBIC) “to fix tariff values for any class of imported goods or export goods and the duty shall be chargeable with reference to such tariff value.”
One of the reasons for changing the tariff value is to align it to changes in market prices of the underlying commodity.
- For example, the price of locally delivered crude palm oil in Malaysia has increased by about 18 per cent from July to October. The World Bank index too shows an increase in the Malaysian palm oil prices
Producers’ body feels reducing the import levies and raising the tariff value are giving confusing signals.