Page 33 - ELT_1st June 2020_VOL 372_Part 5th

2020 ] CUSTOMS LAW AMENDMENTS — A CHALLENGE TO CROSS-BORDER TRADE A157

prescribe for time bound verification from exporting country in case
of doubt.
 Section 8B of Customs Tariff Act, 1975 is substituted in order to em-
power the Government to undertake safeguard measures, in case
any article is imported into India in such increased quantities and
under such conditions so as to cause or threatens to cause serious
injury to the domestic industry.
There are many changes proposed in the Customs laws, however, specif-
ically the aforesaid provisions are going to have a far-reaching impact that may
lead to compliance issues on the importers in the coming days. It is pertinent to
note that in terms of the said Section 28DA of the Act, in case of import of goods
under FTAs, certain obligations are cast on importer and verification is pre-
scribed in case of any doubt. Therefore, the certificate of origin issued by the rel-
evant authorities in exporting countries will be subjected to scrutiny and may not
be a reliable documentary evidence any more. Moreover, during the pendency of
such verification, preferential tariff benefit available under the related FTA can
be temporarily suspended and goods shall be cleared only on furnishing security
equal to differential duty. It is also proposed that in certain cases, preferential
tariff benefit may be denied without verification.
Furthermore, on the customs tariff front, insertion of section 8B in Cus-
toms Tariff Act, is a very significant move in order to protect the domestic indus-
try. However, imposition of safeguard duty or other tariff barriers, sometimes may turn-
out to be a counter-productive for the domestic industry as well. It is also important to
understand that imports play a very crucial role in making raw material or inputs avail-
able for the domestic manufacturing, and it is a price competitive factor. Thus, import is
also needed to become a source of competitiveness for exports. Blanket restrictions on
imports may unnecessarily hurt the current economic paradigm in the country.
At this stage, it is important to understand as to why the Government
has brought in such stringent provisions in the Customs laws. In fact, the Gov-
ernment has constituted a High-Level Advisory Group (HLAG) under the Minis-
ter of Commerce and Industry to assess the global environment and make rec-
ommendations for boosting India’s share and importance in global merchandise
and mainstreaming new age policy making. Accordingly, the HLAG has submit-
ted its report in September, 2019 and in commenting upon “Understanding Eco-
nomics of FTAs: Trade Creation, Employment Generation and Development”, it
has deliberated as under :
“The economics of FTAs/Comprehensive Economic Cooperation
Agreement (CECAs)/RTAs needs to be understood clearly and recipro-
cal benefits emanating from FTAs must be assessed in an objective man-
ner. Considering that imports are only bad is a very narrow and myopic view in
the context of FTAs. Imports do provide price competitive and high-quality in-
puts to domestic manufacturing and become a source of competitiveness for ex-
ports. It is also considered that FTAs are trade diverting hence they result
in costly trade from inefficient sources. However, it can be argued that
with tariff liberalization commitments under FTA, the additional market
access propels a process of scale expansion in the domestic manufactur-
ing, help reaping economies of scale and thus enhanced price-
competitiveness which translates trade diversion ultimately into trade
creation. With this, there is also greater employment generation. Due to
EXCISE LAW TIMES  1st June 2020  33