Industry body up in arms against safeguard duty on hot rolled coil

Terming the imposition of the 20 percent safeguard duty on hot rolled coil as "hefty" and a decision taken in "haste", an apex body of the steel tube industry on Monday demanded exemption for import consignments signed prior to the September 14 notification.

Federation of Industries of India secretary general H.L. Bhardwaj alleged steel producers -armed with the safeguard duty protection - have increased HR coil prices by Rs.1,000 per tonne.

He expressed fears that the safeguard duty will lead to "dumping of downstream products" into India from countries which use hot rolled coil as input but are outside the purview of the safeguard duty.

"Thus instead of HR coil imports, there will be flow of semi finished and finished components, that will defeat the very concept of Make in India and instead give a boost to Dump in India," Bhardwaj told IANS here.

The central government on September 14 imposed with immediate effect provisional safeguard duty of 20 percent on import of hot-rolled flat products of non-alloy and other alloy steel with a width of 600 mm or above saying it would protect domestic producers from "the sudden surge" in inward shipments.

However, terming the decision "hasty", Bhardwaj said the FII met Director General Safeguard Vinay Chhabra on August 31 and explained its position with regard to the Safeguard Duty petition filed by three domestic producers - SAIL, Essar Steel and JSW Steel - on July 27.

"A notice for initiation of Safeguards investigation was issued by DG Safeguard on September 7 asking views from the interested parties within 30 days.

"But just after two days, on September 9, the DG Safeguard, without even waiting for the comments from interested parties, recommended levy of the duty came into effect from September 14. The notice of the DGS had not even reached any of the interested parties by then," said Bhardwaj.

"We are not against the government giving any kind of protection to any industry. But we are against the haste with which this matter has been implemented."

He said many SMEs importing HR coils had entered into firm and irrevocable financial arrangements against the orders booked much before the Safegurd Duty orders were issued by the government and some of the cargoes were already in transit or at mid sea.

Iterating that the imposition of the duty on such shipments amounted to giving it a retrospective effect, Bhardwaj said the companies would be hard hit and might even face "closure".

"So safeguard duty exemption should be granted on imports for which contracts were signed before the duty notification date. The custom officials can easily verify the facts based on documents such as letter of credits, bill of lading etc, on case to case basis," he said.

He said the importers of HR coils would be more inconvenienced as the 20 percent Safeguard duty would take their total burden to 32.5 percent, as they have to pay a 12.5 percent normal basic import duty.

"In contrast, those importing finished products using HR coil as primary or intermediate raw material have to pay only 10 percent customs duty. So if the government cannot roll back the SD in the long term, in order to ensure a level playing field, these importers of finished products companies should also be made to pay 32.5 percent duty."