Central Government Departments

 

Multilateral Agreements of Directorate General of Safeguards

1.a. If, as a result of unforeseen developments and of the effect of the obligations incurred by a contracting party under this Agreement, including tariff concessions, any product is being imported into the territory of the contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the contracting party shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to suspend the obligation in whole or in part or to withdraw or modify the concession.

b. If any product, which is the subject of a concession with respect to a preference, is being imported into the territory of a contracting party in the circumstances set forth in subparagraph (a) of this paragraph, so as to cause or threaten serious injury to domestic producers of like or directly competitive products in the territory of a contracting party which receives or received such preference, the importing contracting party shall be free, if that other contracting party so requests, to suspend the relevant obligation in whole or in part or to withdraw or modify the concession in respect of the product, to the extent and for such time as may be necessary to prevent or remedy such injury.

2. Before any contracting party shall take action pursuant to the provisions of paragraph 1 of this Article, it shall give notice in writing to the CONTRACTING PARTIES as far in advance as may be. practicable parties having a substantial interest as exporters of the product concerned an opportunity to consult with it in respect of the proposed action. When such notice is given in relation to a concession with respect to a preference, the notice shall name the contracting party, which has requested the action. In critical circumstances, where delay would cause damage, which it would be difficult to repair, action under paragraph 1 of this Article may be taken provisionally without prior consultation, on the condition that consultation shall be effected immediately after taking such action.

3. a . If agreement among the interested contracting parties with respect to the action is not reached, the contracting party which proposes to take or continue the action shall, nevertheless, be free to do so, and if such action is taken or continued, the affected contraction parties shall then be free, not later than ninety days after such action is taken, to suspend, upon the expiration of thirty days from the day on which written notice of such suspension is received by the CONTRACTING PARTIES, the application to the trade of the contracting party taking such action, or, in the case envisaged in paragraph I (b) of this Article, to the trade of the contracting party requesting such action, of such substantially equivalent concessions or other obligations under this Agreement the suspension of which the CONTRACTING PARTIES do not disapprove.

b. Notwithstanding the provisions of subparagraph (a) of this paragraph, where action is taken under paragraph 2 of this Article without prior consultation and causes or threatens serious injury in the territory of a contracting party to the domestic producers of products affected by the action, that contracting party shall, where delay would cause damage difficult to repair, be free to suspend, upon the taking of the action and throughout the period of consultation, such concessions other obligations as may be necessary to prevent or remedy the injury.

 

Safeguard Duty Rules under the Customs Tariff Act,1975 of Directorate General of Safeguards

1. If the Central Government, after conducting such enquiry as it deems fit, is satisfied that any article is imported into India in such increased quantities and under such conditions so as to cause or threatening to cause serious injury to domestic industry, then, it may, by notification in the Official Gazette, impose a safeguard duty on that article:

Provided that no such duty shall be imposed on article originating from a developing country so long as the share of imports of that article from that country does not exceed three percent or where the article is originating from more than one developing countries, then, so long as the aggregate of the imports from all such countries taken together does not exceed nine percent of the total imports of that article into India.

Provided further that the Central Government may, by notification in the Official Gazette, exempt such quantity of any article as it may specify in the notification, when imported from any country or territory into India , from payment of the whole or part of the safeguard duty leviable thereon.

2. The Central Government may, pending the determination under sub-section (1), impose a provisional safeguard duty under this sub-section on the basis of a preliminary determination that increased imports have caused or threatened to cause serious injury to a domestic industry:

Provided that where, on final determination, the Central Government is of the opinion that increased imports have not caused or threatened to cause serious injury to a domestic industry, it shall refund the duty so collected:

Provided further that the provisional safeguard duty shall not remain in force for more than two hundred days from the date on which it was imposed.

(2A) Notwithstanding anything contained in sub-section (1) and sub-section (2), a notification issued under sub-section (1) or any safeguard duty imposed under sub-section (2), unless specifically made applicable in such notification or such imposition, as the case may be, shall not apply to articles imported by a hundred percent export oriented undertaking or a unit in a free trade zone or in a special economic zone.

Explanation: For the purposes of this section, the expressions “hundred per cent export oriented undertaking”, “free trade zone” and “special economic zone” shall have the meanings assigned to them in Explanation 2 to sub-section (1) of section 3 of Central Excise Act, 1944.

3. The duty chargeable under this section shall be in addition to any other duty imposed under this Act or under any other law for the time being in force.

4. The duty imposed under this section shall, unless revoked earlier, cease to have effect on the expiry of four years from the date of such imposition:

Provided that if the Central Government is of the opinion that the domestic industry has taken measures to adjust to such injury or threat thereof and it is necessary that the safeguard duty should continue to be imposed, it may extend the period of such imposition:

Provided further that in no case the safeguard duty shall continue to be imposed beyond a period of ten years from the date on which such duty was first imposed.

5. The Central Government may, by notification in the 0fficial Gazette, make rules for the purposes of this section, and without prejudice to the generality of the foregoing, such rules may provide for the manner in which articles liable for safeguard duty may be identified and for the manner in which the causes of serious injury or causes of threat of serious injury in relation to such articles may be determined and for the assessment and collection of such safeguard duty.

6. For the purposes of this section,

a. “developing country” means a country notified by the Central Government in the Official Gazette for the purposes of this section;

b. “domestic industry” means the producers

i. as a whole of the like article or a directly competitive article in India ; or

ii. whose collective output of the like article or a directly competitive article in India constitutes a major share of the total production of the said article in India ;

c. “serious injury” means an injury causing significant overall impairment in the position of a domestic industry;

d. “threat of serious injury” means a clear and imminent danger of serious injury.

7. Every notification issued under this section shall, as soon as may be after it is issued, be laid before each House of Parliament.

 

Preamble of Directorate General of Safeguards

1. Article XIX of GATT read with Agreement on Safeguard (AOS) provides the ground rules for Safeguard action by countries which face a situation of increased imports of any commodity which causes or threaten to cause serious injury to domestic producers of like or directly competitive products. The safeguard action can include the imposition of tariff over and above the bound rates or Quota Restrictions or Tariff Rate Quota. The domestic regulations are based on Agreement on Safeguards which establishes Rules for application of Safeguard measurers. The domestic regulations and its implementation are wholly consistent with both the letter and spirit of Article XIX of GATT 1994 and Agreement on Safeguards, which has been appropriately reflected in the domestic regulations.

2. The Customs Tariff Act, 1975 has been amended to include various provisions for giving relief to the domestic producers against injury caused to them by imports in accordance with the Agreement on Anti-dumping (i.e. the Agreement on the Implementation of Article VI of GATT, 1995), the Agreement on Subsidies and Countervailing Measures and the Agreement on Safeguards. These include Section 8B, Section 8C, Section 9A, Section 9B and Section 9C of the Customs Tariff Act, 1975 and the Rules made thereunder. These provisions are aimed at offsetting the adverse effects of increased imports, subsidized imports or dumped imports & imports from Peoples’ Republic of China.

3. The domestic law to implement the provisions of the Agreement on Safeguards has been enacted under Section 8B and Section 8C of the Customs Tariff Act, 1975. The Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 and Customs Tariff (Transitional Products Specific Safeguard Duty) Rules, 2002 govern the procedural aspects.

4. The salient features of Section 8B of the Customs Tariff Act, 1975, inter alia, are as under:

i. If the Central Government, after conducting such enquiry as it deems fit, is satisfied that any article is imported into India in such increased quantities and under such conditions so as to cause or threatening to cause serious injury to domestic industry, then, it may, by notification in the Official Gazette, impose a safeguard duty on that article.

ii. Provided that no such duty shall be imposed on an article originating from a developing country so long as the share of imports of that article from that country does not exceed three per cent or where the article is originating from more than one developing countries, then, so long as the aggregate of the imports from all such countries taken together does not exceed nine per cent of the total imports of that article into India.

iii. Provided further that the Central Government may, by notification in the Official Gazette, exempt such quantity of any article as it may be specified in the notification, when imported from any country or territory into India, from payment of the whole or part of the safeguard duty leviable thereon.

Section 8C which was introduced in Finance Act, 2002 provides for imposing safeguard duty on any article imported into India from the Peoples’ Republic of China in such increased quantities and under such conditions so as to cause market disruption to domestic industry.

5. A Director General (Safeguards) / Director General (Specific Safeguard) under the Department of Revenue, Ministry of Finance has been appointed to hear the petitions and conduct investigations for imposition of Safeguard Duty / Specific Safegnard Duty. The duties of Director General include:

i. to investigate the existence of “serious injury” / “market disruption” or “threat of serious injury” / “threat of market disruption” to domestic industry as a consequence of increased import of an article into India;

ii. to identify the article liable for Safeguard duty / specific Safeguard duty;

iii. to submit his findings provisional or otherwise to the Central Government as to the “serious injury” / “market disruption” or “threat of serious injury” / “threat of market disruption” to domestic industry consequent upon increased import of an article from the specified country / Peoples’ Republic of China.

iv. to recommend:

a. the amount of duty which if levied would be adequate to remove the injury / market disruption or threat of injury / threat of market disruption to the domestic industry;

b. the duration of levy of safeguard duty which if levied would be adequate to remove the injury or threat of injury to the domestic industry;

c. to except such quantity of any article when imported from any country or territory into India, from payment of the whole or part of the safeguard duty leviable thereon.

v. to review the need for continuance of safeguard duty.

(more…)

 

Introduction of Directorate General of Safeguards

The World Trade Organisation (WTO) came into existence on 1.01.95. A member of the WTO has to be a signatory to the General Agreement on Tariffs & Trade (GATT) and certain multilateral agreements. The agreement on Anti-dumping (i.e. the Agreement on the Implementation of Article VI of GATT, 1995), the Agreement on Subsidies and Countervailing Measures and the Agreement on Safeguards are some of the multilateral agreements to which a WTO Member has to be a party. India is one of the founder Members of GATT as well as of WTO and, a signatory, inter alia, to all these Agreements.

The domestic law to implement the provisions of the Agreement on Safeguards has been enacted under Section 8B and Section 8C of the Customs Tariff Act, 1975. The Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 and Customs Tariff (Transitional Products Specific Safeguard Duty) Rules, 2002 govern the procedural aspects.

The Director General is required under Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 to investigate the existence of ’serious injury’ or ‘threat of serious injury’ to the domestic industry as a result of increased imports of an article into India and submit his findings to the Central Government alongwith his recommendation regarding the duration and amount of safeguard duty adequate to remove the injury or threat of injury to the domestic industry. Besides, the Director General also is required to investigate cases relating to transitional safeguard duty against imports originating from China under the Customs Tariff (Transitional Product Specific Safeguard Duty) Rules, 2002. In addition, the Directorate General needs to closely coordinate with the domestic industry / trade associations.

The Directorate General has carried out 18 investigations so far as under:

Year -No. of cases

1998 -6

1999 -3

2000 -2

2001 -2

2002 -3

2003 -1

2004 -1

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