ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Domestic Rulings vis-a-vis GATT/WTO Jurisprudence - I

Valuation of Undervalued and Dumped Imports

The ticklish issue of domestic rulings vis-a-vis GATT/WTO jurisprudence in the context of a recent ruling by the Supreme Court touching on what constitutes 'ordinary course of trade'.

WTO Agreements on Antidumping (AD Agreement) and Customs Valuation (ACV) provide the basis for the respective Indian laws on these subjects. The rulings by the Indian Supreme Court on these laws have a direct bearing on the way they can be interpreted and applied in India. At the same time, since these laws are based on WTO instruments, the GATT/WTO jurisprudence is also relevant to their interpretation and application. However, the Indian law on monopolies and restrictive trade practices is not based on any WTO instrument and, therefore, the rulings by the MRTP Commission on dumped and undervalued imports are susceptible to challenge on the grounds of incompatibility with the WTO provisions. In this article we examine what constitutes ordinary course of trade in the context of a recent ruling by the Supreme Court. In a companion article we will examine what constitutes public interest and to what extent it should guide action against low valued imports, as well as the international implications of applying domestic competition laws to imported goods, in the context of some of the decisions by the MRTP Commission.

The expression ‘ordinary course of trade’ and similar expressions appear in the relevant WTO instruments as well as in the Indian law. Recently, in the context of valuation of imported goods, the Supreme Court in its decision of November 14, 2000 in the case of Eicher Tractors vs Commissioner of Customs, Mumbai,1 has ruled on the meaning of the expression ‘ordinarily sold’ appearing in Section 14 of the Customs Act. Article VII of GATT 1947, renegotiated as Article VII of GATT 1994, deals with valuation of imported goods. It requires the customs value to be based on the ‘actual value’ of the imported merchandise or of like merchandise. It goes on further to say that the actual value “should be the price at which, at a time and place determined by the legislation of the country of importation, such or like merchandise is sold or offered for sale in the ordinary course of trade under fully competitive conditions”. India is a founder member and signatory of GATT and Section 14 of the Customs Act reflects this provision of GATT as it requires that the value “shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale”.

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