After the import duties were reduced, the Ministry of Finance raised the value of the tariff for edible oils. This means that the benefit of lower tariffs for retail prices will be less than expected.

Immediately after the import duties were reduced, retail prices for refined oil were expected to fall by $6-8 per kilogram, but they may now be lower.

Tariff values ​​refer to the basis on which they are based to the value of (Percentage value) Duty is calculated on an imported good. Any change or no change in value is notified every two weeks taking into account prices in the international market. Subsection (2) of Section 14 of the Customs Act 1962 empowers the Central Board of Indirect Taxes and Customs (CBIC) “to determine tariff values ​​for any class of imported goods or export goods, and duties shall be levied by reference to this valuable tariff.”

On the one hand, after keeping the values ​​unchanged for a month, on October 14, the Council reported an increase in the tariff value in the range of $60-74 per ton for crude palm oil, RBD palm oil (refined, bleached and deodorized), and other palm oil, palm Crude, RBD palmolein, and others – palm oil, crude soybean oil. On the other hand, as of the same day, the council reduced import duties between 16.5 percent and 19.25 percent on crude and refined palm oil, soybean oil and sunflower oil.

The third reduction

This is the third drop in recent months, and the immediate trigger for the latest cut was largely due to higher edible oil prices, the start of the holiday season and rising food inflation.

Anil K Sood, professor and co-founder of the Institute for Advanced Study in Complex Options, said one reason for changing the value of the tariff is to align it with changes in market prices for the underlying commodity. During recent months, there has been a general upward trend in commodity prices. For example, the price of locally delivered crude palm oil in Malaysia rose about 18 percent from July to October. The World Bank index also shows a rise in Malaysian palm oil prices.

Malaysian export prices for processed palm oil in the past three months have not seen any change. It is possible that the recent increase in market prices will be reflected in export prices after a few months, depending on the nature of the contracts that have been signed.

On the other hand, according to Sood, soybean oil prices have fallen over the past few months. Therefore, it is a bit surprising to see the higher tariff value.

“Any increase in the tariff value will naturally add to the fee ratio and will reduce the benefits available from the fee reduction, although it will protect government revenue,” he said.

The producers’ body feels that lower import duties and higher tariffs give confusing signals.

“The edible oils industry is a large volume low profit margin industry. Also, we import approximately 65 percent of our requirements. To give maximum benefit from the tariff reduction, the Ministry of Solvents Extractors should have continued,” said BV Mehta, Executive Director of the Solvent Extractors Association. Finance in keeping the tariff value unchanged for some time.

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