CCJ Settles Dispute Over Import Tax On Cement

Owner of Rock Hard Cement, Mark Maloney. The Barbadian company won its court battle to maintain a low import tax on imported cement.

BRIDGETOWN, Barbados, Thursday April 18, 2019 – A Barbadian company has won a trade dispute with its Trinidadian-owned competitor over import tax on cement.

The Caribbean Court of Justice (CCJ) yesterday ruled in favour of Rock Hard Cement over Arawak Cement Company, a subsidiary of Trinidad Cement Limited (TCL), that the regional tax payable on cement imported by the Barbadian company from Portugal and Turkey should be five per cent and not 60 per cent.  

The amount is a far cry from the 60 per cent tariff that Rock Hard Cement had once paid on the imports.

In 2001, CARICOM’s Council for Trade and Economic Development (COTED) had granted Barbados an exemption, in respect of the regional Common External Tariff (CET) of zero to five per cent, so that the State could apply taxes of 60 per cent to categories of cement described as ‘other hydraulic cement’ – cement used to stop water and leaks in concrete and masonry structures. The regional tariff is intended to offer goods produced and distributed in the region an advantage over imported ones. In 2015, Barbados decided to return to the CET and apply a five per cent tax on the ‘other hydraulic cement’ imported by Rock Hard Cement Limited.

TCL and Arawak Cement Company had contended that Barbados contravened the Revised Treaty of Chaguaramas by unilaterally reducing and/or altering the CET on ‘other hydraulic cement’ from the rate approved by COTED. They also claimed that Barbados misclassified extra-regional cement imported by Rock Hard as ‘other hydraulic cement’.

In its ruling yesterday, the CCJ said that where COTED allowed a member state to charge taxes higher than the regional tariff on the importation of good from outside the region, there was no need for the member state to obtain approval from COTED to revert to the CET.

However, it said, in these circumstances, the member state should give reasonable notice of its intention of returning to the regional tariff, to ensure that regional businesses enjoy transparency, certainty, and predictability of tax structures.

The CCJ found that the regional manufacturers of cement who had brought the action against Barbados – TCL and Arawak Cement Company – had notice for several years of Barbados’ intention to revert to the regional tariff.

TCL and Arawak Cement Company Limited had filed an application last May for special leave to commence proceedings against Barbados and Rock Hard Cement over the import tax on cement. They subsequently filed an application asking the CCJ for interim relief and the Trinidad-based court ordered Barbados to “restore and enforce” the 60 per cent import duty on hydraulic cements imported from outside CARICOM “until either judgement is rendered on the originating application in this matter, or the court varies or terminates the order”.

Rock Hard then joined the proceedings and provided testimony from international experts on the composition of cement and its classification, and the interpretation of the Harmonised Commodity Description and Coding System on which the CET is based. After that testimony, TCL and the CARICOM Secretariat argued that the matter of classification falls within the remit of COTED and should be decided by that body.

Last month, COTED concluded that Rock Hard Cement was correctly classified as ‘other hydraulic cement’ which attracts the zero to five per cent duty under the CET. However, the CCJ had still been required to give a final ruling on the matter, which it did yesterday.

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