St Lucia-based Rock Hard Distribution Limited has received temporary reprieve in its fight over the Government’s move to increase taxes on imported cement.
Delivering a decision on Friday, the Court of Justice (CCJ) granted an order barring the Government from applying the 50 per cent Common External Tariff (CET) on imported cement, which was increased from five per cent, this year.
The CCJ’s order will stay in place until it hears and determines the company’s substantive lawsuit on the issue. A case management conference of the case is scheduled to take place on March 3.
Presenting submissions on the company’s behalf, earlier this month, Senior Counsel Ian Benjamin said that the increase, which has already been applied to its first shipment of cement to T&T for the year, would make its product “effectively unsellable”.
“This has had a significant deleterious consequence on my client’s viability and sustainability,” Benjamin said.
Senior Counsel Deborah Peake, who led the State’s legal team, and stated that the company sought to maintain its imports despite being notified of the increase.
“They took the risk,” Peake said.
Peake also noted that an interim measure would negatively impact both the Government and Mexican-owned local manufacturer Trinidad Cement Limited (TCL) and its regional subsidiaries.
Peake stated that the increase was especially important during the ongoing COVID-19 pandemic as it is intended to help the Government bolster its tax revenues and TCL to maintain its viability.
The case is the most recent in a series of lawsuits that arose since Rock Hard, which imports its hydraulic cement from Turkey, entered the regional cement market that was previously dominated by TCL and its subsidiaries.
In 2015, TCL’s Barbados subsidiary Arawak Cement filed one claim when Barbados sought to reintroduce a CET of five per cent on hydraulic cement.
In 2001, Barbados sought an exemption on the tariff, set by COTED, in an effort to give regional producers an advantage over foreign imports with a 60 per cent tax.
In 2018, the Caribbean Court of Justice (CCJ) delivered judgement in favour of the Barbados Government and Rock Hard as it ruled that it was permitted to make the change.
As part of the ruling, the CCJ stated that a Member State must give adequate notice of such a decision to ensure that regional businesses “enjoy transparency, certainty, and predictability of tax structures”.
TCL brought a separate case calling on the CCJ to decide if COTED had the authority to classify Rock Hard’s product in T&T.
The CCJ ruled that COTED had the competence to make the determination.
TCL and this country’s Government then brought another case challenging COTED’s decision to classify Rock Hard’s product as hydraulic cement as opposed to Portland, which attracts a higher tariff.
The CCJ eventually upheld COTED’s decision.
Last month, Rock Hard and its local distributor filed a lawsuit against the Ministry of Trade and Industry over its move to introduce a licensing scheme for cement importers and a national cap on the annual importation of cement at 75,000 tonnes.
Like the new CET increase, the quota and import licensing registration system went into effect on January 1.
In that case before High Court Judge Jacqueline Wilson, the companies are claiming that the Government sought to implement the measures without proper consultation. It is scheduled to come up for hearing, this week.
Rock Hard is also being represented by Jagdeo Singh and Justin Phelps.