Finance Act 1939

SCHEDULES.

Section 1.

FIRST SCHEDULE Tobacco.

PART I Customs Duties.

	s.	d.
Upon tobacco unmanufactured, viz.—
containing 10 lbs. or more of moisture in every 100 lbs. weight thereof—
unstripped the lb.	11	6
stripped	11	6 ½
containing less than 10 lbs. of moisture in every 100 lbs. weight thereof—
unstripped the lb.	12	6
stripped	12	6 ½
Upon tobacco manufactured, viz.—
Cigars	20	1
Cigarettes	16	7
Cavendish or Negrohead	15	9
Cavendish or Negrohead manufactured in bond	14	0
Other manufactured tobacco	14	0
Upon snuff—
containing more than 13 lbs. of moisture in every 100 lbs. weight thereof the lb.	13	4
containing not more than 13 lbs. of moisture in every 100 lbs. weight thereof the lb.	15	9
and so in proportion for any less quantity.

PART II Excise Duties.

	s.	d.
Upon tobacco unmanufactured, viz.—
containing 10 lbs. or more of moisture in every 100 lbs. weight thereof the lb.	9	3 ½
containing less than 10 lbs. of moisture in every 100 lbs. weight thereof the lb.	10	0 ⅞
Upon tobacco manufactured, viz.—
Cavendish or Negrohead manufactured in bond - the lb.	11	4 ⅞
and so in proportion for any less quantity.

PART III Drawback.

Description of Tobacco.	Rate per pound.
	In respect of tobacco on which full customs duty has been paid.		In respect of tobacco on which customs duty at a preferential rate or excise duty has been paid.
	s.	d.	s.	d.
Cigars	12	9	10	6
Cigarettes	12	6	10	4
Cut, roll, cake or other manufactured tobacco	12	3	10	1
Snuff (not being offal snuff)	12	0	9	11
Stalks, shorts, or other refuse of tobacco including offal snuff	11	9	9	8

Section 2.

SECOND SCHEDULE Sugar, &c.

PART I Full Rates of Customs Duty and Amounts of General Preferential Reductions.

Article.		Full rate of Customs duty.		Amount of General Preferential Reduction.
		s.	d.	s.	d.
Sugar of a polarisation exceeding 99°	-the cwt.	14	0	5	10
Sugar of a polarisation exceeding :—
98° but not exceeding 99°	the cwt.	14	0	7	0.4
97 but not exceeding 98°	the cwt.	10	8.8	3	11.3
96° but not exceeding 97°	the cwt.	10	5.4	3	10.0
95° but not exceeding 96°	the cwt.	10	2.0	3	8.8
94° but not exceeding 95°	the cwt.	9	10.7	3	7.6
93° but not exceeding 94°	the cwt.	9	7.03	3	6.3
92° but not exceeding 93°	the cwt.	9	4.0	3	5.1
91° but not exceeding 92°	the cwt.	9	0.6	3	3.9
90° but not exceeding 91°	the cwt.	8	9.2	3	2.6
89° but not exceeding 90°	the cwt.	8	5.9	3	1.4
88° but not exceeding 89°	the cwt.	8	2.5	3	0.2
87° but not exceeding 88°	the cwt.	7	11.7	2	1.11
86° but not exceeding 87°	the cwt.	7	8.9	2	10.1
85 but not exceeding 86°	the cwt.	7	6.4	2	9.2
84° but not exceeding 85°	the cwt.	7	3.9	2	8.3
83° but not exceeding 84°	the cwt.	7	1.4	2	7.3
82° but not exceeding 83°	the cwt.	6	10.8	2	6.4
81° but not exceeding 82°	the cwt.	6	8.6	2	5.6
80° but not exceeding 81°	the cwt.	6	6.4	2	4.8
79° but not exceeding 80°	the cwt.	6	4.1	2	4.0
78° but not exceeding 79°	the cwt.	6	1.9	2	3.1
77 but not exceeding 78°	the cwt.	5	11.6	2	2.3
76 but not exceeding 77°	the cwt.	5	9.4	2	1.5
Sugar of a polarisation not exceeding 76°—	the cwt.	5	7.2	2	0.6
Molasses (except when delivered to a licensed distiller for use in the manufacture of spirits or yeast, or to a person for use in the manufacture of yeast in premises used solely for that purpose) :—
if containing 70 per cent. or more of sweetening matter	the cwt.	8	10 ½	3	8 ½
less than 70 per cent. and more than 50 per cent. of sweetening matter	the cwt.	6	4 ½	2	8
not more than 50 per cent. Of sweetening matter	the cwt.	3	1 ½	1	3 ½
Glucose :
Solid	the cwt.	8	10 ½	3	8 ½
Liquid	the cwt.	6	4 ½	2	8
Saccharin (including substances of a like nature or use)	the oz.	4	6	1	10 ½

PART II Rates of Customs Duty on Certificated Colonial Sugar.

Article.		Rate of Duty.
		s.	d.
Sugar of a polarisation exceeding 99°	the cwt.	4	8.7
Sugar of a polarisation exceeding :—
98° but not exceeding 99°	the cwt.	3	8.7
97° but not exceeding 98°	the cwt.	3	7.6
96° but not exceeding 97°	the cwt.	3	6.4
95° but not exceeding 96°	the cwt.	3	5.2
94° but not exceeding 95°	the cwt.	3	4.2
93° but not exceeding 94°	the cwt.	3	3.0
92° but not exceeding 93°	the cwt.	3	1.9
91° but not exceeding 92°	the cwt.	3	0.7
90° but not exceeding 91°	the cwt.	2	11.6
89° but not exceeding 90°	the cwt.	2	10.5
88° but not exceeding 89°	the cwt.	2	9.3
87° but not exceeding 88°	the cwt.	2	8.4
86° but not exceeding 87°	the cwt.	2	7.4
85° but not exceeding 86°	the cwt.	2	6.6
84° but not exceeding 85°	the cwt.	2	5.8
83° but not exceeding 84°	the cwt.	2	4.9
82° but not exceeding 83°	the cwt.	2	4.0
81° but not exceeding 82°	the cwt.	2	3.3
80° but not exceeding 81°	the cwt.	2	2.6
79° but not exceeding 80°	the cwt.	2	1.7
78° but not exceeding 79°	the cwt.	2	1.0
77° but not exceeding 78°	the cwt.	2	0.2
76° but not exceeding 77°	the cwt.	1	11.5
Sugar of a polarisation not exceeding 76°	the cwt.	1	10.8

PART III Rates of Excise Duty on Sugar, Molasses, &c.

1. SUGAR.

Article.		Rate of Duty.
	s	d.
Sugar of a polarisation exceeding 99°	the cwt.	6	11
Sugar of a polarisation exceeding :—
98° but not exceeding 99°	the cwt.	5	9.5
97° but not exceeding 98°	the cwt.	5	7.8
96° but not exceeding 97°	the cwt.	5	6.0
95° but not exceeding 96°	the cwt.	5	4.2
94° but not exceeding 95°	the cwt.	5	2.4
93° but not exceeding 94°	the cwt.	5	0.7
92° but not exceeding 93°	the cwt.	4	10.9
910 but not exceeding 92°	the cwt.	4	9.1
90° but not exceeding 91°	the cwt.	4	7.4
89° but not exceeding 90°	the cwt.	4	5.6
88° but not exceeding 89°	the cwt.	4	3.8
87° but not exceeding 88°	the cwt.	4	2.4
88° but not exceeding 87°	the cwt.	4	0.9
85° but not exceeding 86°	the cwt.	3	11.6
84° but not exceeding 85°	the cwt.	3	10.2
83° but not exceeding 84°	the cwt.	3	8.9
82° but not exceeding 83°	the cwt.	3	7.6
81° but not exceeding 82°	the cwt.	3	6.4
80° but not exceeding 81°	the cwt.	3	5.2
79° but not exceeding 80°	the cwt.	3	4.0
78° but not exceeding 79°	the cwt.	3	2.9
77° but not exceeding 78°	the cwt.	3	1.7
76° but not exceeding 77°	the cwt.	3	0.5
Sugar of a polarisation not exceeding 76°	the cwt.	2	11.3

2. MOLASSES, &C.

Article		Rate of Duty.
		s.	d.
Molasses (including all sugar and extracts from sugar which cannot be completely tested by the polariscope), if containing—
70 per cent. or more of sweetening matter	-the cwt.	4	4 ½
less than 70 per cent. and more than 50 per cent. of sweetening matter	-the cwt.	3	2
not more than 50 per cent. of sweetening matter	-the cwt.	1	7
Glucose—
Solid	-the cwt.	4	4 ½
Liquid	-the cwt.	3	2
Saccharin (including substances of a like nature or use)	-the oz	2	3

PART IV Rates or Drawback.

TABLE 1.

Scale applicable in the case of Sugar produced in the United Kingdom from material on which duty has been paid.

Nature of Sugar.	Rate of Duty Paid.	Rate or amount of Drawback.
Sugar of a polarisation exceeding 98° produced from material on which the full duties of customs have been paid.	14s. 0d. per cwt.	14s. 0d. per cwt.
	less than 14s. 0d. per cwt.	11s. 8d. per cwt.
Sugar of a polarisation exceeding 99° produced from material on which customs duty at the general preferential rates has been paid.	8s. 2d. per cwt.	8s. 2d. per cwt.
	less than 8s. 2d. per cwt.	7s. 4.7d per cwt.
Sugar of a polarisation exceeding 99° produced from material on which customs duty at the certificated colonial rates has been paid.	4s. 8.7 d. per cwt.	4s. 8-7d. per cwt.
	less than 4s. 8.7d. per cwt.	3s. 11.4d. per cwt.
Sugar of a polarisation exceeding 99° produced from material on which excise duty has been paid.	6s. 11d. per cwt.	6s. 11d. per cwt.
	less than 6s. 11d. per cwt.	6s. 1.7d. per cwt.
Sugar of a polarisation not exceeding 98° produced from material on which the full duties of customs have been paid and sugar of a polarisation not exceeding 99° produced from material on which customs duty at the general preferential rates or the certificated colonial rates, or excise duty has been paid.	Any rate of duty.	A drawback equal to the duty chargeable on sugar of the like polarisation.

TABLE 2.

Scale applicable in the case of Molasses produced in the United Kingdom from material on which duty has been paid.

Nature of Molasses.	Amount of Drawback.
	Produced from material on which full customs duty has been paid.		Produced from material on which customs duty at the general preferential rates has been paid.		Produced from material on which customs duty at the certificated colonial rates has been paid.		Produced from material on which excise duty has been paid.
Containing more than 80 per cent, of sweetening matter the cwt.	8s.	9d.	5s.	6 ½ d.	2s	11 ½ d	4s.	7d
Containing more than 70 per cent, but not more than 80 per cent, of sweetening matter - the cwt.	7s.	8 ½ d	4s.	10 ½ d	2s	7 d	4s.	0 ½ d.
Containing more than 60 per cent, but not more than 70 per cent, of sweetening matter - the cwt.	5s.	7 ½ d	3s.	6 ½ d	1s	10 ½ d.	2s.	11 ½ d.
Containing more than 50 per cent, but not more than 60 per cent, of sweetening matter - the cwt.	4s.	2 ½ d	2s.	7 ½ d	1s.	5 d	2s.	2 ½ d
Containing not more than 50 per cent, of sweetening matter and weighing not less than fourteen pounds to the gallon the cwt.	2s.	9 ½ d	1s.	9d		11 d	1s.	5 ½ d

In this Part of this Schedule—

(a) the expression " the general preferential rates " means the full rates of duty reduced by the amounts of the general preferential reductions specified in Part I of this Schedule;

(b) the expression " the certificated colonial rates " means the rates of duty specified in Part II of this Schedule.

Section 3.

THIRD SCHEDULE Provisions as to duties, drawbacks and rebates on cinematograph film.

1 In the Schedule to the Import Duties (General) Order, 1935 (as amended by any subsequent order) there shall be substituted for sub-paragraph (ii) of paragraph (20) of Group XVIII the sub-paragraphs set out in the Table below.

TABLE.

(ii) Unexposed sensitised cinematograph film.....	⅓ d. per linear foot.
(iii) Exposed cinematograph film—
(a) of a width not exceeding one inch	1d. per linear foot.
(b) containing only a single sound track	1d. per linear foot.
(c) shown to the satisfaction of the Commissioners to consist wholly of photographs (with or without sound track) which at the time of importation are means of communicating news	1d. per linear foot.
(d) shown to the satisfaction of the Commissioners to be a duplicate of film on which customs duty has been paid at the rate of fivepence per linear foot and not refunded -	1d. per linear foot.
(e) other film	5d. per linear foot.

2 In the case of film of a greater width than the standard width of one and three-eighths inches, the customs duty chargeable shall be increased in proportion to the extent to which the width is greater than the standard width, and in the case of unexposed sensitised cinematograph film of less than the standard width, the customs duty chargeable shall be decreased in proportion to the extent to which the width is less than the standard width.

3 The Additional Import Duties (No. 8) Order, 1938, so far as it relates to cinematograph film, shall cease to have effect.

4 Notwithstanding anything in paragraph (2) of Article 2 of the Import Duties (General) Order, 1935, goods of any of the classes or descriptions specified in the said Table shall not be deemed for the purposes of paragraph (1) of Article 2 of that Order to be goods of any other class or description, and accordingly there shall be inserted in the appropriate place in the first column of Part I of the Second Annex to that Order a reference to Group XVIII (20) (ii) and (iii), and in the second column thereof opposite to that reference the definitions of the classes or descriptions of goods specified in the said Table.

5 Subsection (4) of section six of the Finance Act, 1938 (which relates to preferential rates of duty on Empire goods) shall apply to all goods of the classes and descriptions specified in sub-paragraph (ii) of the said Table, and the said subsection (4) and section five of the Import Duties Act, 1932, and section two of the Ottawa Agreements Act, 1932, (which exempt Empire goods from the general ad valorem duty and any additional duty) shall not apply to any goods of the classes and descriptions specified in sub-paragraph (iii) of the said Table.

6 (1) If, in the case of any exposed cinematograph film, it is shown to the satisfaction of the Commissioners either—

(a) that the production of the film was organised by persons whose chief or only place of business was in the United Kingdom and the producer of the film and all the principal actors and artists employed for the production thereof, except five, or, if the total number of principal actors and artists is less than twenty, not less than three-quarters of the number of actors and artists, were British subjects and domiciled in the United Kingdom; or

(b) that the Board of Trade have certified that the requirements of subsection (3) of section twenty-seven of the [17 & 18 Geo. 5. c. 29.] Cinematograph Films Act, 1927 (which prescribes what films shall be deemed to be British films for the purposes of that Act) or of subsection (1) of section twenty-five of the [1 & 2 Geo. 6. c. 17.] Cinematograph Films Act, 1938 (which prescribes what films shall be deemed to be British films for the purpose of registration thereof under Part III of that Act) have been complied with in relation to the film or in relation to any film of which the film forms part,

the duty of customs chargeable on the film shall be the duty, if any, with which it would have been chargeable if it were still

In this paragraph the expression " artist " includes the person working the photographic camera or other photographic apparatus by means of which the film is made.

(2) The goods specified in the Schedule to the Import Duties (Exemptions) (No. 4) Order, 1938, shall cease to be included in the First Schedule to the Import Duties Act, 1932, and subsection (3) of section ten of the Finance Act, 1934 (which enables the Treasury to make amendments consequential on a direction that goods shall be added to or cease to be included in the said First Schedule) shall have effect as if this sub-paragraph were contained in such a direction.

7 Where two or more equal lengths of exposed cinematograph film are imported together and it is shown to the satisfaction of the Commissioners that they all represent the same objects and are intended to be used as a set, each complementary to the others, in the production of a coloured picture, and are not suitable to be used separately, they shall be charged as a set with the duty that would be chargeable if one length only were being imported.

8 Where in the case of any exposed cinematograph film security is given to the satisfaction of the Commissioners—

(a) that no duplicate will be made in the United Kingdom from the film or from any part thereof or from any duplicate of the film or of any part thereof except for the purpose of preparing a single version adapted for exhibition in the United Kingdom; and

(b) that the film and any duplicate made from the film or from any part thereof will be destroyed or otherwise disposed of to the satisfaction of the Commissioners within such period as they may require,

the duty of customs chargeable on the film shall be at the rate of one penny per linear foot.

9 Where, in the case of any exposed cinematograph film, it is shown to the satisfaction of the Commissioners—

(a) that customs duty was paid on the film at the rate of fivepence per linear foot;

(b) that no duplicate has been made in the United Kingdom from the film or from any part thereof; and

(c) that no duplicate of the film or of any part thereof has been imported into the United Kingdom,

there shall, if the film has been destroyed or otherwise disposed of to the satisfaction of the Commissioners, be allowed a rebate at the rate of fourpence per linear foot.

10 No drawback of duty paid at the rate of fivepence per linear foot on any piece of exposed cinematograph film shall be allowed under the Second Schedule to the Import Duties Act, 1932, if a duplicate thereof, or of any part thereof, has been imported into the United Kingdom, but the Commissioners may waive or modify this provision in any particular case, subject to such conditions as they may consider necessary for the security of the revenue.

11 For the purposes of this Schedule, and of section three of this Act—

(a) all sheets or strips of unexposed sensitised film which are of a length not less than twelve feet shall, whatever their width, be treated as cinematograph film;

(b) references to exposed cinematograph film shall include references to all such film whether it is positive or negative, whether it is developed or undeveloped and whether or not it contains or consists of sound track;

(c) two lengths of exposed cinematograph film representing the same objects shall not be deemed not to be duplicates of each other by reason that one is positive and the other is negative, or by reason that the objects are represented on different scales and the dimensions of the lengths of film are correspondingly different, or where both lengths are intended for use in the production of a coloured picture, by reason of any differences ascribable to the nature of the processes involved in producing such a picture.

12 (1) The provisions of paragraphs 1, 2, 4 and 10 of this Schedule and the provisions inserted by this Schedule in the Import Duties (General) Order, 1935, may be revoked or varied as if they were contained in an order of the Treasury made under the Import Duties Act, 1932, on the recommendation of the Import Duties Advisory Committee.

(2) The provisions of paragraphs 6 to 9 of this Schedule may be varied by an order of the Treasury made on the recommendation of the said Committee, and section nineteen of the Import Duties Act, 1932, except the proviso to subsection (5) thereof, shall apply to any such order as it applies to an order made by the Treasury under that Act.

(3) The powers conferred by this paragraph to revoke or vary certain provisions of this Schedule shall be construed as including a power to revoke or vary any provision of paragraph 11 of this Schedule in so far as it relates to those provisions.

Section 5.

FOURTH SCHEDULE Duty on licences for premises used for, the addition of priming and colouring solutions to beer.

1 The duty payable on the grant of a licence in respect of premises which have not been licensed for the addition of solutions to beer for the preceding licence year or any part thereof shall be twenty-five pounds, or, in a case where the licence is granted for part of a licence year, a sum which bears the same proportion to twenty-five pounds as the length of that part of the year bears to twelve months.

2 The duty payable on the grant of a licence in respect of premises which have been so licensed for the preceding licence year or any part thereof, shall be in accordance with the following scale:—

Where the number of bulk barrels of solutions received for use at the premises in the preceding licence year did not exceed twenty-five	£25
Where the number of bulk barrels of solutions so received exceeded twenty-five—
For the first twenty-five barrels	£25
For every further twenty-five barrels or fraction of twenty-five barrels	£5

Provided that where the premises have been so licensed for part only of the preceding licence year, the number of bulk barrels of solutions received for use at the premises in that year shall, for the purpose of the foregoing scale, be taken to be a number which bears the same proportion to the number so received in the period for which the licence was in force as twelve months bears to the length of that period.

3 Section three of the [5 & 6 Geo. 5. c. 62.] Finance Act, 1915 (which provides for the repayment of duty where a business is discontinued) shall apply to any such licence as aforesaid as it applies to the licences mentioned in that section.

4 For the purpose of this Schedule the following expressions have the meanings hereby respectively assigned to them—

• " bulk barrel " means a quantity of thirty-six gallons;

• " solutions " means priming and colouring solutions.

Section 6.

FIFTH SCHEDULE Reduced rates of entertainments duty in case of certain entertainments.

Amount of Payment.	Duty.
Where the amount of the payment, excluding the amount of duty—
Exceeds 6d. and does not exceed 1s. 2 ½ d	One halfpenny.
Exceeds 1s. 2 ½ d. and does not exceed 1s. 5d	One penny.
Exceeds 1s. 5d. and does not exceed 1s. 7 ½ d	Three halfpence.
Exceeds 1s. 7 ½ d and does not exceed 1s.10d	Two pence.
Exceeds 1s. 10d	Two pence for the first 1s. 10d. and one penny for every 5d. or part of 5d. over 1s. 10d.

Section 8.

SIXTH SCHEDULE Duties on certain Preserved Fruits.

Class or description of goods.	Rate of duty.
The following fruit salad preserved in syrup, that is to say, mixtures of fruit (but not including mixed fruit pulp) containing not less than four separate descriptions of fruit, in which each of at least four descriptions constitutes at least eight per cent., and no one description represents more than fifty per cent., by weight, of all the fruit in the mixture (excluding syrup)	5s. 6d. per cwt.
Loganberries preserved in syrup	4s. per cwt.
Pineapples preserved in syrup	5s. per cwt.

Section 8.

SEVENTH SCHEDULE United Kingdom—India Trade Agreement.

His Majesty's Government in the United Kingdom of Great Britain and Northern Ireland and the Government of India, having resolved, so far as the relations between them are concerned, to replace by the present Agreement the Agreement concluded between them at Ottawa on the 20th August, 1932, have agreed upon the following provisions :—

ARTICLE 1.

His Majesty's Government in the United Kingdom undertake that goods grown, produced or manufactured in India and consigned from any part of the British Empire which are now free of duty shall continue to enjoy entry free of customs duty into the United Kingdom.

ARTICLE 2.

His Majesty's Government in the United Kingdom undertake in respect of the goods the growth, produce or manufacture of India enumerated in Schedule 1 to this Agreement, that the difference between the rates of the duties of customs on such goods on importation into the United Kingdom when consigned from any part of the British Empire and the rates upon similar goods the growth, produce or manufacture of any foreign country shall not be less than the rates set out in that schedule.

ARTICLE 3.

His Majesty's Government in the United Kingdom undertake that, in the event of any greater preference than the preference accorded by this Agreement being accorded in respect of goods of the kinds specified in Schedule 1 the growth, produce or manufacture of any other part of the British Empire, such greater preference will be extended to similar goods grown, produced or manufactured in India and consigned from any part of the British Empire.

ARTICLE 4.

His Majesty's Government in the United Kingdom undertake to maintain until the 19th August, 1942, for tobacco grown, produced or manufactured in India and consigned from any part of the British Empire the existing margin of preference over foreign tobacco, so long, however, as the duty on foreign unmanufactured tobacco does not fall below 2s. 0 ½ d. per pound, in which event the margin of preference shall be equivalent to the full duty.

ARTICLE 5.

His Majesty's Government in the United Kingdom recognise the importance attached by the Government of India to the development of the use of unmanufactured Indian tobacco by tobacco manufacturers in the United Kingdom, and undertake that they will co-operate in any further measures that may appear necessary and practicable in order to facilitate the marketing of such tobacco in the United Kingdom.

ARTICLE 6.

1. His Majesty's Government in the United Kingdom undertake that on and after the 15th August, 1939, drawback of duty shall not be allowed in the case of goods other than linseed oil, unmixed, manufactured in the United Kingdom and exported or shipped as stores therefrom in respect of linseed used in the manufacture of such goods. For the purposes of this Article " linseed oil " includes linseed oil refined or heat-treated or both refined and heat-treated, and " unmixed " means not mixed with any substances other than driers.

2. His Majesty's Government in the United Kingdom undertake that on and after the 15th August, 1939, drawback shall not be allowed in the case of ground-nut oil (hydrogenated or not) manufactured in the United Kingdom and exported or shipped as stores therefrom in respect of ground-nuts used in the manufacture of such oil.

ARTICLE 7.

His Majesty's Government in the United Kingdom undertake that the goods specified in Schedule 1I to this Agreement, of whatever origin and from whatever place arriving, shall be admitted into the United Kingdom free of customs duty.

ARTICLE 8.

The Governments of the non-self-governing Colonies, the Protectorates and Protected States will accord to India any preference which may for the time being be accorded to any other part of the British Empire, and the Governments of the Colonies and Protected States shown in Schedule 1II to this Agreement will accord to India preferences on the commodities and at the rates shown therein.

Provided that the operation of the first paragraph of this Article shall not extend to any preferences accorded by Northern Rhodesia to the Union of South Africa, Southern Rhodesia and the High Commission Territories in South Africa.

Provided also that in the case of Ceylon the first paragraph of this Article shall apply only so far as is consistent with the terms of Article 13 of this Agreement.

ARTICLE 9.

The Government of India undertake, in respect of goods the growth, produce or manufacture of the United Kingdom of the kinds specified in Schedule 1V to this Agreement which comply with the laws and statutory regulations for the time being in force defining Empire goods for the purpose of customs duties, that the difference between the rates of customs duties on such goods on importation into India and the rates upon similar goods the growth, produce or manufacture of any foreign country shall not be less than the margins set out in that schedule.

ARTICLE 10.

1. In this Article :—

• The expression " cotton year " means a year beginning on the 1st January.

• The expression " cotton piece goods year " means a year beginning on the 1st April.

• A cotton piece goods year and the cotton year in which that cotton piece goods year begins are referred to as " corresponding "; and the expression " the following cotton piece goods year" means in relation to a cotton year the cotton piece .goods year beginning on the 1st April next after the end of that cotton year.

• The word " yard " means a linear yard.

• The word " bale " means the weight of lint cotton contained in the standard Indian bale of gross weight 400 lb. and nett weight 392 lb.

• The expression " United Kingdom cotton piece goods " means fabrics manufactured in the United Kingdom of the kinds which, at the date of the signature of this Agreement, were assessable to duty on import into British India under item 48 (3) or item 48 (9) of the First Schedule to the Indian Tariff Act, 1934, at the rates applicable to fabrics of British manufacture.

• The expression " Indian raw cotton " means raw cotton grown in India.

2. His Majesty's Government in the United Kingdom undertake that they will continue to use all possible efforts in cooperation with commercial interests to stimulate the consumption of Indian cotton in all possible ways, including technical research, commercial investigation, market liaison and industrial propaganda. They have taken note that it is the desire of cotton growers in India that as much as possible of their production of short and fair staple varieties of cotton should be absorbed in the United Kingdom. They have also taken note, and invite the Government of India to take note, that the Lancashire Indian Cotton Committee, set up by His Majesty's Government in the United Kingdom to stimulate the consumption of Indian cotton, have expressed their sympathy with that desire and their intention to take all practicable steps to assist in its fulfilment. It is recognised that the fulfilment of the foregoing objectives largely depends on the continued pursuit by all interests concerned in India of the policy of improving the quality and staple of Indian cotton exported to the United Kingdom by all practicable means.

3. From the entry into force of this Agreement the customs duties charged on imports into India of United Kingdom cotton piece goods shall not, save as provided in paragraphs 5 and 7, exceed the following rates, hereinafter referred to as the basic rates, namely :—

(a) Printed goods—17 ½ per cent. ad valorem;

(b) Grey goods—15 per cent. ad valorem, or 2 annas 7 ½ pies per lb., whichever is the higher;

(c) Other goods—15 per cent. ad valorem.

4. If in any cotton piece goods year the total quantity of United Kingdom cotton piece goods imported into India does not exceed 350 million yards, the duties charged on imports of such goods into India after the end of that year, and until the end of any cotton piece goods year in which the total quantity of such goods imported into India exceeds 425 million yards, shall not exceed the basic rates reduced by 2 ½ per cent. ad, valorem, and a proportionate reduction shall apply to the alternative specific duty on United Kingdom grey cotton piece goods.

5. If in any cotton piece goods year the total quantity of United Kingdom cotton piece goods imported into India exceeds 500 million yards, the duties charged on imports of such goods into India in the following cotton piece goods year may be increased above the basic rates to such rates as may be deemed necessary for the purpose of restricting imports of such goods during the year to the maximum yardage figure for the preceding cotton piece goods year, but shall be reduced to the basic rates (or, where the provisions of paragraph 4 are applicable, in accordance with those provisions) after the end of any cotton piece goods year in which the total quantity of such imports into India has not exceeded 425 million yards.

The expression " maximum yardage figure " for any cotton piece goods year means 500 million yards, or, for a year corresponding to a cotton year in which there is a deficiency, as defined in paragraph 6, 500 million yards reduced by the appropriate figure in accordance with the provisions of paragraph 6.

6. For the purpose of determining the appropriate rates of duty to be charged on United Kingdom cotton piece goods under this Article, the quantity of United Kingdom cotton piece goods actually imported into India in any cotton piece goods year corresponding to a cotton year in which there is a deficiency shall be deemed to have been increased by 25 million yards for every 50,000 bales of the deficiency or for any part thereof, provided that the deficiency does not exceed 100,000 bales in the cotton year ending 31st December, 1939, and 150,000 bales in any subsequent cotton year.

The word " deficiency " means the amount by which imports of Indian raw cotton into the United Kingdom fall below the following quantities :—

	Bales.
For the cotton year ending 31st December, 1939	500,000
For the cotton year ending 31stDecember, 1940	550,000
For every subsequent cotton year	600,000

7. Notwithstanding anything contained in the preceding paragraphs, if the imports of Indian raw cotton into the United Kingdom fall below 400,000 bales in the cotton year ending 31st December, 1939, or in the cotton year ending 31st December, 1940, and 450,000 bales in any other cotton year, the duties charged on imports of United Kingdom cotton piece goods into India in the following cotton piece goods year may be increased above the basic rates to such extent as the Government of India may, after consultation with His Majesty's Government in the United Kingdom, determine.

8. (1) If in any cotton year the quantity of Indian raw cotton imported into the United Kingdom exceeds 750,000 bales, the rate of duty charged on United Kingdom printed cotton piece goods imported into India in the following cotton piece goods year shall not exceed the duty charged in that year on other United Kingdom cotton piece goods imported into India.

(2) If in any cotton piece goods year in which a reduction in the duty on United Kingdom printed cotton piece goods takes effect under the provisions of this paragraph, or in any following cotton piece goods year in which the same reduction remains in force, the quantity of United Kingdom printed cotton piece goods imported into India is in excess of the quantity of such goods so imported in the cotton piece goods year immediately preceding that in which the said reduction first took effect, such excess up to a maximum quantity of 25 million yards shall not be taken into account for the purposes of determining whether or not the figure of 425 million yards specified in paragraph 4 of this Article or the figure of 500 million yards specified in paragraph 5 of this Article has been exceeded.

9. For the purpose of calculating imports in any cotton year or cotton piece goods year under this Article there shall be deducted the amount of re-exports from the United Kingdom of Indian raw cotton in that year and the amount of re-exports from India of United Kingdom cotton piece goods in that year.

10. Any alteration of the duties charged on United Kingdom cotton piece goods imported into India which falls due to be made under the provisions of this Article shall come into effect not later than the 17th April of the cotton piece goods year to which it relates, and the relative provisions of this Article shall be deemed to have been duly fulfilled if such alteration takes effect on or before that date.

ARTICLE 11.

The Government of India undertake to accord to the non-self-governing Colonies, the Protectorates and Protected States, and the Mandated Territories of Tanganyika, the Cameroons under British Mandate and Togoland under British Mandate, preferences on the commodities which comply with the laws and statutory regulations for the time being in force defining Empire goods for the purpose of customs duties and at the rates shown in Schedule V to this Agreement, and also any preferences for the time being accorded to any part of the British Empire other than Burma if His Majesty's Government in the United Kingdom so request.

Provided that the Government of India shall not be bound to accord any preference to Ceylon except as provided in Article 13 of this Agreement.

Provided further that the Government of India shall not be bound to continue to accord any preferences to any Colony, Protectorate or Protected State, which, not being precluded by international obligations or, in the case of Nigeria, by the declared policy of His Majesty's Government in the United Kingdom from according preferences, either (i) accords to India no preferences or (ii) accords to some other part of the British Empire (in the case of Northern Rhodesia, excepting the Union of South Africa, Southern Rhodesia and the High Commission Territories in South Africa) preferences not accorded to India.

ARTICLE 12.

The Government of India undertake to accord to goods the growth, produce or manufacture of any of the non-self-governing Colonies, the Protectorates and Protected States, and the Mandated Territories of Tanganyika, the Cameroons under British Mandate, Togoland under British Mandate and Palestine, treatment not less favourable than that accorded to similar goods the growth, produce or manufacture of any foreign country.

ARTICLE 13.

1. The Government of India will, as soon as may be after the conclusion of this Agreement, enter into negotiations with the Government of Ceylon regarding the trade relations between India and Ceylon.

2. The Government of Ceylon will continue in force during the interim period the preferences at present accorded to India as set out in Schedule 1II to this Agreement, and the Government of India will continue to accord during the interim period :—

(a) to Ceylon the preferences to be accorded under Article 11; and

(b) to Ceylon and to the Colonies, Protectorates, Protected States and Mandated Territories to which preferences are to be accorded under Article 11, preferences at the rates shown in Schedule VI to this Agreement on the commodities named in that schedule which comply with the laws and statutory regulations for the time being in force defining Empire goods for the purpose of customs duties.

3. In this Article the expression " the interim period " means a period ending on the date on which any Agreement between the Government of India and the Government of Ceylon resulting from the negotiations heretofore mentioned comes into effect, or a period of six months from the date on which the present Agreement comes into effect, whichever is the shorter. Provided that, if it appears likely that the said negotiations will be protracted beyond the said period of six months, His Majesty's Government in the United Kingdom and the Government of India shall consider in consultation whether the interim period should be extended.

ARTICLE 14.

His Majesty's Government in the United Kingdom undertake to extend to India any tariff preferences which are, or may be, accorded to Canada, the Commonwealth of Australia, New Zealand, the Union of South Africa, Eire, Newfoundland, Southern Rhodesia or Burma, and the Government of India undertake to extend to the United Kingdom any tariff preferences which are, or may be, accorded to Canada, the Commonwealth of Australia, New Zealand, the Union of South Africa, Eire, Newfoundland or Southern Rhodesia.

ARTICLE 15.

In the event of circumstances arising which, in the judgment of His Majesty's Government in the United Kingdom or of the Government of India, as the case may be, necessitate a variation in the terms of this Agreement, the proposal to vary its terms shall be the subject of consultation between the two Governments.

ARTICLE 16.

This Agreement shall come into force on a date to be mutually agreed between the two Governments. On the coming into force of the present Agreement, the Agreement concluded between His Majesty's Government in the United Kingdom and the Government of India at Ottawa on the 20th August, 1932, shall cease to have effect between the United Kingdom and India. Pending the coming into force of the present Agreement, the two Governments will apply its provisions as far as may be possible. The present Agreement shall continue in force until the 31st March, 1942. Unless six months before the 31st March, 1942, notice of termination shall have been given by either Government to the other, the Agreement shall remain in force until the expiry of six months from the date on which a notice of termination is given.

Done in duplicate, at London, this twentieth day of March, 1939.

Signed on behalf of His Majesty's Government in the United Kingdom of Great Britain and Northern Ireland :

OLIVER STANLEY.

Signed on behalf of the Government of India :

FIROZ KHAN NOON.

SCHEDULE I

(a)

Preferences at a rate of 10 per cent. ad valorem—

• Bones.

• Castor seed.

• Coir yarn.

• Cotton yarns, unbleached, up to No. 40 count.

• Goatskins, raw, dried, salted or pickled, but not further treated, of varieties supplied by India to the United Kingdom.

• Gram or chick pea.

• Ground-nuts.

• Hardwoods, hewn or sawn, the following—

  • Indian hardwoods—

    • Tectona grandis (teak).

    • Dipterocarpus species (gurjun).

    • Terminalia crenulata (also known as Terminalia tomentosa) (laurel).

    • Terminalia bialata (silver greywood and white chuglam).

    • Dalhergia latifolia (rosewood or Bombay blackwood).

    • Diospyros species (ebony, including Andaman marble-wood).

    • Pterocarpus dalbergioides (Andaman padauk).

    • Chloroxylon swietenia (satinwood).

    • Canarium euphyttum (white dhup).

    • Santalum album (sandalwood).

    • Albizzia lebbek (kokko).

  • Similar foreign hardwoods—

    • Tectona grandis (teak).

    • Chlorophora excelsa (iroko or " African teak ").

    • Hopea, Shorea, Parashorea and Pentacme species (yakal, bangkirai and lauan).

    • Dipterocarpus species (apitong, bagac, keruing, yang and dau).

    • Dryobalanops species (kapur, kamfer or Borneo camphor-wood).

    • Terminalia crenulata (also known as Terminalia tomentosa) (laurel).

    • Terminalia superba (fraké, limba, limbo or noyer du Mayombe).

    • Dalhergia nigra (Brazilian rosewood).

    • Diospyros species (ebony).

    • Pterocarpus species (padauk).

    • Zanihoxylum flavwm (satinwood).

    • anarium species.

    • Santalum species (sandalwood).

• Leather, undressed—hides, other than sole leather.

• Leather, undressed—skins.

• Linseed.

• Magnesite.

• Oil-seed cake and meal.

• Paraffin wax.

• Sandalwood oil.

• Soya beans.

• Spices, the following—

  • Pepper, ginger and cardamoms.

(b)

Preferences at a rate of 15 per cent. ad valorem—

• Castor oil, linseed oil, coconut oil, ground-nut oil, rape oil and sesamum oil.

• Granite setts and curbs.

• Leather, dressed—

  (i)

  Box and willow calf, box and willow sides, and other chrome tanned calf, kip and hide leather, but not patent leather or machinery belting.

  (ii)

  Reptile leather of the following descriptions—

  • Snake, lizard, crocodile and alligator skins, not shaped or subjected to any process other than dressing or dressing and colouring.

• Manufactures wholly of jute, the following—

  • Cordage, cables, ropes and twine (including polished, starched or glazed singles, and all multiples).

(c)

Preferences at a rate of 20 per cent. ad valorem—

• Coir mats and matting.

• Manufactures wholly of cotton, the following—

  • Tissues and like materials.

  • Household goods and similar articles for non-domestic use.

  • Blankets, shawls, coverlets and travelling rugs.

  • Handkerchiefs.

• Manufactures wholly of jute, the following—

  (i)

  Tissues not made up (not including rags).

  (ii)

  Sacks and bags of a shape similar to sacks.

(d)

Preference at a specific rate of 1s. per cwt.—

• Magnesium chloride.

(e)

Preference at a specific rate of 9s. 4d. per cwt.—

• Coffee.

(f)

Preference at a specific rate of 2d. per lb.—

• Tea.

(g)

Preferences at a specific rate of 2/3 d. per lb.—

• Rice, busked, including cargo rice and cleaned rice whole, but not including broken rice.

• Rice in the husk.

(h)

Preferences at the undermentioned rates—

• Carpets, carpeting and floor rugs, wholly or partly of wool, and not containing any silk or artificial silk—

  (i) Hand made, knotted	4s. 6d. per sq. yard, exclusive of fringes.
  (ii) Other kinds	20 per cent. ad valorem.

SCHEDULE II

• Shellac, seed lac, stick lac, and other varieties of these lacs.

• Jute, raw.

• Myrabolams.

• Mica slabs and splittings.

• Hemp of the variety crotalaria juncea, not further dressed after scutching or decorticating; tow of such variety of hemp.

SCHEDULE III

(1) CEYLON.

(a)

At a rate of not less than 5 per cent. ad valorem—

• Cotton piece goods.

• Fruit, dried or otherwise preserved without sugar (except canned fruit and currants, dates and raisins).

• Tanks and drums of iron and steel, black painted or galvanised.

(b)

At a rate of not less than 10 per cent. ad valorem—

• Cotton yarn.

• Fruit, fresh, dried or otherwise preserved, except currants and except those fruits to which a preference of not less than 5 per cent. ad valorem applies under Section (1) (a) of this schedule.

• Iron and steel, including machinery other than oil pressing and refining, but excluding the following :—

  • Tea chest fittings.

  • Sheets and circles declared to be imported for the purpose of manufacturing drums for the export of Ceylon produce.

  • Plain plates and sheets, flat or corrugated, not fabricated.

  • Expanded metal and other materials for reinforcement, not fabricated.

  • Rolled angles, bulbs, channels, shapes and sections, H iron, girders, tees, beams, joists, pillars and rails, not fabricated.

  • Bars, rods and slabs, including blister, jumper and tool steel, not fabricated.

  • Staples and wire nails.

  • Unwrought metal (including pig iron).

  • Tanks and drums, black painted or galvanised.

• Vegetables, preserved or tinned, but not dried.

• Pig lead, except lead sheets, tea lead or foil.

• Teak and other hardwoods (excluding manufactures thereof).

• Perfumery, cosmetics, powder and toilet preparations (except perfumed spirits).

• Apparel of woollen, silk and artificial silk and mixed material.

• Boots and shoes (other than canvas, rubber-soled).

• Woollen carpets and rugs.

(c)

At specific rates—

Vegetables, fresh or dried (including fresh chillies, but excluding onions, potatoes and garlic)	at the rate of 1 rupee per cwt.
Beans	at the rate of 50 cents per cwt.
Tea.	at the rate of 12 ½ cents per lb.
Beedies	at the rate of 50 cents per lb. gross weight.
Cigars	at the rate of 75 cents per lb.
Snuff	at the rate of 50 cents per lb.
Hooka and beedy tobacco	at the rate of 30 cents per lb.
Cigarettes	at the rates per lb. specified below as against cigarettes manufactured in foreign countries :— (i) Manufactured in the British Empire from Empire-grown tobacco— (a) Sold wholesale at not more than Rs. 11 per lb. nett Rs. 2 (b) Sold wholesale at more than Rs. 11 per lb. nett Re. 1 (ii) Manufactured in the British Empire from foreign tobacco— (a) Sold wholesale at not more than Rs. 11 per lb. nett Re. 1-50 (b) Sold wholesale at more than Rs. 11 per lb. nett 50 cents. (iii) Manufactured in the British Empire from Empire-grown and foreign tobacco at rates intermediate between (i) and (ii) above according to the certified proportion of Empire and foreign leaf content. Other manufactured tobacco - at the rate of 75 cents per lb.

(2) THE GOVERNMENTS OF MALAYA OTHER THAN THE STRAITS SETTLEMENTS.

(a)

At a rate of not less than 10 per cent. ad valorem—

• Ground-nuts.

• Cotton piece goods.

• And, so long as it is consistent with the tariff policies of the Governments to impose a customs duty on the commodity in question—

  • Perfumery.

(b)

At 2 cents per lb.—

• So long as it is consistent with the tariff policies of the Governments to impose customs duties on the commodities in question—

  • Ground-nut oil (Kachang oil).

  • Gingelly oil.

(3) THE GOVERNMENTS OF MALAYA INCLUDING THE STRAITS SETTLEMENTS.

• At 10 cents per lb.—

  • Unmanufactured tobacco.

SCHEDULE IV

Tariff Item.	Article.	Margin of preference.
22 (5) (b)	Drugs and medicines containing spirit— (i) entered in such a manner as to indicate that the strength is not to be tested. (ii) not so entered	Rs. 4 per Imperial gallon.
		Rs. 3 per Imperial gallon of the strength of London proof.
25 (4)	Cement not otherwise specified -	10 per cent.
Ex 28	Chemicals, drugs and medicines, all sorts not otherwise specified (except hydrochloric, nitric, sulphuric, tartaric and other acids, anhydrous ammonia, potassium bichromate and other potassium compounds, sodium bichromate, sodium cyanide and sodium carbonate).	10 per cent.
30	Paints, colours and painters' materials, all sorts not otherwise specified, including paints, solutions and compositions containing dangerous petroleum within the meaning of the Indian Petroleum Act, 1934.	10 per cent.
30 (2)	Paints, colours and painters' materials, the following, namely :— (a) Red lead, genuine dry, genuine moist and reduced moist. (b) White lead, genuine dry. (c) Zinc white, genuine dry. (d) Paints, other sorts, coloured, moist	10 per cent.
49(1)	Fents, being bona fide remnants of piece goods or other fabrics.	10 per cent.
Ex 49 (4)	Woollen carpets, floor rugs, shawls and other manufactures of wool, not otherwise specified, including felt but excluding woollen waste and rags.	10 per cent.
63 (14)	Iron or steel hoops and strips -	10 per cent.
63 (24)	Iron or steel barbed or stranded wire and wire rope.	10 per cent.
64	Copper, wrought, and manufactures of copper, all sorts not otherwise specified.	10 per cent.
72 (5)	Domestic refrigerators	10 per cent.
Ex 72 (6)	Sewing and knitting machines and parts thereof.	10 per cent.
Ex 73	Electrical instruments, apparatus and appliances, not otherwise specified, excluding telegraphic and telephonic (except batteries, accumulators and electromedical apparatus).	10 per cent.
73 (1)	The following electrical instruments, apparatus and appliances, namely :— Electrical control gear and transmission gear, namely, switches (excluding switchboards), fuses and current-breaking devices of all sorts and descriptions, designed for use in circuits of less than ten amperes and at a pressure not exceeding 250 volts; and regulators for use with motors designed to consume less than 187 watts; bare or insulated copper wires and cables, any one core of which, not being one specially designed as a pilot core, has a sectional area of less than one-eightieth part of a square inch, and wires and cables of other metals of not more than equivalent conductivity; and line insulators, including also cleats, connectors, leading-in tubes and the like, of types and sizes such as are ordinarily used in connection with transmission of power for other than industrial purposes, and the fittings thereof but excluding electrical earthenware and porcelain otherwise specified.	10 per cent.
73 (4)	Wireless reception instruments and apparatus and component parts thereof, including all electric valves, amplifiers and loud speakers which are not specially designed for purposes other than wireless reception or are not original parts of and imported along with instruments or apparatus so designed.	10 per cent.
75 (1)	Motor cars including taxi cabs and articles (other than rubber tyres and tubes) adapted for use as parts and accessories thereof.	7½ per cent.
75 (2)	Motor cycles and motor scooters and articles (other than rubber tyres and tubes) adapted for use as parts and accessories thereof.	7½ per cent.
75 (3)	Motor omnibuses; chassis of motor omnibuses, motor vans and motor lorries; and parts of mechanically propelled vehicles and accessories not otherwise specified, excluding rubber tyres and tubes.	7½ per cent.
Ex 75 (4)	Cycles (other than motor cycles) imported entire or in sections and parts and accessories thereof, excluding rubber tyres and tubes.	10 per cent.
Ex 77	Instruments, apparatus and appliances other than electrical, all sorts not otherwise specified, including photographic, but excluding scientific, philosophical and surgical.	10 per cent.

SCHEDULE V

(a)

Preferences at a rate of not less than 10 per cent. ad valorem—

• Asphalt.

• Soda ash, including calcined, natural soda, and manufactured sesquicarbonates.

• Gum arabic.

• Gum benjamin, ras and cowrie.

• Gum dammer.

• Dammer batu, unrefined.

• Rosin.

• Cutch.

• Gambier, all sorts.

• Coconut oil.

• Fresh vegetables.

• Vegetables, dried, salted or preserved.

• Fruit and vegetables, canned and bottled.

• Fruit juices.

• Sisal and aloe fibre.

• Ivory, unmanufactured.

• Sago (but not sago flour).

• Tapioca and tapioca flour.

• Artificial teeth.

• And so long as it is consistent with India's tariff policy to impose customs duties on the commodities in question—

  • Fresh fruits (other than coconuts).

  • Dried, salted or preserved fruits.

(b)

Preferences at a rate of 7 ½ per cent. ad valorem—

• Betelnuts.

• Unground spices (other than cardamoms).

• Cardamoms, cassia, cinnamon, cloves, nutmegs and pepper—ground.

• And, so far as preferences are granted to the United Kingdom, drugs and medicines and apparel of all kinds.

(c)

Preferences at specific rates—

Bitters	at the rate of Rs. 3-12 per gallon.
Coffee	at the rate of 1 anna per lb.
Rum	at the rate of Rs. 3-12 per proof gallon.
Unmanufactured tobacco at the rate of 8 annas per lb.

SCHEDULE VI

(a)

Preferences at a rate of not less than 10 per cent. ad valorem—

• Citronella oil.

• Cinnamon oil.

• Cinnamon-leaf oil.

• Coconuts, husked, unhusked and other kinds, copra or coconut kernel, coir fibre, coir yarn, coir mats and matting.

• Fish, dry, unsalted.

• Oil seeds (other than essential).

• Vegetable oils (other than essential).

• Plumbago.

(b)

Preference at a rate of 7 ½ per cent. ad valorem—

• Cardamoms, unground.

(c)

Preference at specific rate—

Tea	at the rate of 2 annas per lb.

LETTER NO. 1. LETTER FROM THE INDIAN SIGNATORY ON THE SUBJECT OF ZINC.

London,

March 20, 1939.

SIR,

With reference to Article 15 of the Trade Agreement signed this day, I have the honour to inform you that the Government of India, having taken note of the statements of His Majesty's Government in the United Kingdom in the course of the recent discussions (1) that it is essential to the national security that the production of the zinc smelting industry in the United Kingdom should be maintained at a satisfactory level; and (2) that His Majesty's Government in the United Kingdom will consult the Government of India before taking any decision to impose a customs duty on imports of zinc from India into the United Kingdom; agree that it will be open to His Majesty's Government in the United Kingdom, after consultation with the Government of India, and notwithstanding the provisions of Article 1 of the Trade Agreement, to impose a customs duty on imports of zinc produced or manufactured in India.

It is understood that no customs duty will be imposed on zinc from India which is not equally applicable to zinc from other oversea Empire sources.

I have, etc.,

FIROZ KHAN NOON.

The Right Hon. OLIVER STANLEY, M.C., M.P.,

President of the Board of Trade.

LETTER No. 2. LETTER FROM THE INDIAN SIGNATORY ON THE SUBJECT OF PIG IRON.

London,

March 20, 1939.

SIR,

With reference to Article 15 of the Trade Agreement signed this day, I have the honour to inform you that the Government of India having taken note of the statements of His Majesty's Government in the United Kingdom in the course of the recent discussions (1) that, bearing in mind the provisions of Article 6 of the Agreement supplementary to the Ottawa Trade Agreement concluded between the two Governments on the 9th January, 1935, His Majesty's Government in the United Kingdom desire to reserve the right to impose a customs duty on imports of pig iron from India if after the expiry on the 31st March, 1941, of the Iron and Steel Protection Act, 1934, duties are applied to articles of iron and steel imported into India substantially less favourable to the United Kingdom than those for which that Act provides; and (2) that His Majesty's Government in the United Kingdom will consult the Government of India before taking any decision to impose such a customs duty; agree that it will be open to His Majesty's Government in the United Kingdom, after consultation with the Government of India, and notwithstanding the provisions of Article 1 of the Trade Agreement, to impose after the 31st March, 1941, a customs duty on imports of pig iron produced or manufactured in India if duties are applied to articles of iron and steel imported into India substantially less favourable to the United Kingdom than those for which the above mentioned Act provides, without prejudice, however, to the provisions of Section 4 (1) of the Indian Tariff Act, 1934.

It is understood that no customs duty will be imposed on pig iron from India which is not equally applicable to pig iron from other oversea Empire sources.

I have, etc.,

FIROZ KHAN NOON.

The Right Hon. OLIVER STANLEY, M.C., M.P.,

President of the Board of Trade..

LETTER No. 3. LETTER FROM THE INDIAN SIGNATORY ON THE QUESTION OF THE EXTENSION TO OTHER COLONIAL DEPENDENCIES OF PREFERENCES PRIMARILY OF INTEREST TO CEYLON.

London,

March 20, 1939.

SIR,

With reference to Article 13 of the Trade Agreement signed this day, I have the honour to inform you that the Government of India have taken note of the statement of His Majesty's Government in the United Kingdom in the course of the recent discussions that, in agreeing that the preferences included in Schedule VI to the Agreement are principally of interest to Ceylon, they are nevertheless anxious that the claims of other Colonial dependencies to receive any of these preferences should be sympathetically considered by the Government of India if the proposed negotiations between that Government and the Government of Ceylon do not result in the extension of such preferences to those dependencies for the duration of the Agreement concluded this day. I am authorised to state that the Government of India will give sympathetic consideration to any requests which His Majesty's Government in the United Kingdom may make in regard to such preferences on behalf of Colonial dependencies other than Ceylon.

I have, etc.,

FIROZ KHAN NOON.

The Right Hon. OLIVER STANLEY, M.C., M.P.,

President of the Board of Trade.

Section 9.

EIGHTH SCHEDULE Amended rates of duty in the case of certain mechanically propelled vehicles.

PART I Paragraph to be substituted for Paragraph 1 of the Second Schedule to the Finance Act, 1920.

Description of vehicle.	Rate of duty.
	£	s.	d.
1. Cycles (including motor scooters and cycles with an attachment for propelling them by mechanical power) not exceeding 8 cwt. in weight unladen—
(a) Bicycles—
Where the cylinder capacity of the engine thereof—
(i) does not exceed 150 cubic centimetres		17	6
(ii) exceeds 150 cubic centimetres but does not exceed 250 cubic centimetres	1	17	6
(iii) exceeds 250 cubic centimetres—
In a case where the bicycle is one in respect of which a licence was taken out before the first day of January, nineteen hundred and thirty-three, and does not exceed 224 lbs. in weight unladen	1	17	6
In any other case	3	15	0
(b) Bicycles, if used for drawing a trailer or sidecar	1	5	0
(c) Tricycles—
Neither constructed nor adapted for use nor used for the carriage of a driver or a passenger	2	0	0
Other tricycles	5	0	0
The duty chargeable under sub-paragraph (b) of this paragraph in respect of any bicycle shall be chargeable in addition to the duty chargeable on the bicycle under sub-paragraph (a) of this paragraph.

PART II Paragraph to be substituted for Paragraph 6 of the Second Schedule to the Finance Act, 1920.

Description of vehicle.	Rate of duty.
	£	s.	d.
6. Any vehicles other than those charged with duty under the foregoing provisions of this Schedule :—
Electrically propelled vehicles	7	10	0
Other vehicles—
Not exceeding 6 horse-power	7	10	0
Exceeding 6 horse-power—
For each unit or part of a unit of horsepower	1	5	0

Section 23.

NINTH SCHEDULE Computation of Profit and Capital for Purposes of Armament Profits Duty.

PART I Adaptation of income tax provisions as to computation of profit.

1 The profits shall be taken to be the actual profits arising in the year or chargeable accounting period, and the principles of computing profits by reference to any other period and of allowing losses sustained in any other period to be carried forward shall not be followed.

2 There may be deducted in respect of any such year or chargeable accounting period a sum (ascertained on the like basis as the amount of a deduction for wear and tear is ascertained under Rule 6 of the Rules applicable to Cases I and II of Schedule D) which represents the diminution in value by reason of wear and tear during that year or period of any plant or machinery in respect of which a deduction can be made under the said Rule 6, plus, in the case of a year constituting or comprised in the standard period, ten per cent., and, in the case of a chargeable accounting period, twenty per cent., of that sum.

3 (1) Where any buildings, plant or machinery have, - after the beginning of the year nineteen hundred and thirty-seven, been provided for the purpose of fulfilling armament contracts by the persons carrying on the business, then, if either—

(a) on such date as Parliament may hereafter declare to be the date of the restoration of normal conditions as respects the requirements of the Crown for armaments, the buildings, plant or machinery have, wholly or partially, become obsolete or ceased to be required and the value thereof is less than the net cost thereof; or

(b) the buildings, plant or machinery are sold before the said date at a price which is less than the net cost thereof,

there shall be allowed in respect of each chargeable accounting period such proportion of the deficiency as is properly attributable to that period, less the amount of any allowances for wear and tear or depreciation already made for that period in respect of the buildings, plant or machinery otherwise than under this paragraph, and if any plant or machinery provided as aforesaid is replaced, no allowance other than that made under this paragraph shall be made in respect of the amount expended in the replacement thereof.

(2) Pending an ascertainment whether any allowance falls to be made under sub-paragraph (1) of this paragraph in respect of buildings, plant or machinery, the Commissioners, if they are satisfied that any buildings, plant or machinery provided as aforesaid are of such a character that it is likely that the conditions specified in the said sub-paragraph will be fulfilled in the case thereof, may allow in any chargeable accounting period such sums as they think fit, not exceeding ten per cent. (or, if the chargeable accounting period is less than a year, a proportionately reduced amount) of the net cost of the buildings, plant or machinery, but any such allowance shall be provisional only, and on the coming of the said date, or, as the case may be, on the previous sale of the buildings, plant or machinery, the amount thereof shall be adjusted so as to accord with the provisions of the said sub-paragraph.

(3) In this paragraph, the expression " net cost " means, in relation to any buildings, plant or machinery, the cost of the provision thereof less any sum provided, or to be provided, directly or indirectly, out of the Consolidated Fund of the United Kingdom or of Northern Ireland, or out of moneys provided by the Parliament of the United Kingdom or the Parliament of Northern Ireland, towards the cost of the provision of the buildings, plant or machinery, or towards any depreciation thereof.

4 The principles of the Income Tax Acts under which deductions are not allowed for interest, annuities or other annual payments payable out of the profits, or for royalties, or (in certain cases) for rent, and under which the annual value of lands, tenements, hereditaments or heritages occupied for the purposes of a business is excluded, and under which a deduction may be allowed in respect of such annual value, shall not be followed :

Provided that—

(a) nothing in this paragraph shall authorise any deduction in respect of any payment of dividend or distribution of profits;

(b) for the purposes of this paragraph any additional deduction allowable for income tax purposes by virtue of the proviso to paragraph (2) of Rule 5 of the Rules applicable to Cases I and II of Schedule D and any deduction allowable for those purposes under section eighteen of the Finance Act, 1919, shall not be treated as a deduction in respect of annual value.

5 The provisions of subsection (4) of section twenty-seven of the Finance Act, 1920 (which disallows deductions on account of the payment of Dominion income tax) shall not apply.

6 No income received from investments shall be included in the profits; and where the person carrying on the business is the beneficial owner of any investments and a deduction would, apart from the provisions of this paragraph, fall to be made in respect of interest on borrowed money, the deduction (if any) to be made in respect of that interest shall be computed as if the principal of the borrowed money were reduced by the value of those investments :

Provided that where the person carrying on the business is not a body corporate, no deduction shall be treated as made in the principal of any borrowed money in respect of any investments unless those investments are mortgaged, charged or pledged as security for the repayment of that money and the interest thereon.

7 No deduction shall be made on account of liability to pay or payment of United Kingdom income tax, the national defence contribution, or armament profits duty.

8 No deduction shall be made in respect of any transaction or operation of any nature if and so far as it appears that the transaction or operation has artificially reduced the profits, or would artificially reduce the profits.

9 In the case of a business carried on in any chargeable accounting period by a company the directors whereof have a controlling interest therein,—

(a) if the standard profits for the company are computed by reference to a standard period, no deduction shall be allowed in respect of directors' remuneration in excess of the amount paid for directors' remuneration in respect of the standard period or, if the standard period is longer than the chargeable accounting period, in excess of so much of the sum paid for directors' remuneration in respect of the standard period as bears to the total amount thereof the like proportion as the length of the chargeable accounting period bears to that of the standard period;

(b) if the standard profits are not computed by reference to a standard period, no deduction shall be allowed in respect of the remuneration of the directors.

10 Where the performance of a contract extends beyond the year or chargeable accounting period, there shall (unless the Commissioners, owing to any special circumstances, otherwise direct) be attributed to the year or period such proportion of the entire profit or loss which has resulted, or which it is estimated will result, from the complete performance of the contract as is properly attributable to the year or period, having regard to the extent to which the contract was performed in the year or period.

PART II Provision for computing capital.

1 (1) Subject to the provisions of this Part of this Schedule, the amount of the capital employed in a business (so far as it does not consist of money) shall be taken to be—

(a) so far as it consists of assets acquired by purchase on or after the commencement of the business, the price at which those assets were acquired, subject to the deductions hereafter specified;

(b) so far as it consists of assets being debts due to the person carrying on the business, the nominal amount of those debts, subject to the said deductions;

(c) so far as it consists of any other assets which have been acquired otherwise than by purchase as aforesaid, the value of the assets when they become assets of the business, subject to the said deductions.

(2) The price or value of any assets other than a debt shall be subject to the following deductions—

(a) a deduction of any sum contributed, directly or indirectly, out of the Consolidated Fund of the United Kingdom or of Northern Ireland, or out of moneys provided by the Parliament of the United Kingdom or the Parliament of Northern Ireland, towards the acquisition of the asset;

(b) any such deductions for wear and tear or for depreciation as are authorised by the Income Tax Acts or Part I of this Schedule,

and, in the case of a debt, the nominal amount of the debt shall be subject to any deduction which has been allowed in respect thereof for income tax purposes.

(3) Where the price of any asset has been satisfied otherwise than in cash, the then value of the consideration actually given for the asset shall be treated as the price at which the asset was acquired.

(4) For the purposes of the provisions of sub-paragraph (2) of this paragraph relating to deductions for wear and tear or depreciation, any additional deduction allowable for income tax purposes by virtue of the proviso to paragraph (2) of Rule 5 of the Rules applicable to Cases I and II of Schedule D, and any deduction allowable for those purposes under section eighteen of the Finance Act, 1919, shall be treated as a deduction for depreciation.

2 Any borrowed money and debts shall be deducted, and in particular any debt for income tax computed by reference to the standard rate or for the national defence contribution or the armament profits duty in respect of the business shall be deducted :

Provided that any such debt for income tax or the national defence contribution or the armament profits duty shall, for the purposes of this Part of this Schedule, be deemed to have become due—

(a) in the case of income tax, on the first day of January in the year of assessment for which the tax is assessable;

(b) in the case of the national defence contribution or the armament profits duty, on the first day after the end of the chargeable accounting period in respect of which the contribution or duty is assessable;

notwithstanding that the tax, contribution or duty may not have been assessed until after those dates respectively.

3 Any investments and any moneys not required for the purposes of the business, shall be left out of account, but where any investments in the beneficial ownership of the person carrying on the business are so left out of account, the sum (if any) to be deducted under the last preceding paragraph in respect of borrowed money shall be computed as if the principal of the borrowed money were reduced by the value of those investments :

Provided that where the person carrying on the business is not a body corporate, no reduction shall be treated as made in the principal of any borrowed money in respect of any investments unless those investments are mortgaged, charged or pledged as security for the repayment of that money and the interest thereon.

4 For the purpose of ascertaining the average amount of capital employed in a trade or business during any period, the profits or losses made in that period shall, except so far as the contrary is shown, be deemed—

(a) to have accrued at an even rate throughout the period; and

(b) to have resulted, as they accrued, in a corresponding increase or decrease, as the case may be, in the capital employed in the business.