Budget 2012: Levy Basic Customs Duty on Cement Imports into India, Says FICCI Close.

NEW DELHI: FICCI in its pre-budget memorandum has given the following recommendations for the cement industry:

>> There is surplus capacity of cement in the country and cement market is on bearish trend therefore excise duty rate should be reduced for the growth of cement industry. For better tax administration, law compliance and to ensure no litigation, it is submitted that a single specific rate of duty should be prescribed for cement and clinker also.

>> Dumpers being used in the cement factory as material handling equipments for transportation of basic raw material, i.e. limestone from Mines phase to the crusher Hooper for crushing of the said limestone to be used for further process of clinkerization. These have been classified in the tariff as 'Motor Vehicles for the transport of goods -Dumpers designed for off-highway use'. Department is disputing the credit on dumpers on the grounds that these have not been covered in the definition of 'capital goods' or 'input' under the CENVAT credit Rules. Considering the important role being played by these equipment in the cement manufacturing process, the credit should be allowed on these equipments and suitable amendment made in the Rules to cover these equipments in the definition of 'capital goods'.

>> Government may consider reviewing import duty on coal, pet coke, gypsum and other fuels. The cement industry is heavily dependent on imported Coal and Pet Coke due to short supply of indigenous coal.

>> To encourage cement industry and bring it at par with other core and infrastructure industries, the excise duty rate should be rationalized from 10% to 6-8%. Also, the duty structure should be simplified to be either on specific rate per MT or on ad-valorem basis and without relating to MRP.

>> CENVAT credit should be allowed on Clean Energy Cess so as to mitigate the impact on costs.

>> Cement should be categorized as "Declared Goods" under Section 14 of Central Sales Tax Act so that it is put on an equal footing with other core sector goods.

>> Export incentive in the form of duty drawback should be introduced to encourage exports.

>> Various industries are allowed benefit of Status Holder Incentive Scrip (SHIS) under the Foreign Trade Policy. Unfortunately, cement industry does not figure in the eligible industries. Benefit of SHIS scrip should be extended to cement industry.

>> Presently, import of cement into India is freely allowed without paying basic customs duty. It is submitted that to provide a level playing field, basic customs duty be levied on cement imports into India. Alternatively, import duties on goods required for manufacture of cement be abolished and freely allowed without levy of duty.

>> 3% duty on imports under EPCG scheme should be abolished to promote export growth and investment. Recognizing this, the Government has already reduced duty to 0% for certain sectors and should be extended for cement industry as well.

>> Tyre chips should be allowed to be imported by removing it from the Negative list. Further, the import duty on the same be reduced to zero. This will have a dual benefit of increasing supply of energy sources as well as conserving the domestic energy sources.

>> Suitable amendments be made or Notification issued to state that CENVAT credit will be eligible on all items used in relation to business activity if the same is liable to either excise duty or service tax.

Source : economictimes.indiatimes.com