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Cement producers for specific excise duty

K.R. Srivats

New Delhi, Feb. 15

THE domestic cement industry, represented by the Cement Manufacturers' Association (CMA), has reiterated its plea to continue with the system of levying excise duty on cement on specific basis.

In its pre-Budget memorandum to the Government, the association has argued that levy of excise duty on cement on an ad valorem basis would pose difficulties due to the ``unique'' nature of cement industry, its pricing mechanism, transport logistics and m arketing systems.

While stating that the industry is not averse to a value added tax (VAT) regime, the CMA felt that the journey to VAT should be traversed through specific rate of excise duty on cement and not through an ad valorem route.

In fact, CMA has, in its memorandum, cited the National Council of Applied Economic Research (NCAER) study on `Specific rate of excise duty on cement in a VAT regime' (September 1999) in support of its suggestion to continue with a specific rate of exci se duty.

The NCAER report had noted that ``under the present scheme of assessment where individual clearances have to be assessed separately, difficulties will persist in regard to levy of excise duty on ad valorem basis''. It has also pointed out that under the prevailing circumstances and the current provisions of law as at present, the over-riding considerations and administrative compulsion for having a specific duty on cement will continue even under the VAT regime.

According to the NCAER study, the drawback of specific duty regarding absence of buoyancy can, to a large extent, be removed by a suitable adjustment of excise duty rates. The basic consideration in regard to these changes will be that the changes should not be too frequent and that the incidence should not be varied drastically.

Claiming that many countries, particularly some neighbouring countries, are trying to ``dump'' cement into India, the domestic cement manufacturers' have made a case for protecting the domestic industry. The CMA has called for an upward revision in impor t duty by at least 10 per cent, with the effective import duty being increased to 55.6 per cent plus countervailing duty plus special additional duty of customs.