BUSINESS

Cement units seek reduction in customs duty

NEW DELHI, JAN. 20. The cement industry has suggested reduction in customs duty from 25 per cent to 15 per cent and review of the hike in royalty that had been raised from Rs. 32 to Rs. 40 per tonne in order to provide some relief to this sector which was on the path of recovery.

Asserting these concessions were rather necessary, the trade and industry organisations in their pre-budget memorandum to the Government pointed out that royalty of Rs. 40 per tonne worked out to be 80 per cent of the pithead cost of cement which was Rs. 50 per tonne.

In fact, the increase in additional cost due to increase in royalty from Rs. 32 to Rs. 40 per tonne has increased the cost of cement by Rs. 12 per tonne as 1.5 tonne of limestone is required for manufacture of one tonne of cement. Cumulatively, this action has resulted in an additional burden of Rs. 125 crores in the cement industry.

The hike in the customs duty on non-coking coal from May 2000 had also adversely hit this industry. Worst affected were the plants situated in coastal areas as the delivered cost of indigenous coal from coalfield located far away was high and it affected competitiveness of these plants. Also in many locations, the limestone quality is marginal grade requiring low ash coal which was not available.

Another anomaly brought out on behalf of the cement sector was that white cement whether or not artificially coloured was brought under MRP based assessment from December 2001 with abatement of 40 per cent and later when in the last year budget Special Excise Duty on white cement was increased from 8 to 16 per cent, no corresponding increase in abatement had been effected, the memorandum said lamenting that abatement of 40 per cent was on the lower side.

Industry has cautioned against any change in the excise duty structure in case of cement saying that a switch over from specific rate to ad valorem would lead to multiple problems for it.

Recommended for you