The cement industry has urged the Centre to abolish import duty on raw materials such as coal, pet coke and gypsum since cement as a finished product does not attract duty. In its pre-Budget memorandum submitted to the Finance Minister, Mr Pranab Mukherjee, the Cement Manufacturers Association (CMA) has said the duty on coal, pet coke and gypsum should be abolished in line with the established principle that import duty on inputs should not be higher than that of finished product. “It is an anomaly. While import duty on gypsum, coal and pet coke is five per cent, cement imports attract no duty,” it said.
The Association has requested the Government to align value-added tax on cement with that of steel at four per cent against 12 per cent levied currently since both are important raw commodities for the infrastructure sector.
The demands come at a time when CMA member companies (excluding ACC and Ambuja Cement) have added 14 million tonnes of capacity this fiscal. These investments have impacted bottomlines and the likes of Ambuja Cement, UltraTech Cement, JK Lakshmi Cement and India Cement have reported a drop in net profit in the third quarter of this fiscal.
Ms Vineeta Singhania, Managing Director, JK Lakshmi Cement and President, CMA, said the industry will be adding about 100 million tonnes of capacity at an investment of Rs 50,000 crore between 2009 and 2013.
According to her, the cement sector is the third largest contributor to the exchequer and the Centre earns 1.9 times (by way of various taxes and duties) over what theindustry earns for itself with excise duty alone contributing over Rs 10,000 crore. Cement is one of the highest taxed commodities with levies accounting for nearly 60 per cent of the ex-works realisation.
CMA has also sought an abatement of 55 per cent on excise duty. This is the case when it is levied on the basis of MRP (maximum retail price) and though whitecement gets it, it is not extended to Ordinary Portland Cement, Portland Pozzolana Cement and slag cement. Companies expect the Centre to reverse the excise levy based on retail sale prices and introduce an uniform duty instead.