Budget 2011: ASSOCHAM for restoration of 4% excise duty on pipes and allied products

The products mentioned above fall in Chapter no. 6811 and attract a basic Excise Duty of 10% as per Union Budget 2010-2011.

By Agencies | Feb 08, 2011, 11.55 AM IST

NEW DELHI: Restoration of 4% excise duty on asbestos cement roofing sheets, pipes and allied products under chapter no. 6811. The products mentioned above fall in Chapter no. 6811 and attract a basic Excise Duty of 10% as per Union Budget 2010-2011.

From the year 1991 (refer Notification no. 60/91-CE dated 25.7.1991 and excepting for a period of 3 and half months in between), these asbestos -cement products had enjoyed for several years full excise duty exemption thoughtfully granted by the Government of India to encourage utilization / consumption of pollutant fly ash - with the condition that the finished products should contain a minimum of 25% fly ash by weight.

However, Notification no. 5/2006 - CE dated 1.3.2006 (item no. 9) had levied 8% basic excise duty on these products containing not less than 25% of fly ash by weight.

Later, this excise duty was reduced to 4% vide Notification no. 58/2008-CE dated 7.12.2008 (item no. 6) in the stimulus package on the condition of usage of not less than 25% of fly ash.

However, this concession was withdrawn vide Notification No. 15/2009-CE dated 6.7.2009 thereby taking the duty rate back to 8% even with the usage of 25% of fly ash. This Notification further implied that even without the usage of flyash, the payable duty was 8%. No distinction was made between usage of fly ash or no usage of fly ash in these products.

As mentioned in item (1) above, in the Budget of 2010-11, basic Central Excise duty on these products has been raised to 10%.

Ever since the exemption was granted in 1991, the industry had installed new equipment at huge costs and started using fly ash and has been striving through research further investments and technological improvement to maintain the products quality and strength as required by the BIS Standards and towards reducing work place pollution.

Asbestos-Cement (AC) products such as Roofing Sheets, Pipes, etc. deserve concessional duties on account of the following:

• AC roofing sheets are basically for the rural poor, providing them most cost effective, yet permanent roof.

• AC roofing sheets are preferred and proven material for small industrial sheds and such other applications, being durable , heat - resistant and having good acoustic value.

• AC Pipes are used in drinking water systems and the public at large with be benefited.

• These products provide employment for lakhs of people not only directly to employees working in manufacturing plants, but indirectly to those such as carpenters, fabricators at installation sites.

• AC products are energy efficient as compared to other roofing products such as steel, aluminum, PVC, GI etc.

• AC products therefore can be considered as very environmental friendly.

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