Govt changes duties on Cement; producers say cost will go up
The government on Tuesday announced changes in excise duty from specific to value based for cement priced above Rs 250 per bag of 50 kg, a move manufacturers said would increase the production cost.
By PTI |
NEW DELHI: The government on Tuesday announced changes in excise duty from specific to value based for cement priced above Rs 250 per bag of 50 kg, a move manufacturers said would increase the production cost.
Industry, however, was non-committal on whether it would pass on the increased burden to consumers.
Winding up the debate on the Finance Bill in the Lok Sabha, Finance Minister P Chidambaram replaced the fixed excise duty of Rs 600 per tonne by an ad valorem duty of 12 per cent on 50 kg cement bag priced above Rs 250.
"Increase in excise will definitely have a negative impact as cost of production will increase," Cement Manufacturers Association President H M Bangur told the media.
Cement is selling at above Rs 250 per bag in South India, North-east and Mumbai, Bangur said.
When asked whether the producers of these regions would pass on the increase in cost to the consumers, he said: "I do not know".
"Packaged cement for the prices of about Rs 250 per bag is currently chargeable to specific rate of duty of Rs 600 per tonne. This results in a regressive duty structure and does not sufficiently discourage increase in price beyond the threshold of Rs 250 per bag," Chidambaram said.
Last year, the government had announced an ad valorem duty of 12 per cent on cement priced above Rs 190 while the rate of excise duty above Rs 250 per bag was fixed at Rs 600 per tonne. The excise duty on cement priced at Rs 190 and below was fixed at Rs 350 per tonne.
Industry, however, was non-committal on whether it would pass on the increased burden to consumers.
Winding up the debate on the Finance Bill in the Lok Sabha, Finance Minister P Chidambaram replaced the fixed excise duty of Rs 600 per tonne by an ad valorem duty of 12 per cent on 50 kg cement bag priced above Rs 250.
"Increase in excise will definitely have a negative impact as cost of production will increase," Cement Manufacturers Association President H M Bangur told the media.
Cement is selling at above Rs 250 per bag in South India, North-east and Mumbai, Bangur said.
When asked whether the producers of these regions would pass on the increase in cost to the consumers, he said: "I do not know".
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"Packaged cement for the prices of about Rs 250 per bag is currently chargeable to specific rate of duty of Rs 600 per tonne. This results in a regressive duty structure and does not sufficiently discourage increase in price beyond the threshold of Rs 250 per bag," Chidambaram said.
Last year, the government had announced an ad valorem duty of 12 per cent on cement priced above Rs 190 while the rate of excise duty above Rs 250 per bag was fixed at Rs 600 per tonne. The excise duty on cement priced at Rs 190 and below was fixed at Rs 350 per tonne.
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