Assocham backs Kelkar panel's graded duty structure

NEW DELHI: Assocham has suggested a restructuring of the customs duty rate to strengthen the domestic manufacturing sector.
The chamber wants the government to treat import window as a means to develop value addition at cost-effective level in the domestic industry. This will enable local companies to compete both globally and at home against imports while adhering to WTO commitments and free trade agreements (FTAs).
In a note submitted to the finance minister, Assocham president Mahendra K Sanghi said the “move for one single uniform rate is not advisable as it would be detrimental at least in the present circumstances�. There should be a graded duty structure providing for a differential between raw materials, inputs and intermediates and finished goods.
The Kelkar Committee’s recommendation for a 2-tier duty structure and the road map has great merits and must be given weightage, he said.
He said while the customs duty on raw materials is at 25%, in many cases, components also pay the same rate. This leads to a situation here imported components are cheaper as compared to indigenous components manufactured from imported raw materials and therefore duty on raw materials should be lower so that the local manufacturer using imported raw materials can compete with imported components more effectively.
Referring to the imported Maximum Retail Price (MRP) based products, the chamber chief said, in case of products to which Standards of Weights & Measures Act, 1977 is applicable, countervailing duty is payable based on MRP less the amount of abatement as allowed by the government for the particular product category. This leads to delay of customs clearance of such products.
Moreover, under the provisions of the said Act, importer is responsible for affixing the MRP on the package. Foreign suppliers are not interested in affixing the MRP, while the importer may not like the foreign suppliers to know the MRP at which he is selling the product.
Therefore, Mr Sanghi suggested that customs authority should accept the MRP declaration/printed price list given by the importer for purpose of duty payment.
He has also suggested to review the Special Additional Duty (SAD) and should rather restore exemption of SAD against DEPB licence as it existed prior to April ’02. Till recently, he said for goods custom cleared against DEPB licence, SAD was exempted. Sometime in March/April ’02, Finance ministry withdrew the exemption of SAD for clearances under DEPB. This is unjustified as SAD element was not considered while working out the eligibility of DEPB.