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Vinson Kurian

THIRUVANANTHAPURAM, Dec. 1

THE Centre is well within rights to decide on a excise duty waiver for a particular industry segment based on geographical location and which it can invoke for lifting the levy on teas from South India.

Sources in the Association of Planters of Kerala (APK) told Business Line that the framers of the Central Excise Act had applied their mind on this aspect.

Tea is basically an agro product whose fortunes fluctuate wildly depending on agro-climatic conditions.

This apart, the tea quality, the wage structure and the priceline vary from region to region.It is in this context that Rule 96F of the Central Excise Rules was introduced in 1958, empowering the Centre to levy differential rates of excise duty.

The implications, the sources said, are clear from the drafting of the rule.

There is no legal hassle involved in levying `nil' duty or granting an exemption from excise duty on tea for an identifiable regional segment,.

On whether this would not put the tea producers from other parts at a disadvantage, they said that the APK would be happy if excise duty on the entire tea industry is abolished.

"The South has been forced to make the waiver demand owing to the serious crisis which it finds itself in. Also, the fortunes of South Indian tea and tea from other regions have even otherwise tended to vary for as far back as the market can hope to register, which is recognised by the Central Excise Rules."

During the entire 34-year period from 1958-59 to 1992-93, excise duty on South Indian tea has tended to be at variance with and lower in incidence compared to tea from other regions.

For instance, in 1992-93, the duty applicable for Zone 1 was Rs 1.50 per kg on bulk tea and for Zone 2, South India, just 50 paise per kg.

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