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K.R. Srivats

NEW DELHI, April 11

THE PHD Chamber of Commerce and Industry (Phdcci) has urged the Centre to examine the need for levy of additional duty of excise (AED) on sugar, textiles and tobacco products in a scenario where States are to be empowered to impose value added tax (VAT)/ sales tax (not exceeding 4 per cent) on these items.

This suggestion of the chamber comes at a time when most of the States are looking at a one-year cooling off period before they utilise the powers that are to be soon granted to them for imposing VAT on textiles, sugar and tobacco products.

Phdcci has, in its post-budget submissions, contended that the Centre's proposed move to empower States would increase the price of the end products as they are likely to be taxed at both the ends — from Centre as AED and in the States as VAT.

The Chamber has also made a case for reduction in customs duty on linear alkyl benzene (LAB) from 25 per cent to 15 per cent. It has pointed out that the domestic LAB's price increase has been more than 45 per cent in the past three years as against an increase of around 12 per cent in the international prices of LAB.

"The domestic synthetic detergent industry has been pushed to struggle due to the high cost of the essential raw material i.e LAB whether imported or indigenous. There is practically no import of LAB as it has been deterred by the excessive customs duty. This has facilitated the domestic LAB manufacturers to hike their prices by following a policy of import price-parity in rupee terms," the Chamber's post-budget memorandum said.

While the customs duty on LAB is currently pegged at 25 per cent, the customs duty on its raw materials — kerosene and benzene have been pegged at 5 per cent and 10 per cent respectively.

Kerosene constitutes 70 per cent by way of quantity and 60 per cent by value at current costs. "On a weighted-average basis, the duty component on the raw materials works out to 12 per cent. The duty differential between the raw materials and LAB is quite steep and unwarranted", the Chamber said.

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