Financial Daily from THE HINDU group of publications
Thursday, Jan 20, 2005
Financial Daily from THE HINDU group of publications Thursday, Jan 20, 2005 |
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Industry & Economy
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Excise and Customs Bangalore chamber against excise duty on food processing sector Our Bureau
Bangalore , Jan. 19 IS it a tax on innovation? And could the levy be justified while offering the same product with a slight variation. The Bangalore Chamber of Commerce and Industry (BCIC) seems to be in dissonance with the Government's levy of 16 per cent ad valorem excise duty.
In its pre-Budget memorandum to the Union Finance Minister, Mr P. Chidambaram, it has sought the withdrawal of the levy as the food processing industry is still at its nascent stage. Classification of the products for levying duty could affect the growth of the sector, which has the potential to utilise the vast agricultural produce. All innovative products (branded) of the food processing industry tend to get classified under the residual entry, attracting excise at 16 per cent ad valorem. This discouraged innovation, the chamber said. The memorandum said milk is exempt from excise duty. But masala milk — mixture of edible nuts and other ingredients — is taxable at 16 per cent. Similarly, instant sambar and rasam powder attract the duty while the basic products are untouched by the levy. Sweet and savoury spreads used as a substitute for butter, cheese etc., are subjected to tax under this category though butter and cheese are not taxed. Mixed fat spreads containing more than 15 per cent milk fat and balance vegetable fat get taxed in this category, though milk and vegetable fat are exempt. Preparations consisting of tea or coffee and milk powder, sugar and any other added ingredients are taxed in this category though tea, coffee and milk are not. The chamber said "mixed condiments and mixed seasonings" should be specifically included in the exemption notification to avoid litigation. It added that suitable clarification should be issued for the past period, confirming inclusion of "mixed condiments and mixed seasonings", in the exemption.
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