The Hindu Business Line : `Rationalising duty rates for alcohol sector must have scientific basis'

THE Ministry of Food Processing Industry today asked the All-India Distillers' Association (AIDA), a representative body of distillers' at national level, to work out an economic and scientific basis in support of their demands for any changes in duty rates.

"Taxation is an area that we have to look at scientifically and not leave it to any one individual sitting in revenue department or any other ministry. There has to be some logic or scientific reasoning on how much tax or cess should be levied on a commodity or item," Mr D.P. Singh, Secretary, Food Processing Ministry, said in his address at the 38th Annual General Meeting of AIDA.

He felt that the decision on tax rates should not be a "free for all" exercise as was the situation now.

AIDA President, Mr Devin Narang, had sought a reduction in central excise duty on molasses (a basic feedstock for production of alcohol) from the existing level of Rs 750 per tonne to Rs 500 per tonne.

Mr Narang also highlighted that the Government had in the Union Budget for 2005-06 hiked the excise duty on molasses from Rs 500 per tonne to Rs 1,000 per tonne but later lowered it to Rs 750 per tonne on account of the protests of domestic alcohol industry.

Responding to the AIDA President's request for further lowering of excise duty on molasses, Mr Singh said that he did not see any logic behind any of the figures (rates) mentioned by the AIDA President.

"Let us have a systematic and scientific rationale in support of any tax related changes," he said.

Mr Singh also urged the alcohol industry to "realise the scarcity value of molasses" by way of value addition in chemical and perfumery segments.

Besides lowering of excise duty on molasses, AIDA also sought retention of present import duty structure on alcoholic beverages.

Further, the Association has also demanded that alcoholic beverages industry be exempted from service tax in view of the "special circumstances" of the industry.

The service tax paid by the alcoholic beverages industry cannot be set off against its excise duty payments as the latter is payable to the State Governments.

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