The Hindu Business Line : Pipe units fear curbs on excise waiver

Manufacturers of pipes, both cast iron and ductile iron, supplying to multi-storage water supply projects of various State water Boards, are in a bind. This follows a circular by the Tax Research Unit (under the Department of Revenue) with regard to full excise duty exemption for such items.

It is feared that the circular could be restricting the excise exemption to pipes only up to the first storage point.

Senior members of the Ductile Iron Pipes & Castings Manufacturers Association said the department, through a more than three year old notification, had exempted all pipes needed for delivery of water from its source to the treatment plant and from there to the storage facility from payment of excise.

Govt clarification

Industry sources say that the government, fearing likely misuse of the facility by manufacturers, has issued a clarificatory circular to all excise commissionerates that "once the water is stored, no excise exemption would be available beyond the first storage point."

Industry players, based on legal opinion, point out that the language of the notification does not restrict the scope of excise exemption (provided to pipes used) only up to any particular storage point.

Said one top lawyer: "As per the said Notification, the benefit of excise exemption is admissible in respect of pipes intended to be used in a water supply project till the last storage point from where water is finally supplied to the consumption point."

Availability of excise relief is subject to the certification by the Collector/District Magistrate/Deputy Commissioner of the district in which the water treatment plant is to be set up.

A trade notice issued some time ago by the Commissioner of Central Excise, Ahmedabad, prescribes the format in which the certificate required under the notification needs to be furnished to avail exemption from excise duty.

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