Industry & Economy
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Excise and Customs
Govt agrees to look into inverted duty structures
K.R. Srivats
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Inverted duty structure arises when the duty on the finished product is lower than the duty on raw materials.
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New Delhi
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July 12
The Finance Ministry has agreed to look into the three cases of inverted duty structure brought to the notice of the Finance Minister, Mr P. Chidambaram, by apex industry associations.
Sources said that representations on inverted duty structures have been made in the areas of rubber goods industry (tyres), catalysts and chemical consumables for fibre manufacture, and synthetic fibres and yarn.
Inverted duty structure arises when the duty on the finished product is lower than the duty on raw materials.
According to industry representation, while the basic Customs duty on tyres is 12.5 per cent, the duty on natural rubber is 20 per cent. In the case of catalysts and chemical consumables for fibre manufacture, the duty is 12.5 per cent against 10 per cent on fibres.
Synthetic fibres
Industry has also represented that inverted duty structure on synthetic fibres and yarn needs to be corrected by lowering excise duty on purified terephthalic acid/monothylene glycol to eight per cent.
Last week, Mr Chidambaram had confirmed that three cases of inverted duty structures had been brought to his notice at an interactive session with representatives of apex industry associations. He had, however, refused to specify or elaborate on the three cases.
The Minister had also highlighted that there were not too many cases of inverted duty structures, given that the duty levels have generally come down.
"As India further lowers Customs duties and enters into free trade agreements, there will be some cases of inverted structures," he added.
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