The Hindu Business Line : Rationalise peak duty rate: CII

In its pre-budget memorandum, the chamber has argued that despite the peak rate having been lowered to 12.5 per cent since March 1, several product categories continue to attract rates ranging from 15 per cent to 150 per cent. There are many commodities whose duty has not been reduced during the last five years, according to the chamber.

On the peak duty rate itself, the chamber has urged the Government to follow the recommendations of the Kelkar Task Force on indirect taxes and further reduce the peak rate from 12.5 per cent to 10 per cent.

The chamber has said that this must be accompanied by internal reforms such as reduction of transaction cost due to high infrastructure costs, power cost, cargo dwell time in ports or airports and also reduction of Central Sales Tax from four per cent to two per cent from April 1 next year.

While reducing the peak rate of customs duty, the chamber has recommended that there should be corresponding reduction of duty rates on intermediates and raw materials to maintain two- or three-tier duty structure. For instance, reduction of customs duty on fuel oils such as furnace oil from 10 per cent to five per cent on non-ferrous metals and scrap of non-ferrous metals from 7.5 per cent to five per cent and two per cent respectively.

In order to make Indian industry competitive, CII has emphasised removal of zero per cent customs duty except for life-saving drugs and security related items, and those agreed through multilateral and bilateral agreements.

The chamber has also urged the Government to remove anomalies in the customs duty structure where the inputs to a product attract higher duty than the product itself. Customs duty, for instance, on set-top boxes used in cable transmission system is nil whereas its imported inputs attract a duty of five per cent or 12.5 per cent.

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