The Hindu Business Line : FIMI calls for higher drawback rate on zinc

New Delhi, Jan. 22 The Federation of Indian Mineral Industries (FIMI) has asked the Finance Ministry to consider increasing the duty draw-back rate on zinc and be brought on par with copper rods at 2.2 per cent.

In a pre-Budget memorandum submitted to the Finance Ministry FIMI has also said that the cap on duty draw-back rate on zinc exports needs to be rationalised and be brought in line with the international London Metal Exchange (LME) prices.

The duty draw-back rate on zinc was brought down from 5 per cent to 1.6 per cent in 2006-07 and further to 1.1 per cent in 2007-08, whereas the rate on copper rods continues to be 2.2 per cent.

“Instead of restricting the draw-back rate in the form of rupees per tonne, it can be stated as a function of LME prices because the Free on Board (f.o.b.) realisation of zinc metal is LME price driven,” FIMI said in the letter to Finance Ministry.

It also said that since all customs rates and practices are guided by the LME prices for non-ferrous metals, the suggested correction will be a corrective step in removing inadvertent anomaly in valuation and cap norms.

FIMI has also sought the import duty on zinc and lead be increased from the present 5 per cent to 7.5 per cent.

“The current capacity expansions that various domestic companies are undertaking for zinc as well as lead will see India becoming a net exporter of zinc during 2008 financial year. However with huge quantities of zinc and lead still being imported, to safeguard the interest of domestic producers, the import duty on zinc and lead should be increased,” the Federation has said.

It also said that the excise duty on zinc and lead must be reduced from 16 per cent to 8 per cent.

“Value Added Tax (VAT) and excise duty on dispatches from depots in case deemed exports must also be set off,” the memorandum has stated.

According to FIMI, the supply from depots is more preferable as it gives flexibility for supply and proximity with the customers’ works.

However, the customers do not get the set off against VAT and excise duty and hence supply cannot be made from the depots.