The Hindu Business Line : Tyre makers seek waiver of rubber cess

Kochi, May 9 With 25 per cent rise in the prices of natural rubber in the last six months, the Automotive Tyre Manufacturers Association (ATMA) has urged the Union Ministry of Commerce and Industry for waiver or reduction of rubber cess to ease the financial burden of domestic tyre companies.

Currently, natural rubber prices are ruling at a historic high of over Rs 116.50 a kg. The average price of natural rubber in October last year was Rs 95 a kg. The charging of cess from the consuming interests is only adding to the rising input costs especially for the tyre sector, ATMA said in a statement issued here.

The rubber cess is being charged from the consumers, understandably, because it was not practical to collect the cess from over 10 lakh natural rubber growers, a majority being small, it said.

“At such high prices, there is no justification for natural rubber growing interests to be supported by any subsidy/cess/surcharge. Moreover, since the cess amount is paid by the producing interests in case of other products/commodities, the provision of charging cess to the natural rubber consuming interests is grossly inequitable,” said Mr Raghupati Singhania, Chairman, ATMA.

A cess amount of Rs 1.50 a kg of natural rubber is charged from the natural rubber consuming interests (tyre and non-tyre). With progressively higher consumption of natural rubber over the years, the cess collection is estimated to be over Rs 115 crore during the year 2007-08 compared with Rs 82 crore in 2002-03.

According to ATMA, an increase of Re 1 a kg on natural rubber adds to an incremental burden of Rs 49 crore on the tyre sector, taking into account the natural rubber consumption of 4.91 lakh tonnes by the sector.

ATMA has asked for complete waiver/consumption from payment of the rubber cess or reduction in quantum of the cess to a notional amount charged from the natural rubber consuming interests.

Alternatively, the rubber consuming interests should be allowed to take full Cenvat on the total cess amount paid against R&D expenses, the tyre body has suggested. Natural rubber itself accounts for 42 per cent of raw material cost of the tyre industry.

According to final estimates given by the Rubber Board, out of the total rubber consumption of 8,60,000 tonnes in 2007-08, tyre sector accounted for 4,91,500 tonnes (57 per cent).

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