The Hindu Business Line : ‘Haldia port computing iron ore export tax based on Chinese prices’

Mr Rahul N. Baldota, President, Federation of Indian Mineral Industries (right) and Mr R.S. Sharma, Secretary General, at a press conference in the Capital on Thursday. —

Our Bureau

New Delhi, Aug 7

The Federation of Indian Mineral Industries (FIMI) on Thursday said that custom officials are charging export tax on iron ore based on reference prices provided by Chinese authorities and not taking into consideration the actual bills raised by the Indian companies. This, according to FIMI, has started at the Haldia port from the end of July and has not yet been reported from other ports.

Add valorem duty

The development follows imposition of 15 per cent ad valorem export duty on iron ore on June 13 this year replacing the earlier fixed duty based on tonnage.

According to the FIMI President, Mr Rahul Baldota, the price varies from transaction to transaction and there is no fixed price.

“Officials at the Haldia port are making the exporters pay more than what is legitimate. The ad valorem 15 per cent tax should be on the value of the transaction based on the bill raised by the company but the customs officials at the Haldia port are taking into consideration a reference price provided by the Chinese authorities which is much higher than the real price at which ore is being sold and consequently the tax amount is becoming higher,” he said.

“This problem is not there in other ports but we gather that Vizag port too may follow suit,” he said.

“Instead of going by the prices provided by the Chinese, the customs department could go by the average of the actual bills raised by the companies to arrive at some benchmark price on which the duty would be levied,” he said.

ROYALTY

With the Government all set to introduce ad valorem base royalty for mining iron ore, the FIMI today cautioned that unless procedural details are not put in place thoroughly, it would lead to difficulties in implementation.

“There would be similar problems as is happening in case of ad valorem export duty. Moreover, higher royalty rates would make exports even more unviable,” he said.

EXPORTS

Following the introduction of new 15 per cent ad valorem duty, export of iron ore has come down by around 15-20 per cent, he said.

“Since the duty was introduced in the middle of June, the real impact could be felt only for the full month of July. Official figures fore July will be out next week but it appears that volumes have come down by 15-20 per cent,” he said.

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