The Hindu Business Line : Steel Ministry calls for ad-valorem duty on iron ore exports

New Delhi, Dec. 31 The Steel Ministry has advised the Finance Ministry to consider imposing export duty on iron ore on an ad-valorem basis in place of the current specific rate of customs duty from the next financial year.

Sources told Business Line that the Steel Ministry has sent a duty proposal for the consideration of the Finance Ministry for the Budget 2008-09. He also said that the move is seen as a way to curb exports of higher grades of iron ore.

“Since the imposition of an export duty of Rs 300 per tonne during the current year, the spot prices of iron ore have undergone a significant change. Further, we also have got to know that there have been cases wherein higher grades of iron ore (iron content in the ore is above 62 per cent) are being blended with lower grades to pay a lower export duty of Rs 50 per tonne. In order to address both the issues, we have written to the Finance Ministry to impose ad-valorem duty instead of the current specific rate of customs duty in the next Budget,” the source added.

The Steel Ministry has said that the ad-valorem duty should be at a level of around 10 to 15 per cent. It has also suggested that there should be arrangements to check and prevent mixing of the above ore containing higher iron content with that containing lower iron content.

The Finance Minister, Mr P. Chidambaram, in the 2007-08 Budget fixed the export duty on iron ore and concentrates at Rs 300 per tonne. This was, however, changed to a dual export duty structure for iron ore, where ore fines having iron content of up to 62 per cent would attract export duty of Rs 50 per tonne and fines with iron content higher than 62 per cent would continue to attract Rs 300 per tonne.

Iron ore pellets

“We have also urged the Finance Ministry to consider excluding iron ore pellets from the purview of levy of export duty which was introduced through the Finance Bill 2007-08,” the source said.

“We have also said that the export duty of Rs 2,000 per tonne that has been imposed on chrome ore and its concentrates must also be modified to ad-valorem rate at 15 to 20 per cent as the export price of it has gone up by nearly 100 per cent from the time the rate was introduced,” the source said.

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