MUMBAI (Commoditiescontrol) - In an attemt to safegaurd local manufacturers interest, the Finance Ministry has issued notifications that restrict low duty benefit only for them.
Trade observers have pointed out that not only the move would put domestic manufacturers at an advantageiou position, but it would also ensure differential duty regime.
The Central Board of Excise and Custom (CBEC), has issued three new notifications dated July 17, towards thie above effect.
The notification suggest that imported items will attract 12.5 per cent duty, while domestic manufacturers will be required to pay 2 per cent duty if they do not avail CENVAT (Central Value Added Tax) credit on taxes paid on inputs.
This move would extend benefits to the domestic textile industry and mobile phones, beside others.
The new notifications suggest only manufacturers can benefit from the “CENVAT not availed” condition. Mere buyers are specifically excluded.
Further, the excise on inputs going into manufacturing must be paid in cash. This will override the concept of ‘deeming fiction’.
Experts believe the apex court verdict disturbed the system which used to give protection up to 11.5 per cent to goods manufactured in India who could easily forego low incidence of input tax to get the benefit of virtual zero excise on the final goods.
At the same time, duty collection was also affected despite higher imports of HR coils, fertilisers and mobile phones.
(By Commoditiescontrol Bureau; +91-22-40015533)
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