Faced with protests from traders, the Department of Customs has rationalised tariff on brass scrap imports by 20.33 per cent effective January 1, 2009.

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Tariff is fixed by the customs frequently which is influenced by the price movements of base metals on the benchmark London Metal Exchange (LME). It has been brought down to $3,252 from the previous figure of $4,082 per tonne a fortnight ago.

But, it failed to cheer importers as they have been demanding that duty be levied on the basis of the value of imports instead of fixed tariffs for a given period.
 

“Duty should be levied on transaction value or the value of shipment instead of fixed tariff irrespective of value of metals,” said Rohit Shah, director of 50-year old Bombay Metal Exchange, the apex body of base metals traders in India.

Currently, the Department of Customs under the aegis of the Ministry of Commerce, fixes tariff on regular intervals depending upon virgin metal prices on the benchmark London Metal Exchange (LME). This, according to brass scrap importers, has some anomalies that take tariffs over 125 per cent higher than the virgin copper price on the LME.

For example, tariff for brass scrap imports was fixed for the second fortnight of December at $4,082 per tonne which comes to around 127.24 per cent of the average LME copper price for the month.

Virgin brass, an alloy of copper (60 per cent) and zinc (40 per cent), is quoted between $1,800-2,000 per tonne in the international market.

“Scrap is always sold at a discount of virgin metal. But, in this case, scrap costs higher than the virgin metal which, in our recent meeting with the prime minister, we demanded to bring in line with transaction value,” said Shah.

India consumes about 100,000-150,000 tonnes of brass of which about 70 per cent is imported. Largely dominated by unorganised sector players, brass is used in handicraft and arts which have good export market, mainly from the US and European nations.

Brassware units are dispersed as household industry across the country, largely in Gujarat, Maharashtra and Uttar Pradesh. According to estimates, about 50,000 families are depended solely brassware articles manufacturing which includes antique pieces, statues and utensils.

Considering 10 per cent loss in melting, at least 5 per cent value addition and minimum 5 per cent profit as a normal trade practice, the import of scrap becomes at least 50 per cent costlier than the virgin metal.

Ideally, scrap importers should be offered some incentives to keep the inherent business alive. If we are not protected, then the industry would collapse and more than 250,000 jobs would be lost in the industry, Shah added.

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