Cars above 1,500 cc engine capacity but below 2,000 cc capacity will attract specific duty of Rs 15,000 per car and cars above 2,000 cc engine capacity will attract specific duty of Rs 20,000 per car. The excise duty on small cars i.e. cars below 1,500 cc engine capacity remains unchanged.

The hike in excise duty comes weeks after some car manufacturers had hiked the prices of cars due to increase in the prices of inputs — especially steel. Maruti Suzuki increased prices of its models from Rs 1,000 to Rs 18,000 on May 20. Two days later, Hyundai announced a price rise of 0.75 per cent to 2 per cent.

Hyundai vehicles became costlier by Rs 2,000 to Rs 20,000 from June 1. Tata Motors followed suit last week by announcing a 1 to 2 per cent hike in prices. Its multi utility vehicles became costlier by 2 to 3 per cent. Lower demand, especially in the monsoon months, may, however, force manufacturers to come out with promotional measures and attractive discounts.

The steel sector also got special attention last week. Export duty was fully exempted on flat rolled products of iron or non-alloy steel, hot rolled, not clad, plated or coated, flat rolled products of iron or non-alloy steel, cold rolled (cold-reduced), not clad, plated or coated, flat rolled products of iron or non-alloy steel, plated or coated with zinc and tubes and pipes, of iron or steel. The rate of export duty on long products such as bars and rods; angles, shapes and sections and wire was hiked from 10 per cent to 15 per cent.

The Government rescinded the notification regarding export duty on iron ore fines and imposed uniform export duty of 15 per cent on iron ore irrespective of iron content and also on all sorts of iron ore and concentrates. The iron ore exporters from Goa will now have to make suitable representations to the finance ministry to enable them keep their export commitments.

The duty revisions might have everything to do with curbing price rise of steel items and suitable relaxation that lower demand during the monsoon months warrant but the overall impression is that the steps are taken keeping in view the need for party funds in the run up to the impending elections — expected this year end, rather than mid-2009. The Government needs to explain its moves more cogently to dispel such impressions.

Area based excise duty exemption notifications have been amended to allow refund of 75 per cent of the duty payable for iron & steel, cement, starch and coco-butter, when these are manufactured starting from specified inputs in the same factory. The time limit for filing application for revision of value addition rates have been revised and special provisions have been made for new units.

The Director General of Foreign Trade has revised the forms for claiming deemed exports benefits and amended the documentation requirements. Now, the copies of returns and invoices duly certified by the central excise authorities will be required for claiming benefits under most categories of deemed exports, which may mean better safeguards but higher transaction costs.

tncr@sify.com