Cement stocks gain on hopes of rationalization of excise duty structure

Three Cement stocks rose by 1.2% to 1.33% at 13:40 IST on BSE amid expectations that the government will rationalize excise duty structure for the cement sector in upcoming Union Budget 2015-16.

Meanwhile, the S&P BSE Sensex was up 52.81 points or 0.18% at 29,057.47.

Among cement stocks, ACC (up 1.33%), Ambuja Cements (up 1.2%), and UltraTech Cement (up 1.33%), gained.

Shree Cement dropped 0.33%.

Grasim Industries declined 0.09%. Grasim has exposure to the cement sector through its subsidiary UltraTech Cement.

Finance Minister Arun Jaitley presents Union Budget 2015-16 in the parliament on Saturday, 28 February 2015. Cement is as much an essential item required for construction activities as steel but both products are treated differently when it comes to the taxation. Cement, a high volume low-value product, is highly taxed, even more than the luxury items at 60% of ex-factory price in India. Moreover, the present excise duty structure on cement is complicated with a combination of ad valorem duty and specific duty. At present, excise duty is levied on cement at the rate of 12% + Rs 120 per metric tonne. At present, most of the varieties of cement are subjected to excise duty on the basis of the maximum retail price (MRP) printed on the bags.

Presently, import of cement into India is freely allowed without paying basic customs duty. However, all the major inputs for manufacturing cement such as limestone, gypsum, pet coke, packing bags etc. attract customs duty, bringing disadvantage to cement industry. The cement industry wants imposition of basic customs duty on imported cement to provide level playing field for domestic companies.

Industry has recommended Government to scrap import duty on pet coke, and other input materials used in production of cement to remove the aberration in the structure of duties existing in cement imports visvis its inputs. It is also suggested that Cement be stipulated as "Declared Goods" under Section 14 of Central Sales Tax Act so that it is put on an equal footing with other core sector goods like coal and steel.

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