Hegde Seeks Rethink On 8% Levy
Union commerce minister Rama Krishna Hegde has taken up the issue of the 8 per cent additional customs duty with the finance minister on behalf of the exporters who are arguing that this will adversely hit them.
The finance minister, according to sources, is reported to have assured the commerce minister that he will review the duty and its impact on exporters soon.
It is argued by exporters that this duty will lead to negative growth of exports. Federation of Indian Export Organisations (FIEO) president Ramu S Deora has pointed out that this additional duty works out to a burden of around 12.75 per cent on imports for export production.
A further burden has been placed on exporters through the fluctuation of the rupee, which it is argued leads to a burden of around 11 per cent. Thus, the total burden will work out to around 23 per cent. The Delhi Exporter's association has also opposed the levy and sought an exemption for exports.
It is, therefore, argued that the ministry should exempt imports wherever customs duty is paid from the duty entitlement passbook scheme and the goods cleared under special import license (SIL).
Also, the FIEO has sought exemption from the restriction of Modvat credit effected in this Budget. Exporters argue that exports should be reimbursed by way of duty drawback.
Exporters feel that it was not very clear whether all inputs required by exporters were exempt from this levy. The budget has, however, said that this new levy will not apply to crude oil, newsprint, capital goods under a special tariff regime or goods which are subjected to additional customs duties of excise in lieu of sales tax, gold and silver imported by passengers or other nominated agencies and life saving drugs that are free from customs duties.
It also said that the levy will also not apply to goods which are currently exempt both from basic and additional customs duties, goods imported for subsequent trading and inputs imported under export promotion schemes. Coal mining, crude petroleum, fertiliser, power generation, specified telecom equipment will also be exempted.
It had also said that no drawback of special additional duty of customs will be admissible.