Plastic manufacturers seek customs duty cut

Reduction in levy will make the industry competitive, says association

The Gujarat State Plastic Manufacturers' Association has urged the Union finance minister P Chidambaram to reduce customs duty on imports to 10 per cent.

The existing duty is 20-25 per cent, depending on the category of products imported by manufacturers.

The association, in a representation to the finance minister, also demanded exempting various plastic products, which are of daily use, from Cenvat.

"Customs duty on imports should be reduced to 10 per cent. As per WTO norms, the government has to bring down customs duty to 10 per cent by 2005. We have requested the finance minister to look into this. Many Asian countries, where polymers are produced, levy only 5-15 per cent duty. Because of this, they have an edge over Indian plastic manufacturers," said Amrit Patel, president of the association.

Patel said once the duty is reduced to 10 per cent, import cost of polymer will be reasonable and local manufacturers will have to bring down prices. Domestic prices could be stabilised to that extent through this step, he said.

The association has also requested the minister to exempt plastic articles of daily use such as jugs, mugs, soap cases and baskets from Cenvat.

"As 16 per cent Cenvat is paid on polymers, exempting these units from excise duty should be considered. However, any industrial unit interested in entering the Cenvat net should be encouraged. It should avail of small scale industry concession up to Rs one crore. We also demand a revision in the existing central sales tax structure as the government, while declaring the VAT policy, has declared that the tax will be phased out in due course. As various states are now preparing for VAT, the central government should take immediate corrective steps to reduce the tax from the existing four per cent to zero," said Patel.

The association, in a memorandum, also asked the finance ministry to revise various rules related to central excise.

"At present, all plastic items are incorporated in the list of small-scale unit exemption. However, polypropylene tapes have been kept outside the purview of this exemption. Polypropylene tapes are generally not marketable but are used for captive consumption for manufacture of fabrics and sacks. They are not getting exemption from the beginning because of the existing central excise rules. It is suggested that Polypropylene tapes may also be included in the specified list of exemption," the representation said.

The plastic manufacturers also demanded that the eight per cent service tax be brought down to five per cent.

The association has over 2,000 members.