Punjab steel makers protest tax demand by central excise department

Category: International Trade Sub-category: Customs
Document type: news

02-Sept-2011 | 19:15 IST | Edited by: Abhishek Sikdar

Steel manufacturers in Punjab has hailed the excise duty demand raised by the Central Board of Excise and Customs(CBEC) as unfair alleging the latter of using "pick and choose" approach by not slapping the charges uniformly in the industry and has sought intervention of the chairman of in the matter.

According to Confederation of Indian Steel Producers Association (CISPA), the CBEC has raised excise duty demand over Rs 5 crore by issuing notices to several steel rolling mills in Punjab, raising objection to industry's 'cash discount' practice and quantum of burning loss being shown in production. Under this practice, the steel mills get cash discount on input purchases on which the excise duty is imposed and passes on the discount to end users. The local industry thus alleged that the excise department raised objections in only few cases while the whole industry follows the cash discount practice. Furthermore it had previously been agreed upon that no such duty would be imposed on the cash discount.

Steel makers further claimed that burning loss in producing 'MS Flat-pipe', used in construction sector, varies from 3 per cent to 7 per cent and it was also been agreed by Joint Plant Committee of the Ministry of Steel. However, tax officials contended that the burning loss could not go beyond 2 per cent of total production, thus demanding duty on excess loss claimed by industry. CISPA constitutes secondary steel manufacturers and associations such as All India Steel Re-rollers Association, All India Induction Furnace Association and Cold Steel Manufacturers Association. Punjab is a significant manufacturer of secondary steel in the country and has 375 steel rolling mills located at Khanna and Mandi Gobindgarh.

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Central Board of Excise and Customs (CBEC) is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with the tasks of formulation of policy concerning levy and collection of Customs and Central Excise duties, prevention of smuggling and administration of matters relating to Customs, Central Excise and Narcotics to the extent under CBEC's purview.