Govt unlikely to roll back dual excise duty on cement

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New Delhi, Apr 26: The government is unlikely to roll back the dual excise duty structure on cement, proposed in Budget for 2007-08. While keeping the possibility open for further talks with manufacturers, government sources said unless companies suggest another alternative, the proposed duty structure was likely to continue. “It is up to the cement industry to approach us with another model of taxation,” a source connected with the negotiations said.

Two earlier meetings between representatives of the cement industry and the finance minister have proved to be inconclusive.

North Block is of the view that while there is a certain demand-supply imbalance in the cement sector, it can be addressed to a certain extent by increasing production capacity. But the sharp rise in retail prices of cement over the last year and half cannot be justified, sources said.

About 156 million tonne cement was consumed in the country last fiscal, and with a booming construction sector, the consumption is likely to increase this year as well. According to an official statement, the average price has risen from Rs 165 per 50 kg bag in January 2006 to Rs 209 in February 2007.

Worried by this trend, finance minister P Chidambaram in the Budget has proposed a dual excise duty structure for cement to “reward cement manufacturers who hold the price line and tax those who do not.”

He has, accordingly, proposed dual duties on cement by hiking it to Rs 600 a tonne from Rs 400 if a 50 kg bag is sold higher than Rs 190 and reducing it to Rs 350 if it is sold up to Rs 190.