Tobacco Institute of India (TII) chairman Ram Poddar told The Financial Express that average sales of cigarette fell over six per cent in terms of volume in July-December 1998 over the April-June period. The industry expects the excise duty collection to be in the region of Rs 4,900 crore in the current fiscal than the budgeted Rs 5,540 crore, he added.

The industry has urged the Government to maintain the existing excise structure in the forthcoming Budget. "The industry has suffered due to the excise duty hike last year. If the duty cannot be reduced in the Budget, at least it should be maintained at last year's level", said Poddar.

In the last Budget, there was a 9.5 per cent average increase in excise duty on cigarettes following which the manufacturers hiked up the prices by 10 per cent on the average."The price rise has been in line with the increase in excise duty", said Poddar.

The industry has also called for continuation of the specific duty structure. The specific duty structure is more effective than ad valorem as it enhances collections, besides facilitating simple and litigation-free administration.Industry insiders say that as consumers are slowly moving from cigarettes to other form of tobacco, the Government should encourage filtration.

Cigarettes, interestingly, have been the favourite items for excise duty increases in most Budgets because of comparative price inelasticity of demand. Cigarettes are also viewed as a luxury good as well as a health hazard.

The Tobacco Institute has called for restoration of the single point taxation. State levies should be discouraged to facilitate free movement of goods between states and uniform prices throughout the country, TII added.

The industry feels that maintenance of excise duties at the current levels will reverse the decline in the tax basevolume and correct diminishing returns.

The industry has emphasised that moderate taxation and expansion of tax base will also provide better livelihood to farmers, besides boosting exports.

Almost 50 per cent of cigarette tobacco produced in the country is exported.Poddar said a stable excise policy will help domestic cigarette industry to generate resources and increase its ability to invest in overseas markets for value-added exports. In last year's Budget, the increase in excise for cigarettes (per 1000 sticks) was Rs 90 to Rs 100 for non-filter cigarettes not exceeding 60 mm in length; from Rs 350 to Rs 370 for non-filter cigarettes exceeding 60 mm in length but not exceeding 70 mm; from Rs 500 to Rs 550 for filter cigarettes not exceeding 70 mm in length; from Rs 820 to Rs 900 for filter cigarettes exceeding 70 mm but not exceeding 75 mm; from Rs 1100 to Rs 1200 for filter cigarettes exceeding 75 mm but not exceeding 85 mm; from Rs 1350 to Rs 1470 for filter cigarettes exceeding 85 mm in length.