Indian Tea Association (ITA) chairman Vinay Goenka told PTI that hitherto, bulk tea was attracting zero duty and the decision to impose the levy should have been referred to the expert committee as suggested by the finance minister himself in the budget.

Claiming that the duty on bulk tea was the highest central levy ever imposed on tea industry, the ITA chairman contended that this was not desirable as tea was considered to be common man's drink.

According to him, the duty would directly add to the costs of production, which were currently under severe strain. Furthermore, with the tea marketing control order in vogue, it was mandatory for producers to sell 75 per cent of teas through auction centres.

Goenka added that the excise burden would be significant and the tea companies would have to bearit. In addition, with low levels of prices currently prevailing, the imposition of the duty would erode profitability, thereby retarding growth.

Commenting upon the importance of tea in the north-eastern region of the country, Goenka said that if the tea industry was affected, the axe may fall on the welfare activities undertaken in remote and rural areas.

In this context, the ITA chairman urged finance minister Yashwant Sinha to reconsider the excise duty on bulk tea and withdraw it immediately.

On the other contentious issue, Section 80 HHC of the Income-tax Act, the ITA chairman was of the opinion that the budget had not addressed the problems associated with the composite nature of income of the tea producers.

He said that a provision should be incorporated in the section clarifying that 100 per cent deduction be allowed in respect of export profits of tea companies.

The ITA chief said that the budget did not provide any succour to the tea producer-exporters, the full benefit under Section 80HHC. In addition, this would also hit the industry's efforts in regaining the export markets which were lost after the breakup of the erstwhile USSR.