FICCI says customs duty of natural rubber needs to be revisited for tyre industry: Budget 2012

NEW DELHI: While the Customs Duty rate on tyres and the peak rate of Customs Duty on all non agricultural products were progressively reduced in the Union Budgets during the last few years, in the case of Natural Rubber the rate of 20% Customs Duty has remained unchanged for over a decade. 

This has resulted in a serious anomaly of Customs Duty on raw-material (Natural Rubber@20%) being higher than the Customs Duty on finished product (Tyres @10%). 

FICCI in its pre-budget memorandum has said that it is imperative that Customs duty of principal Raw material of tyre industry i.e. Natural Rubber is revisited and reduced from 20% to a suggested level of 7.5% to make duty paid imports viable. 

Or else, Increase in Customs Duty on tyres - from current 10% to suggested 20% to provide a level playing field to the domestic tyre industry vis-a-vis cheaper tyre imports. 

Following recommendations are provided by FICCI for the tyre industry 

> For waiver of Customs Duty FICCI would request on all raw materials not manufactured domestically. 

> Clarification should be appropriate issued to the effect that tubes and flaps are "inputs" being "accessories" for tyres and thereby Rule 3(5) of the CENVAT Rules 2004 and Rule 16 of the Central Excise Rules 2002 are not applicable being revenue neutral. 

> To overcome problem with respect to exports of tubes / flaps, it is suggested to include 'Tyre Manufacturer' as a class of Exporters under Rule 20 of Central Excise Rules to allow them procure tubes and flaps without payment of duty for exports.