Par panel recommends hike in cess on cement

New Delhi, May 5: Even as the Union government provided some relief to cement producers by relaxing excise duty on cement, a parliamentary panel suggested hike in cess on cement to fund research and development (R&D) in the sector.

Development Council for Cement Industries (DCCI) and National Council for Cement and Building Materials (NCCBM) are two bodies engaged in R&D activities in the cement industry.

After having forced cement producers to hold their prices for one year in a bid to cool rising prices, the government, through an amendment in the Finance Bill for 2007-08 in Lok Sabha on May 3, provided some relief to them. It said specific excise duty of Rs 600 per tonne on cement sold at more than Rs 190 a bag of 50 kg would be replaced by an ad valorem duty of 12 per cent. This, Finance Minister P Chidambaram said, will reduce the incidence of excise duty by Rs 7 a bag.

Even though cement producers had agreed to hold their prices for a year, the government had allowed duty-free import of cement and also removed the counter-vailing duty on imports as anti-inflationary measures.

Whether cement producers would pass on the benefit of partial excise relief to consumer remains to be seen, the parliamentary standing committee on commerce, in its 81st report tabled in Lok Sabha on May 3, recommended hike in cess on cement to enable the department of commerce and industry to undertake R&D in a big way.

The panel had recommended the increase in cess last year, saying the present rate of paise 75 per tonne of cement was ridiculously low.

When the department claimed that funds allocated to DCCI were sufficient for the '' present level'' of R&D activities for the cementy industry, the parliamentary committee countered the contention of the department as untenable.

It said increase in cess can help claim increased budgetary allocation to enable the departement to undertake R&D activities in a big way. The committee has recommended re-examination of the issue of hike in cess on cement.

DCCI has been alloted a budget of Rs 3.50 crore in the current fiscal, while NCCBM, a cooperative research organisation, has got Rs 5 crore.

Defending increase in plan allocation to NCCBM from Rs 3.50 crore last year, the panel said they support its efforts in carrying out R&D activities and its proposal to upgrade building clinics at Ahmedabad, Bhuj, Rajkot, Bhubaneswar and setting up of a testing facility at Guwahati for north-east region.

UNI