ACMA Demands Nil Import Duty on Steel and Aluminium Alloys

Automotive Component Manufacturers Association of India ( ACMA )) has demanded nil import duty on steel and aluminium alloys. Steel and aluminium alloys account for 60% of the raw material costs in the auto component sector. The duty reduction in steel and aluminium alloys would mitigate the inverted duty structure caused by FTAs. This would also help the Indian auto industry access such raw material at international market prices. China, which is a major threat, accords lower than LME prices on both steel and aluminium for manufacturers for value added products.

Apart from this it has also suggested finance minister on the following points:

No interest on differential duty due to price revision subsequent to the removal of goods: In the auto component industry, it is usual that the prices are first fixed provisionally and subsequently after protracted negotiations, the final prices are mutually decided between the supplier and the customer. Supplementary invoices are raised after the final price is decided which could take between three months to one year. Currently, the Excise Department levies interest on the duty payable on the supplementary invoices raised due to revision of price subsequent to the removal of goods. However, considering that the aforesaid is a standard business practice of auto component industry, no such interest should be levied on differential Excise Duty. Further, the aforesaid interest paid by the auto component manufacturers on supplementary invoice is not eligible for CENVAT Credit and hence adds to the cost of the product.

100% CENVAT Credit on Capital Goods: CENVAT Credit Rules were announced in 2004 and allow for only 50% CENVAT credit on capital goods in year of purchase, balance 50% can be availed in subsequent year. This causes cash flow problems and accounts need to be maintained to keep track of credit availed. It is recommended that CENVAT credit Rules may be amended to permit availing 100% of CENVAT credit immediately on receipt of goods.