Government levies 5 per cent import duty on steel products
18 Nov 2008
The government has imposed an ad valorem duty of 5 per cent on all imports of pig iron as also semi-finished, flat and long steel products.
The move follows industry demand for a 10 per cent import duty to discourage imports and provide support to falling domestic prices. Steel producers claim that cheaper steel imports have led to sagging sales and a rise in inventories.
''In the wake of the recent fall in the international prices of commodities and with a view to safeguard the interests of domestic producers, government has carried out certain changes in the customs duty rates,'' a government press release said.
The government withdrew the full exemption from customs duty granted earlier on specified iron and steel items such as pig iron, spiegeleisen, semi-finished products, flat products and long products.
Consequently, they will be subject to a basic customs duty of 5 per cent ad valorem, the release said.
Steel Authority of India (SAIL) and JSW have reported a 25-30 per cent fall in sales. This has also forced many producers to cut production by as much.
At present, both iron and steel items like pig iron, semi finished, flat and long steel along with crude soybean oil enjoy complete duty exemption.
Industry experts, however, do not expect the import duty to provide any relief against cheaper imports.
Chinese and Ukrainian steel producers are offering steel at a price of $430-440 a tonne (FOB), which translates to Rs21,300-21,800 a tonne at current rupee-dollar exchange rates. Including clearing and inland freight charges, it may cost around Rs23,300-23,800 a tonne.
A five per cent duty may push this to around 24,300-24,800 a tonne, still far below the domestic prices of Rs34,000 a tonne. This would still leave a imported steel cheaper by around Rs10,000 a tonne.
Domestic steel producers, meanwhile, had taken a price cut of 12-14 per cent, or Rs5,000-5,500 a tonne, earlier this month, to boost sales. However, the situation has not improved so far and producers might have to go for another round of price cut.
The government also extended the time limit for filing refund claims for refund-based service tax exemption schemes on taxable services attributable to exports from 60 days to six months.
It also simplified documentation required for claiming refund in respect of technical testing and analysis service.
The government also lifted customs duty exemption to crude soyabean oil and subjected to a basic customs duty of 20 per cent ad valorem. There is no change in the import duty on refined soyabean oil.
These changes come into effect on the 18 November, a customs notification said.
