The commerce ministry has made a case for the removal of various cesses including the Agricultural Produce Cess, the Agricultural and Processed Food Products and Export Development Authority (APEDA) cess, the textile cess and the export cess.
In addition to this, the ministry has also mooted that the Department of Revenue should adopt a 10-digit classification for trade to provide flexibility to the government to reduce tariffs on inputs not produced domestically but required either for export or for the domestic industry.
"This would also give India more options while negotiating tariff reductions at the World Trade Organisation and entering into regional and bilateral trade agreements with other countries," the ministry said in its Budget recommendations to the finance ministry.
The ministry has also recommended that the multiple incidence of education cess on sales made to the domestic tariff areas by the export oriented units (EOUs) should be reduced.
"While working out the rate of excise duty and its payment, the EOUs have to consider the education cess many times -- once while working out the rate of duty on imported goods and again at the time of DTA sale," the ministry said.
Similarly the cesses imposed under the Agricultural Produce Cess Act of 1940 and the Agricultural and Processed Food Products and Export Development Authority Cess Act of 1986 should be abolished in the interest of farmers and exporters.
The ministry has also mooted that Customs duty imposed under the Agricultural Produce Cess Act, 1940, levied at the rate of 0.5 per cent on export of agricultural items, should be removed.
The ministry has recommended exemption from Central Sales Tax (CST) on capital goods and raw materials on EOUs at par with the Special Economic Zones (SEZs).
The ministry's contention is that though CST is being refunded, the imposition of the tax leads to blocking of funds. The ministry has also sought CST exemption on inter-state purchase of goods by EOUs.