Steel makers in Punjab has termed the excise duty demand raised by the central excise department as unjustified and has sought intervention of the chairman of Central Board of Excise and Customs in the matter.
Peeved over the manner under which show cause notices are issued to several steel manufacturing firms at Khanna in Ludhiana, the Confederation of Indian Steel Producers Association (CISPA) has even charged the central excise department officials of adopting "pick and choose" approach.
"The department has indulged in pick and choose method in issuing show cause notices to firms ... had the (excise) officials honest in their approach, notices would have been served upon all the units as the industry as a whole follows cash discount practice and claims burning losses," CISPA Chairman Vinod Vashisht said.
According to CISPA, the department has raised excise duty demand over Rs 5 crore (Rs 50 million) by issuing notices to several steel rolling mills in Punjab after auditing their accounts.
The excise department has slapped demand notices on steel units after raising objection to industrys 'cash discount' practice and quantum of burning loss being shown in production.
The audit wing of the department has demanded excise duty from steel rolling mills be paid on the cash discount being availed from the input supplier.
"This is an old practice which is being followed in which we get discount from our suppliers on payment of input and we also offer discount to our buyers on finished product. There is no way where the excise department suffers any loss," Vashisht said.
Steel rolling
Industry claimed that central excise department (Ludhiana) had already decided in a similar case earlier that duty was not payable on such discounts.
Describing the approach of the department "arbitrary" in issuing notices, the industry alleged that the excise department raised objections in only few cases while the whole industry follows the cash discount practice.
Steel makers also pointed out that burning loss in producing 'MS Flat-pipe', used in construction sector, varies from 3 per cent to 7 per cent and it has also been agreed by Joint Plant Committee of the Ministry of Steel.
However, tax sleuths contended that the burning loss could not go beyond 2 per cent of total production, thus demanding duty on excess loss claimed by industry.
Seeking the intervention of Sumit Dutt Majumdar, Chairman of CBEC, industry has sought that the excise department should withdraw its demand notices, causing harassment to steel makers.
CISPA comprises secondary steel manufacturers and associations such as All India Steel Re-rollers Association, All India Induction Furnace Association and Cold Steel Manufacturers Association.
Punjab is a major manufacturer of secondary steel in the country and it has 375 steel rolling mills located at Khanna and Mandi Gobindgarh with an average production of 15,000 tonne of steel per day.
States steel sector is a major contributor of tax revenue as central excise department collects duty to the tune of about Rs 400 crore (Rs 4 million) per annum from iron and steel.
