Home > Cement, Coal, Infrastructure > Rationalisation of cement duty structure

Rationalisation of cement duty structure

“As a measure of relief to cement industry, I propose to replace the existing excise duty rates with composite rates having an ad valorem and specific component with some rationalisation. The basic customs duty on two critical raw materials of this industry viz petcoke and gypsum is proposed to be reduced to 2.5 %,” the Finance Minister said in his speech on the Union Budget 2011-12.

Central excise duty rates on cement and cement clinker are being revised as follows:
Existing duty rate New duty rate
Mini Cement Plant:
All goods cleared in packaged form,-
(i) of retail sale price not exceeding Rs. 190 per 50 kg bag or of per tonne equivalent retail sale price not exceeding Rs. 3800; Rs 185 per tonne 10% ad valorem
(ii) of retail sale price exceeding Rs. 190 per 50 kg bag or of per tone equivalent retail sale price exceeding Rs. 3800; Rs. 315 per tonne 10% ad valorem + Rs 30 per MT
(iii) All goods other than those cleared

in packaged form;

Rs 375 per tonne 10% ad valorem
Other than Mini Cement plant
All goods cleared in packaged form,-
(i) of retail sale price not exceeding Rs. 190 per 50 kg bag or of per tonne equivalent retail sale price not exceeding Rs. 3,800; Rs290 per tonne 10% ad valorem + Rs 80 per MT
(ii) of retail sale price exceeding Rs 190 per 50 kg bag or of per tonne equivalent retail sale price exceeding Rs. 3,800; 10% of retail sale price 10% ad valorem + Rs 160 per MT
(iii) All goods other than those cleared in packaged form; 10% or Rs 290 per tone whichever is higher 10% ad valorem
Cement clinker Rs 375 per tonne 10% ad valorem +

Rs 200 per MT

What i can gather from the initial rollout of numbers is that:

  • earlier the cement companies used to pay 10% excise duty on the MRP, whereas now it will be 10% on ad valorem, which is 10% on ex-factory price plus R 160 per metric tonne.
  • the industry is unlikely to gain substantially from cut in import duty on gypsum as most of it is sourced domestically. However, reduction in petcoke import duty will be positive for the cement manufacturers.
  • Further, raw materials used in the industry including fly ash, coal and lignite which were exempt from excise duty, now attract a levy of one per cent.
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Categories: Cement, Coal, Infrastructure
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