Raise CVD on gold dore to 9% & keep excise duty on gold refined bars at 9.25%: ASSOCHAM plea to FinMin

by Shrutee K/DNS 

Apex industry body ASSOCHAM has urged the Centre to raise countervailing duty (CVD) on gold dore to nine per cent and keep excise duty on refined bars made from gold dore at 9.25 per cent.

“This is required in order to restore balance between refineries in excise paying areas vis-à-vis excise exempt areas, since refineries are located almost equally in both areas, as such there would be no revenue loss and it will continue to keep refineries in excise paying areas viable,” said The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in a communication addressed to Union Finance Minister, Mr Arun Jaitley.

While India imports about 800 tons of gold annually, the share of domestic refining using mine dore as feedstock has increased steadily from five per cent in 2012-13 to 25 per cent in 2015-16.

“The advantage of dore refining over importing finished gold is that value addition gets done within the country thereby generating employment, saving foreign exchange and generating tax revenues as direct taxes are paid to government on the refining income,” highlighted the ASSOCHAM letter to FM.

“There is ample opportunity to grow refining capacity further across the nation, which will only add to ‘Make in India,’ and simultaneously move up the quality chain,” it added.

This turnaround has come about since 2011-12, when government permitted import of mine dore, maintaining an aggregate (CVD plus excise) one per cent duty differential between duty on the raw material/bars manufactured from mine dore and that on import of finished gold.

In the Budget for current fiscal, the Finance Ministry has notified an increase in CVD on mine dore from eight per cent to 8.75 per cent, increase in excise duty on refined gold bars manufactured from mine dore from nine per cent to 9.5 per cent and excise duty exemption under existing area based exemption on refined gold stands withdrawn.

So far as impact on refineries in excise paying area is concerned, their gross margin gets reduced to half i.e. from one per cent to 0.5 per cent thereby making them unviable.

Besides the gross margin for refineries in excise-exempt areas also stand reduced from two per cent to 1.25 per cent, thus creating a significant balance in favour of excise-exempt refineries.