Date:17/08/2005 URL: http://www.thehindubusinessline.com/2005/08/17/stories/2005081703150900.htm

Back Bill introduced to abolish cess on agri-product exports

Our Bureau

The Union Minister for Commerce and Industry, Mr Kamal Nath.

New Delhi , Aug. 16

A Bill to discontinue the existing cess on the export of several agricultural products was introduced in the Lok Sabha by the Commerce and Industry Minister, Mr Kamal Nath, here on Tuesday.

Once this Bill is enacted, exporters would not be required to fork out the nearly Rs 100 crore amount that they are now paying every year to the exchequer as export cess on various agricultural products.

"The discontinuation of cess on exports (valued at around Rs 100 crore) would make our exports more competitive. We cannot subsidise exports like the developed countries, but at least let us not tax them," Mr Kamal Nath later told newspersons. The move to introduce a Bill for the discontinuation of cess on exports comes close on the heels of the Commerce Minister's announcement in this year's Annual Supplement to the Foreign Trade Policy (FTP) that export cess levied under different Commodity Board Acts would be abolished.

The main argument put forward against the continuation of export cess on agricultural products is that this export tax reduces the competitiveness of agricultural exports.

As the export cess is levied as a duty of customs, an exporter is required to go through the rigours of all customs procedures before the commodity can be physically shipped out of the country.

Currently, the export of several agricultural products is subject to the levy of cess under different enactments such as the Agricultural and Processed Food Products Export Cess Act 1985, the Tobacco Cess Act 1975, the Spices Cess Act 1986, the Marine Products Export Development Authority (MPEDA) Act 1975 and the Coffee Act 1942.

To abolish the cess on agricultural product exports, which is levied under the respective Acts, the Bill seeks to repeal the Agricultural and Processed Food Products Export Cess Act 1985 and the Spices Cess Act 1986 and bring amendments to the MPEDA Act, Coffee Act and the Tobacco Cess Act.

The Commerce Minister told reporters here that the Government collected about Rs 50 crore a year from the agricultural and processed food products export cess; Rs 20 crore a year from MPEDA cess; Rs 12 crore a year from coffee cess; Rs 7 crore from spices cess and Rs 3 crore from tobacco cess.