Calcutta, Feb. 28: The 8 per cent excise duty imposed on branded and packaged varieties of vanaspati and edible oil has set alarm bells ringing in the sector. Industry sources say the prices of branded cooking medium are likely to rise by a minimum of Rs 4 per kg following the levy.
An edible oil millowner said the impost would discriminate against companies that observe proper quality and weight standards.
The excise duty on vanaspati — re-imposed after eight years — will prevent industry from taking advantage of a fall in prices in the world market, Kunal Banerjee, chief of the Vanaspati Manufacturers Association (eastern region) said. Prices of crude palm oil and other edible oils have fallen by 10 per cent to 15 per cent in February.
He hoped that the imposition of the excise duty on branded vanaspati should automatically attract an 8 per cent countervailing duty (CVD) on Nepalese vanaspati, now flooding the eastern region market. Under the Indo-Nepal treaty there is no duty on import of vanaspati from Nepal. But once the excise has been imposed on the domestic product it is expected that the government would impose a matching CVD on imports from Nepal, Banerjee noted.
The vanaspati industry is hoping that the government will neutralise the ‘money-credit’ it enjoyed till 1994 for using minor oils such as saal seed, cotton seed oil, rice bran oil, til and sesame oil in the hydrogenation process for making vanaspati, with the excise duty. Sources said the ‘money credit’ has created a huge fund with the government.