ibma
INDIAN BISCUITS MANUFACTURERS’ ASSOCIATION
Phone 011-64625899 Telefax 43592838
Email: - ibma.biscuits@yahoo.co.in , info@ibmabiscuits.in
Website: www.ibmabiscuits.in
B P Agarwal President IBMA/ED/749
Dr. Manmohan Singh
Hon’ble Prime Minister of
South Block
Dear Madam,
PRE- BUDGET MEMORANDUM- 2009-10
CENTRAL EXCISE DUTY ON CAKES, BISCUITS, COOKIES – REQUEST FOR EXEMPTION
We submit herewith Pre Budget Memorandum -2009-10.
In this connection I wish to draw your kind attention to the acute hardships being experienced by Cakes, Biscuit and Cookies & Wafers manufacturers in the country. The heavy burden of Taxation is a major problem compounded by additional levies by certain state governments. We list hereunder for your ready reference the duties on the products.
- There is Central Excise Duty @ 8% on Biscuits with MRP above Rs.100/per Kg, Value Added Tax @ 12.5% and other Local Taxes.
- On Cookies & wafers there is Excise duty of 8% if MRP above Rs.100 and VAT of 12.5%.
- On Cakes while Excise duty is levied at 4% but VAT is at 12.5%
- In UP VAT on Cakes, Cookies and Wafers have been increased to 13.5% from 1st June.
If we take the high rate of taxes along with steep rise in the cost of production due to sharp increase in the prices of major raw materials, i.e. wheat flour, Veg Oil/ Pamloline , Milk, Sugar, and also inputs hike Fuel(Furnace Oil), Packaging, Transportation, Wages, etc. you may well imagine the plight of the manufacturers. You will appreciate that majority of the manufacturers are in the small scale sector generating employment and thus contributing in no small measure to the development of the nation.
Despite the tough conditions – high input price and stiff taxes - the manufacturers have been restraining from resorting to increase in prices, as this would add fuel to the inflation and adversely affect consumers a majority of the consumers coming from the poorer sections of the society.
I am enclosing a Comparative Statement showing increase in prices of raw materials/inputs etc and the adverse impact on the cost of production of various categories of Biscuits.
In this connection I wish to draw your kind attention to the following salient issues:-
· Biscuit, cookies, wafers and cakes are very nutritious, hygienically made food providing a range of healthy and tasty categories at affordable prices, to all sections of consumers and as a part of food substitute especially to the weaker sections of the society.
· Children and women form a large part of the consumer base for these food products . In fact organizations like the WHO through their WFP programme have sourced biscuits from
· The manufacturingprocess of these products is a highly labour intensive process. The industry directly employs 3.25 lakh people and indirectly imparts employment to about 35 lakh people in the country. Biscuits, cookies, cakes and wafers are sold in approximately 25 lakh retail outlets, majority of which are small kirana/general shops, in rural and urban areas, while 50% (approximately) of the total consumption of biscuit sand similar snacks comes from rural sector.
· The benefits from production of Biscuit and other snacks mentioned here go to the farmers. Needless to mention that farmers form a large part of the raw material base used in the manufacturer of biscuits, cakes, cookies and wafers. The benefits from sale of wheat flour, vegetable oil, sugar, milk etc go to the people toiling in the villagesl . It is estimated that Biscuit Industry utilize more than Rs 3200 crores worth of these agriculture products.
· What is more the imposition of CENVAT on Biscuits with MRP above Rs.100/- per Kg does not compare favorably with other food products like potato chips, jams and jellies etc which do not have any nutritional value are exempted. Other similar food products like Sweets, Namkeens, Bhujia, Bread, Atta, Maida, Besan, Suji etc have also been exempted from CENVAT as well as VAT. We feel that the biscuit, cake, cokkies and wafers manufacturers deserve at least a level playing field in the snack segment.
· Our products are also subjected to other local levies, i.e. Value Added Tax @ 12.5%, Purchase Tax, Entry Tax on Sugar etc by the State Governments and Local authorities. In addition VAT in states like UP has been raised by one per centage with effect from June.
· The manufacturers of Biscuitsand the related snacks have been holding on to the prices for the past more than two years in spite of steep increase in the cost of production and inflationary conditions in a highly competitive marketing scenario, as increase in prices of our products like Biscuits would cause further increase in inflation and hurt consumers.
· As mentioned above, Biscuit Manufacturers are reeling under the pressure of escalating costs, and additional burden of Taxation burden. As a result competitive capabilities of large number of Biscuits Manufacturers in the Small and Medium sector, have eroded and many such units are facing closure. This would in turn render large number of workers unemployed.
On behalf of IBMA, the apex organization of Biscuit Industry, I would therefore request you to kindly save the Biscuit Manufacturers from the SME sector and exempt all categories of Biscuits including cakes, cookies and wafers from Central Excise Duty without any ceiling on Maximum Retail Price (MRP), in the Union Budget for the year 2009-10.
I would earnestly request you to kindly give sympathetic consideration of our Pre Memorandum Budget 2009 -10 and Grant Total for all categories of Biscuits exemption from CENVAT and look forward to favorable decision in the Union Budget 2009-10.
Thanking you in anticipation.
Yours faithfully
B.P Agarwal
Encl: As Above
Shri P.V. Bhide,
Secretary (Revenue)
Ministry of Finance
Govt of
North Block
NEW DELHI-110001
Shri Pranab Mukherjee
Hon’ble Union Finance Minister
Govt of
North Block
NEW DELHI-110001
Smt Sonia Gandhi
Hon’ble Chairman, UPA
10, Janpath
Shri Subodh Kant Sahai
Hon’ble Union Minister of Food Processing Industries
Govt of
Panchsheel Bhawan
August Krant Marg.
NEW DELHI-110049
Shri Ashok Sinha (Cc of Subodh Kant Sahai Letter)
Secretary
Ministry of Food Processing Industries
Govt of
Panchsheel Bhawan
August Krant Marg.
NEW DELHI-110049
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