The Indian Drugs Manufacturers Association (IDMA) has suggested the Government to lower the excise duty on allopathic as well as ayurvedic drugs from the present level of 16 per cent to 8 per cent.
In its pre-budget memorandum, the association said the bulk drugs and formulations falling under categories of Anti-AIDS, Anti-cancer, Anti-TB, immune suppressants and other life-saving drugs may be totally exempted from the excise duty. Since most of anti - TB drugs are exempted, Rifampicin, may be included in the list of exempted drugs. The exemption limit for SSI Sector should be increased to Rs 2 crore from the present limit Rs 1 crore and the concessional scheme for SSI Sector should be re introduced. Considering the long term benefits of R&D to the economy at large, all excisable goods used for R&D purposes should be exempted from central excise duty and specific excise duty exemption notification should be issued in regard to medicines supplied free during national calamities. If the central excise duty has been paid in such cases, refund of duties should be granted.
The association further said physician's samples should be exempted from excise duty up to 4 per cent of sales value, as earlier and alternatively, physician samples marked exclusively, should be levied excise duty at 4 per cent. CBEC circular dated 25.4.05 regarding valuation of physician's samples on a pro rata basis be withdrawn and earlier position of Cost + 10 per cent valuation clarified vide CBEC Circular dated 1.7.02 be restored. Control samples, retained in terms of statutory requirements, should be fully exempted from excise duty.
Further, in the case of life saving formulations, exemption from CVD in respect of import of bulk drugs should not be conditional to their being used in the manufacture of excisable goods. The central excise tariff should include a list of life saving drugs and finished formulations there of corresponding to list 4 appended to Customs notification no. 21/02 dated 01.03.02 granting full exemption from central excise duty in respect of such items.
With regard to CENVAT Credit Rules, 2004 (CCR), depreciation on duty payable for capital goods should be provided dependent upon period of user, on lines with erstwhile Rule 57S under Modvat on Capital Goods Scheme. Rule 6 for credit restrictions should be deleted and alternatively restrict reversal to the extent of wrong credit taken instead of 10 per cent of value of goods cleared. Considering the potential in earning foreign exchange, to reduce research cost, Cenvat credit on capital goods deployed for R&D activity installed within the factory premises or outside factory premises Cenvat credit should be allowed and the penal interest of Rs 1000 per day in case of default in timely payment of duty is too harsh and needs to substantially modified, said the IDMA representation.
In its suggestions related to customs duty, IDMA said import of capital goods, raw materials and reference standards for R&D purposes should be fully exempted from customs duty. Import of reference standards should be totally exempted from customs duty, CVD etc. Based on the registration issued, the import of goods with eligible benefit should be allowed since the registration does contain particulars of goods to be imported as well as intended purpose. Procedure of obtaining counter signature of ACCE/DCCE stage needs to be eliminated and the clearances on the basis of submission registration copy may be permitted. Alternatively eliminate entire procedure of this rule and instead provisions may be made to allow imports with eligible benefit on submission of bond to the customs authority and on production of End Use Certificate showing details of consumption of goods for intended purpose, bond should be discharged, suggested the association.
Further, the Association suggested various changes to the Service Tax rules for the benefit of the manufacturers.