The Indian Drug Manufacturers’ Association (IDMA) has urged the ministry of finance to allow the pharma companies to utilise the accumulated Cenvat Credit in the books of manufacturers. The association has informed the finance ministry that the industry is facing problem due to huge Cenvat accumulation.

The excise duty on inputs is 12.5 per cent, whereas output is taxed at 6 per cent, due to this there is an anomaly in rate of excise duty on input versus output and the service tax on input service is high.

The association has suggested to introduce parity in the input and output rate of excise duty for pharmaceutical products or else allow the utilization of Cenvat credit for payment of service tax on reverse charge basis.

D B Mody, chairman of international trade committee, IDMA says, “The government should reimburse the accumulation of Cenvat to the manufacturers, so that we are competitive in the international market. We should be allow to export at 12.5 per cent rate of excise duty.”

The association has asked the government to allow easy and prompt refund of accumulated credit under rule 5 of Cenvat Credit rules. Refund based on self-assessment and certificate issued by chartered accountant can be processed, scrutiny of refund claims for issue based cases only and that is required to be made only after the sanction of the refund claim. Payment of interest should be within 30 days of the application, if the refund claim is not sanctioned

Recently, the representatives from IDMA and OPPI has a meeting with the ministry of finance seeking various relief from direct and indirect taxes. There was also a discussion on the research & development on which the IDMA has suggested that import of all capital goods, raw materials, consumables and reference standards for R & D purposes should be fully exempted from customs duty of related duties.