Punjab steel makers seek deemed credit on scrap

Punjab-based steel producers have sought from the Finance Minister P Chidambaram allowing of
'deemed credit' facility on the purchase of recycling scrap, a measure they say will enable the industry to stay afloat amid sagging demand and also curb tax evasion.

Industry representatives under the banner of All India Steel Re-Rollers Association raised this demand during a meeting with Mr Chidambaram in New Delhi recently.

"We have met Union Finance Minister P Chidambaram and demanded that the government should restart deemed credit on scrap. This will not only provide relief to the industry but will also boost government's income," the association's President Vinod Vashisht said today.

He said the minister assured to look into their demand.

Steel makers procure duty paid scrap from scrap dealers but could not claim any tax rebate as dealers could not produce any central excise document with regard to scrap.

"Currently, central excise duty on iron and steel is at 12.36 per cent. The Centre can give deemed credit between 8-10 per cent," Mr Vashist said.

Earlier till 1987, deemed credit facility was available on iron and steel products but was suspended after the Centre received complaints regarding its misuse.

Various industries including bicycle, sewing machines, auto parts generate scrap out of steel on which excise duty is already paid.

"If the Centre allows deemed credit, then it will also curb illegal activity in the trade and raise government revenue," said Mr Vashisht.

He said because of sluggish demand for iron and steel, as many as 101 steel units in Punjab had got their power connections disconnected.

"And those units which are operational are working at just 30 per cent capacity," he added.