Truckers resent levy withdrawal demand by tyre makers

The All India Confederation of Goods Vehicle Owners Associations has requested the government not to remove the eight per cent special excise duty as requested by Automotive Tyre Manufacturers Association (ATMA).

In a memorandum sent to Union finance minister P Chidambaram, the vehicle owners' federation has said that since tyre manufacturers do not pass on the benefit of such duty cuts to end users, the government might as well retain the taxes.

"On the face of it, because the burden of duty is on us, the consumers, therefore, plea for its reduction should have our whole-hearted support. But on the contrary, we have genuine reservations on this," said the letter to the finance minister.

The association said that while duty concession is in the process of being allowed, immediately thereafter the price of tyres will be increased on one or the other excuse, and the duty concession will be usurped.

"Consequently, the government has been losing revenue by giving excise concession but it never benefited the consumer on a sustained basis."

The vehicle owners' association has asked the government to withdraw the customs duty on imported tyres, so that, narrowing the price difference between imported and locally manufactured tyres would effectively keep a check on the price of locally made ones.

It may be recalled that earlier this week, the All India Tyre Dealers Federation had also made a similar request to the Union government and had justified the request with similar reasoning.

Since domestic tyre manufacturers had not reduced the price despite fall in the price of natural rubber, both the dealers and vehicle owners are up in arms to ensure that no excise concessions are given to the tyre manufacturers.

Tyre manufacturers on the other hand claimed that when price of natural rubber was on the rise, the price of finished tyres was increased marginally and covered only 50 per cent of the increased input cost.

ATMA members had also pointed out that while natural rubber prices came down to Rs 53 a kg in November 2004 from a peak of Rs 66.50 per kg in June 2004, the price of other crude-based inputs continue to rule high.