The inter-ministerial group (IMG) on customs tariff has recommended a uniform duty of 20 per cent by 2004-05 for all imports and has also said that all exemptions should be eliminated.
Making a strong case for a single rate of customs duty, the IMG has said a single rate would ensure uniform nominal protection for all imports. The IMG report was being considered by the finance ministry and an announcement on the roadmap for customs duty rationalisation could be expected in the forthcoming Budget with a single rate like the 16-per-cent-Cenvat coming into force after two years, said sources. The single rate would eliminate all classification problems and disputes resulting in substantial savings in administrative and legal costs. It would also help in establishing a duty-free import regime for importers.
The IMG has recommended that to bring in a uniform rate of customs, the duty on all products attracting below 20 per cent tariff should be hiked to 20 per cent and for products that attract over 20 per cent duty, the tariff would be reduced.
The IMG, headed by Arvind Virmani, advisor, Planning Commission, has said that higher tax on consumer goods was undesirable as it removed the incentives for upgrading quality and instead encouraged smuggling.
The IMG
