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Department sees excise revenues in `dough'
February, 26th 2007

Bread makers eye price hike

Buying bread may in the coming days turn out to be a costlier affair for consumers in the Capital, with the Revenue Department actively looking to slap excise duty notices on the `dough' used for the manufacture of breads.

Although breads, as a finished product, are excise-duty exempt, industry sources said that the Excise Department wants bread manufacturers to cough up excise duty on the `dough' which is an intermediate product in the bread making process.

Currently, the Government does not have any price control on breads sold in the market. The aam admi is already facing the heat on the relentless increase in prices of essential commodities.

Sources said that Excise Department officials had recently paid visits to few large bread making units (above Rs 1 crore limit) in the Capital to make enquiries. They had sought list of ingredients and even information on the costing of "dough" from these units. "The Excise Department now wants to levy excise on dough from March 1, 2005. A 16 per cent excise duty is what they are looking at. We don't have that kind of margins. This has to be passed on to consumers and bread prices could go up by as much as Rs 3 per loaf in the Capital," said an official of a bread making company.

At the same time, the official said that the company would pursue all remedies available under the law to counter move for possible levy of excise duty on `dough'.

What has surprised certain bread makers is that the Revenue Department's move comes more than a year after the legislative changes. "My information is that 2-3 companies in the Capital have been served with some form of letter," the official said.

The Excise Department is understood to have sought costing information on `dough' from March 1, 2005. They have contended that `dough' has been brought under excise duty in budget 2005-06, the official said.

"We don't buy or sell any dough to others. This is not an industry practice. It is an intermediate produced in the bread manufacturing process," sources said.

The Department's stance would also affect companies that operate under job contract agreements with industry biggies and get paid in the form of conversion charges.

"We will have to enter into talks with the stalwarts in this industry and try and negotiate for rate hikes in the wake of possible excise duty demands," a top official of company undertaking job work for a bread major said.

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