Centre withdraws excise duty exemption to tobacco units in Assam

GUWAHATI, January 23: The Centre has withdrawn the excise duty exemption facility earlier extended to the tobacco units set up in Assam under the new Northeast industrial policy. With this the future of 14 tobacco units that had come up in the state had become uncertain, at the same time putting at stake jobs of over 600 persons who had found employment in them. About 2000 others had found indirect employment too. The order to this effect was issued by the union finance ministry vide a notification on Monday. The tobacco manufacturing units had come up in Assam following the announcement of the Northeast Industrial Policy by the Centre in December 1997, which contained several incentives for the entrepreneurs. The incentives include transport subsidy, central capital investment subsidy, comprehensive insurance, subsidy on interest on working capital and exemption of central excise, the last two for a period of ten years. This is the second time that the Centre has revoked the order extending excise duty exemption to the tobacco units, the first occasion being in December 1999, following complaints that the units by then already got exemption benefits to the tune of several crores in rupees. With the chief ministers of the Northeastern states exerting pressure, the Centre however restored the benefits within a month. But that hardly brought the issue to a close, with certain quarters complaining that tobacco units should not be encouraged on health grounds. A section of the local media too had lambasted the government for extending such benefits to units producing items detrimental to health, which prompted the Assam government to come up with a condition that such units should also set up non-tobacco units simultaneously. Interestingly, while the excise duty exemption is by the Centre, the state government did not have to lose anything monetary. Instead, the state was getting industrial units with the state government not having to invest anything. While the tobacco units, mostly franchisees of the top cigarette manufacturers, began arriving in the state, the name of Assam industry minister Gunin Hazarika too has been dragged into the controversy, with allegations that he was favouring them out of the way for obvious reasons. In between, the tobacco units and the Assam government were also locked in a tussle over the latter's proposal to levy luxury tax on them. This, according to the government, would have brought Assam Rs 50 crore to Rs 60 crore per annum. In addition to this, the state government had also proposed to charge amenity charges at the rate of Rs 25,000 per month from each unit, apart from asking the units to recruit 80 to 90 per cent local youths. The tobacco units on their part have been opposing these proposals, saying that those were too much for them to bear. And while the tussle was on, the Assam government was happy that seeing the major tobacco companies arrive in the state through subsidiaries and franchisees, other companies manufacturing reputed brands of detergents and cosmetic products etc too have started seeing Assam as a new place to invest.