Union Budget 2010-11: Indirect Taxes
The Union Budget 2010-11 was tabled on February 26, 2010 in the Parliament. No significant budget proposals have been made impacting the paper industry.
Excise Duty:
The excise duty on paper and paperboard has been retained at 4%. However excise duty @ 10% is imposed on some of the paper products viz baby and clinical diapers and sanitary napkins which were fully exempt hitherto. Also, excise duty on cartons, boxes and cases of corrugated paper or paper board manufactured by standalone manufacturers is reduced from eight to four per cent.
(Notification No 10/2010 - Central Excise Dated 27th February, 2010)
Customs Duty:
The basic custom duty on import of paper and paper board is retained at 10% as before.
Exemption from 4% additional duty of customs (Special CVD) is provided on import of wastepaper and paper scrap effected by the traders. However, there is no change in its tariff structure in case of import by the Actual Users.
(Notification No.24/2010 � Customs dated 27th February, 2010)
High Court admits IPMA�s petition on Safeguard Duty
The decision of the Directorate of Safeguards, Department of Revenue, Ministry of Finance, Government of India to not recommend safeguard duty on paper and paper board imports has come as a rude shock to the industry which is reeling under the impact of unbridled imports for a while now.
A writ petition with a prayer to quash/set aside the impugned notification dated 13th November 2009 issued by Directorate of Safeguards to not impose safeguard duty on imports of coated paper & board has been admitted by a division bench of the Delhi High Court.
The Court has issued notices to the Government of India and the Director-General of Safeguards (DGS) directing them to reply to the petition.
The court has listed the matter for hearing on May 11, 2010.
Pulp & Paper under PAT scheme
The manufacturing industry in India accounts for 25% of the national Gross Domestic Product (GDP) and 44.4% of commercial energy use. There is a significant level of coal and oil in the energy mix (50% and 30% respectively) with the power sector now producing over 700,000 GWH per annum. The thermal power sector�s energy consumption is about 65% of the total commercial energy consumption of the industrial sector.
In pursuance of the guidelines provided in the National Action Plan on Climate Change, a steering committee was constituted in the Ministry of Power to prepare a framework document for �National Mission on Enhanced Energy Efficiency�, with the objective of enhancing energy efficiency by putting in place new initiatives. The Energy Conservation Act, 2001 has identified 15 large Energy Intensive Industries for energy improvements. The Government has notified nine industrial sectors including pulp and paper as designated consumers. These industries have to appoint an Energy Manager, file Energy Consumption Returns every year and conduct mandatory Energy Audits. They also will have to adhere to the Energy Consumption Norms specified by the Government.
The Perform Achieve and Trade (PAT) mechanism is a scheme that is being designed to incentivise higher plant efficiencies. The Specific Energy Consumption (SEC) is defined as energy consumption per unit of output. Almost all the industrial sectors are characterized with a wide bandwidth of specific energy consumption which is also indicative of large energy-savings potential in the sector. The wide bandwidth is a reflection of the differences in the energy-saving possibilities amongst plants because of their varying vintage, production capacity, raw material quality, product pix etc.
Under PAT scheme, it is proposed to divide the bandwidth into three or four groups called �range� and all plants within the same bandwidth range would have the same SEC percentage reduction targets, specified in relation to the existing SEC of an individual plant.
The additional Certified Energy Savings can be traded with other designated consumers who could use the Energy Savings Certificates to comply with reduction targets. ESCerts will be traded on special trading platforms to be created in the two power exchanges (IEX and PXIL). These targets would have to be achieved within a period of three years after the energy consumption norms have been notified and institutional arrangements put in place. The target setting and performance reconciliation will occur every three years.
Forest-based products offer the most efficient and �green� solution for the reduction of emissions : CEPI and CEPF
In the backdrop of COP 15 held recently, Confederation of European Paper Industries (CEPI) and CEPF in a joint statement have stated that forest-based products offer the most efficient and �green� solution for the reduction of emissions and producing renewable energy, thus helping countries to meet their targets. Promotion of sustainable forest management and use of forests- and wood-based products has never been more crucial. It is indeed ironic that industries with products that compete with wood are being, to varying levels, protected by governments under emissions trading schemes around the world, while a real benefit from forestry is currently not recognized.
The Intergovernmental Panel on Climate Change (IPCC) recognizes the significant potential of forests in mitigating climate change. In its 4th Assessment Report, IPCC clearly concludes that �a sustainable forest management strategy aimed at maintaining or increasing forest carbon stocks, while producing an annual sustained yield of timber, fibre or energy from the forest, will generate the largest sustained mitigation benefit�
Current negotiations on post 2012 arrangements have a focus on reducing deforestation and forest degradation (REDD) as leading causes of global warming. �No doubt, this is a key issue to be dealt with. But we should bear in mind that sustainably managed forest can offer much more, and the sustainable use of wood can greatly increase our contribution in fighting climate change. In the past sustainably managed forests were only able to provide ecosystem services in terms of biodiversity and climate, as well as all the other important forest functions. In addition the forest sector generates vital income for the rural community. This is what policy makers should encourage to continue. Europe�s forest sector is part of the solution�, says Philipp Guttenberg, board member of CEPF.
Source: ICFPA Press Release
Editorial
Campaign against paper: How wrong can you get?
Increasingly, cellular services providers and credit card companies have been asking their customers to opt for e-services. That�s all fine. However the problem arises when in their eagerness to wean away the customers they start giving a rather distorted picture of the paper industry and its impact on the environment. One cellular service provider has recently gone to the extent of damning paper industry as a whole for adversely impacting the environment through a high-pitched misinformed campaign.
What is worrisome to Paper industry is that the current campaign against the industry can dangerously sway the impressionable minds specially children because it is build up on a slew of half-baked truths. As far as the argument of the campaign is concerned � save paper to save trees and hence environment � it can easily make people believe that paper industry is responsible for destruction of native forest and its de-forestation.
Some of the myths & misgivings about the paper industry need to be dispelled to put the record straight:
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IPMA Newsletter March 2010
