MCMA emands tax benefits for eco-friendly packaging

The Metal Container Manufacturing Association (MCMA) of India has demanded that the country’s government should provide tax incentives to promote environmentally friendly packaging.

The association says the metal packaging industry is facing serious problems resulting from accumulations of credit created by what it describes as an “inverted duty structure”.

Sanjay Bhatia (pictured), president of MCMA and managing director of Indian can maker Hindustan Tin Works, said: “We have urged the government to provide fiscal incentives to promote packaging which is environmentally friendly, recyclable and sustainable. These incentives can be given in terms of subsidies, refund of indirect taxes, concessional duty on import of capital goods/inputs and income tax exemption.”

Under the current system, various food products like mango pulp, processed vegetables and coffee are packed in tin containers that are exported out of the country by manufacturers, export houses, traders, merchant exporters etc. These cans are supplied by the industry without paying excise duty under notification 43/2001.

The notification stipulates that: “procurement of goods without payment of duty for the purpose of use in the manufacture or processing of export goods and their exportation out of India”. For the can making industry, this results in non-utilization of credit.

Recommendations by the MCMA to the Government in a pre budget memorandum deem that export should be brought in line with physical export for the purposes of refund of excise duty in order to address the issue of credit accumulation within the industry.

Alternatively, the accumulated credit should be adjusted against the purchase of inputs so that excise duty should not be paid again on such inputs resulting in further accumulation of credit.

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