Sudden SD on limestone swells many products' costs

Sudden levying of hefty supplementary duty on limestone import hikes manufacturing cost of a plethora of products like cement, paper and so in local industries.
Industry-insiders say the customs wing under the National Board of Revenue (NBR) is charging 69-percent import taxes, instead of previous 37 per cent, on import of limestone in recent times.
They say cost of production of cement would go up by Tk 10 per bag following the increase in taxes on limestone, its prime raw material.
Syed Khalid Hossain, Deputy General Manager of Meghna Group of Industries, says it is against the principle of the customs act to impose SD on raw materials of an industrial product.
Not only cement, cost of production of leather, paper, PVC pipes, plastic products, electric cables, detergents and some other industrial products would go up following the steep raise in taxes on limestone, he adds.
Calcium carbonate, a raw material for paper production and numerous other industries, is also produced with limestone.
Mr Hossain points out that there is no definition in the customs law as to what size of boulders would be considered raw materials to guide the importers.
A top NBR official says they have received applications from various sectors in recent times and will discuss the matter with the board high-ups soon.
"The HS code on import of limestone was changed as per World Trade Organisation (WTO) explanatory notes of broken limestone, as earlier it used to be imported under wrong HS code," he told the FE.
The NBR held a meeting following a note from Chittagong Customs House and issued a clarification. Under the new clarification, import of limestone is subject to payment of 30-percent SD, he added.
He, however, said limestone is needed only two to three per cent of total ingredients in maximum cement.
Masud Khan, Chief Adviser of Crown Cement, says the government should think about manufacturing industries rather than only trying to increase revenue.
"Sudden imposition of SD hurt the cement industry."
The country is dependent on imported limestone, used in various sectors along with cement industry, he adds.
In a recent letter, Bangladesh Cement Manufacturing Association (BCMA) demanded withdrawal of the SD from raw materials of cement.
"Chattogram Customs House is collecting SD at a rate of 30 per cent in recent times, which was never in place," reads the letter, signed by first vice president of the association Md Shahidullah.
Cement manufacturers has been importing limestone under HS Code 2521.00.10 by paying 5.0-percent customs duty, 15-percent VAT, 3.0-percent Advance Income Tax (AIT) and 3.0-percent Advance Tax for long.
Recent imposition of 30-percent SD is burdensome for the manufacturers as they are incurring huge financial loss, the association said.
Cement industries use limestone of 10mm to 20mm as its raw material, which is a recognized size. "It is surprising that 'Limestone in Bulk' is not considered raw material for cement industries in recent times," it is stated in the letter.
The association's leaders said the cement industries are passing through a critical time due to excessive devaluation of the taka against the US dollar, unwillingness of banks to open letter of credit for dollar crunch, increase in domestic transportation cost due to hike in petroleum prices etc.
This crisis worsened further after imposition of SD on the raw materials of the cement industries, they wrote in the letter.
Industry-insiders in an estimate found use of 11-kilogram limestone in 50-kg cement would cost an additional Tk 9.48 due to the SD imposition.
They argue that SD is usually imposed on luxury products, non-essential items and socially-discouraging goods, not on construction materials.

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