Double whammy compounds Himachal cement units’ woes

Cement manufacturers of Himachal Pradesh are in a quandary. While the soaring high-speed diesel price is squeezing their margins, the state government’s refusal to continue reimbursing levies on diesel through ‘Form-C’ has put them in a tight spot. The ‘Form-C’ for diesel is being issued by several state governments to the industry to offset the state-level levies (value-added tax) on the fuel. Diesel is used by Himachal Pradesh-based cement companies such as Ambuja Cements Ltd, ACC and Ultratech for various manufacturing processes, including mining, power generation and clinker activities. As Himachal Pradesh do not have sufficient diesel to cater to the demand of industrial consumers, the industry imports the fuel from neighbouring states at the market rate including VAT, which makes it costlier by about 17 per cent. A senior executive working for a cement major said they were incurring losses on a daily basis as they were forced to buy diesel from Haryana at market rates along with 17.22 per cent VAT. As diesel prices have also jumped significantly in last few months, the non-issuance of ‘Form-C’ is adding to the manufacturing cost, he said. The industry require about 30-35 barrels (about 5,560 litres) diesel per month. Additional Excise and Taxation Commissioner Sanjay Bhardwaj said the government had received representations from various cement manufacturers such as ACL and Ultra Tech. Manufacturers, however, said the state government should restore the ‘Form-C’ in the light of the apex court’s recent decision that allowed purchase of diesel for use in the mining activities at the rate of  2 per cent. The High Courts of Chhattisgarh, Rajasthan, Punjab and Haryana have allowed assesses to purchase diesel against the ‘Form-C’, the manufacturers said.