Stakeholder in the aluminium recycling industry have said that the 18% goods and services tax (GST) rate, over-valuation of imported aluminium scrap and non-processing of refunds, is hurting the industry to the extent that most players will slip into the non-performing assets (NPA) category. Addressing the media on Saturday, industry representatives said the majority of aluminium recyclers are micro, small and medium entreprises (MSMEs).
Kishore Rajpurohit, former president of the All India Non-Ferrous Metal Exim Association (ANMA), said, “The Customs department over-values imports of aluminium scrap, which is the primary raw material for our industry. The GST rate of 18% is levied on this over-valued aluminium scrap, due to which we end up paying more tax. Furthermore, GST on finished goods is again 18%. As our business is recycling of aluminium, there is 10% value-addition and therefore GST refunds accumulate and we are unable to utilize this capital.”
ANMA estimates indicate that Gujarat accounts for 40% of the country’s aluminium recycling. “The 18% rate on import of metal scrap is a major problem which is adding to our input costs. We hope this is reduced to 5%, at par with GST on other types of scrap material imports. This will lead to less accumulation and save revenue losses to the government. Otherwise, it will have a detrimental effect on the industry,” said Mahendra Shah, president, ANMA.
Other stakeholders at a press conference highlighted that aluminium recyclers are battling a cash crunch, having to pay extra money without earning it. “If the trend continues, the industry will be forced to cut jobs and will slip into NPAs,” said Shah.
Rajpurohit said that Customs assessment is being done based on an alert issued by the directorate general of valuation (DGOV). “Customs duty should instead be assessed at transaction value according to Section 14 of the Customs Act, 1962. GST on ocean freight imports and intermediary services are acting as double taxation and this is greatly hurting the industry,” he added.