Mumbai, June 25: The Centre proposes, the state mops up: the curious structure of excise on alcohol-based toiletries has ensured that any price changes in the personal products range, in response to the finance minister's recent cut in excise duty on the products, can come only after the budget is passed and relevant notifications are received.The effect of the excise duty reduction on alcohol-based toiletries has yet to trickle down to the consumer in the form of price reductions. This, industry experts feel, will happen only after the budget is passed and a notification to this effect delivered. This is because alcohol-based toiletries comes under the Medicinal & Toilet Preparation Excise Duty Act which is a state subject. As against this, non-alcohol based cosmetics & toiletries is part of the Central Excise Act. Any change, therefore, in the exise levels on non-alcohol based cosmetics is immediately passed down to the consumer and conveyed through advertisements.
This, however, is not the case foralcohol-based toiletries. A change in the excise levels on alcohol-based toiletries will come into effect only after the final act is passed. Even as alcohol-based toiletries is a state subject, the legislation is passed by the centre. The 1998-99 union budget, announced a 50 per cent reduction in excise duty on alcohol-based toiletries -- a long standing demand of the industry. The duty was reduced to 50 per cent.
The notification to this effect will come only after the budget is passed, which may consume some time, said industry experts. It will take at least two-three months before manufacturers of alcohol-based toiletries reduce their prices accordingly, experts feel.
Further, the extent to which the price reduction on alcohol-based toiletries will take place is also not known as anomalies like the four per cent import duty factor have to be taken into consideration while evaluating the new maximum retail price (MRP), said industry sources.
Companies which manufacture alcohol-based toiletries areProcter & Gamble, Godrej Soaps, Colgate Palmolive (India), Hindustan Lever Ltd, etc, which also manufacture non-alcohol based products. Products like fragrances, perfumes, after-shave lotions, deodrants, colognes and other sprays are categorised as alcohol-based toiletries. Alcohol-based toiletries is part of the country's Rs 1,500-crore cosmetics & toiletries industry. The industry posted a growth of 20-25 per cent in 1997. Duty reduction is expected to result in a higher generation of excise revenue for the government, feels the industry.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
