The Brihan Mumbai Municipal Corporation had hiked the octroi charges on vanaspati, considered to be the ghee of the lower strata of the society, from two to four per cent on August 21.

The decision to raise octroi on vanaspati under octroi follows classification of the product under luxury items. This is despite a supreme court ruling that vanaspati and edible oils fall under one category, Vanaspati Manufacturers' Association (VMA) executive director SK Chadha said.

"The move to increase the octroi on vanaspati is based on a fallacy and it needs to be withdrawn immediately," he said. While vanaspati has been subjected to hike in octroi and sales tax of 1.5 per cent, other edible oils had been exempted from the increase in octroi, he said.

The total duty burden in vanaspati manufacturing had gone upto 23.5 per cent in the metropolis, with 10 per cent basic duty, five per cent additional duty, four per cent each special additional duty and octroi and 1.5 per cent sales tax, Chadha said.

Even under the essential commodities act edible oils includes vanaspati, which is a hydrogenated vegetable oil and fats, he added. The increase in octroi on vanaspati would push up its prices by an average Rs 2 per kg and effect a shift in consumers preference to other edible oils, Chadha said.

Currently, vanaspati prices are in the range of Rs 48 to Rs 50 a kg. The prices had considerably risen in recent past due to the general bullish trend in the edible oil market.

Chadha said only companies like Godrej and Liberty Oil Mills Ltd had manufacturing facilities within Mumbai and the duty hike would have a spread effect on the neighbouring districts.

VMA alleged that the discrimination of vanaspati against edible oils had no valid reason as the sales tax for both the commodities were the same at 1.5 per cent.

"The normal practice adopted is that the percentage of octroi is always less than the percentage of sales tax on a particular commodity," he said. The association has already made representation to the Maharashtra chief minister, finance minister and municipal commissioner to reconsider the octroi hike.

Out of a total of 19 manufacturing units in the state nine had been closed and the rest were operating at 27.1 per cent capacity against the national average of 33.5 per cent. Meanwhile, the Federation Associations of Maharashtra (FAM) has called for a one-day token bandh on September 8 in the city to protest against the unilateral decision of the corporation.