The industry, which had price bands for steel imports restored by a courtorder recently (to check steel imports at ``unfair'' prices), gets budgetaryblessings as well. The finance minister withdrew the dual excise ratesprevalent among steel producers and spared steel companies excise on freightand cargo handling charges.

The re-introduction of the factory gate price instead of the ex-stockyardprice prevalent since 1996-97, will mean a saving of Rs 70 crore a year forthe Steel Authority of India Limited (SAIL) alone. The company had to solong, absorb the excisable amount of the freight and handling charges,unable to pass it on to a sticky market.

``The assessment of excise duty at factory gate, which was one of ourlongstanding demands, will help us in servicing a greater number of smallcustomers through our stockyards,'' said SAIL chairman Arvind Pande. Toescape paying excise on the stockyard price, steel companies had resorted tomore direct sales.

Till 1997, SAIL sold 60 per cent of the eight million tonne of steel itmarkets in a year, making the infrastructure-building block easily availableto small customers. Since 1997 the company has resorted more to direct salesand its customer base has also shrunk to a clutch of large industrial usersof steel.

The re-introduction of the factory gate price for excise purposes will alsogive a leg-up to Tata Iron and Steel Company (Tisco), the Rashtriya IspatNigam Limited (RINL) and the ailing Indian Iron and Steel Company(Iisco).

The relative newcomers to the steel market, like Essar Steel, Jindal Stripsand Ispat Industries sell directly from their plant sites in any case.

Sinha also scrapped Section 3A of the Excise Rules introduced in 1995-96,which entitled induction furnaces and re-rolling mills to a flat rate ofduty based on their steel-making capacity. The excise rule was intended tobring small steel-makers within the tax net.

It also provided considerable relief to small induction furnaces andre-rolling mills, which had since been charged a flat rate of Rs 750 a tonneon their steel making capacity. The concessional duty rankled with all othersteel companies, that had to pay 16 per cent excise ad valorem.

Steel companies and their associations like the Indian Stainless SteelDevelopment Association (ISSDA) have protested against the dual excise ratein their pre-Budget memoranda. Now that the steel industry has a uniformexcise duty of 16 per cent, even the small market players seem happy.

President of the All India Induction Furnaces Association Jitendra Singhsaid in a statement that he welcomed the scrapping of Section 3A of theExcise Rules. ``This will enable the industry to get Modvat on many itemswhich were withdrawn earlier,'' Singh says, adding that induction furnacesmay also get Modvat credit on imported steel melting scrap.