ISLAMABAD, June 2: The government is considering a proposal to review the rate of central excise duty (CED) on the cement in the upcoming budget of 2004-05. Well-placed sources told Dawn on Wednesday that the decision to review the rate was taken following the shortfall registered in the collection of CED from the cement due to slashing of CED rate by 25 per cent in the budget of 2003-04.

According to the sources, the tax authorities were strongly opposing the government move to further slash down the CED rate on cement as what they believed that reduction in rate resulted into decline in revenue collection.

They said that the direct slashing of CED rates by 28.6 per cent between fiscal year 1999-2000 to 2002-03 has been resulted in reduction in the central excise duty revenue by about 22 per cent even though the production of cement has kept on increasing at an average rate of 3.2 per cent.

The government had reduced the CED rate on cement to Rs750 per ton from Rs1,000 in the year 2003-04 with a view that it would result in increasing the production of cement.

And it was also hoped that the benefit of duty reduction would also be passed on to the consumers by reducing prices of cement at retail level. Contrary to this, the sources said that not only the revenue collection from the commodity declined during the current fiscal year but the average price of cement also moved up.

The total collection of CED from cement sector declined by 17.7 per cent to Rs7.6 billion during the July-April period of the current financial year against Rs9.2 billion the same period last year.

However, the statistics showed that the sales tax collection from cement stood at Rs3.5 billion during the July-April 2003-04 period against Rs3 billion the same period of the previous year, showing an increase of 16.7 per cent.

The statistics also showed that the average retail price of cement has increased to Rs240 per bag from Rs190.2 available before the announcement of budget of 2003-04.