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NEW DELHI, March 6

THE Finance Ministry is unlikely to relent to the demands of a section of the tobacco industry to restore excise duty exemption granted to units manufacturing cigarettes, pan masala containing tobacco and other tobacco products in the North East.

The Finance Bill 2003 has withdrawn the benefit of excise duty exemption that was originally granted in July 1999.

The withdrawal, much to the disappointment of the tobacco industry, has now been done on a retrospective basis.

"It is quite unfortunate, but this has been done on account of the misuse of the exemption that has come to the notice of the department," the Chairman of the Central Board of Excise & Customs (CBEC) said.

Representatives of the cigarette and tobacco industry are agonised over the retrospective nature of the withdrawal. "It will send a very wrong signal to prospective investors in that region," they said.

The excise duty exemption originally formed part of the Government's package for the North-East and was announced by the Prime Minister, Mr Atal Bihari Vajpayee, after the dissolution of the 12th Lok Sabha.

Following protests from a section of industry, who sought a level playing field with units in the North-East, excise duty exemption to units manufacturing cigarettes was withdrawn in late December 1999, only to be restored in mid-January 2000.

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