The Western India Sugar Mills Association (WISMA) has appealed to the Centre to intervene and restore the exemption granted earlier on the levy on ethanol in the interests of the sugar industry.
In a representation sent to the chairman of the Central Excise and Customs, the association has objected to the withdrawal of the exemption since this would have an impact on the committed supplies for the industry producing ethanol from molasses generated from cane crushed in the sugar season of 2015-16. The exemption was issued by the Central Excise and Customs in June 2015.
BB Thombare, president, WISMA, pointed out that when the companies have already invested based on the government’s commitment in arranging procurement, created inventory and taken loans and are yet to use two-thirds of the planned supplies of ethanol using this exemption, the sudden withdrawal would cause irreparable loss.
While the government cannot go back on its commitment, it only shakes the confidence of the companies who are producing ethanol, who are the conduits to implement government’s policy apart from suffering losses for no fault of theirs, he pointed out. The mills said that this government policy was against the principles of natural justice and the fundamental right of the company to carry on business based on certain assurances given by the government.
The millers said that in order to implement the spirit of the exemption given by the government and and support oil companies to enable 10% blending of ethanol with petrol the sugar industry offered more committed supplies of ethanol to OMCs (oil marketing companies) through the tender process.
The sugar industry had to take the decision to quote for the tender for committed supplies based on such exemption afforded with particular restriction of producing ethanol only out of molasses generated out of cane crushed the sugar season of 2015-16. Hence, all the members of the industry are not only bound by such quantum of production but are also to ensure such committed supplies, failing which OMCs could impose penalty of 7.5% of the price for the delay in supply. Further, every individual supplier needs to block huge inventory in terms of carrying molasses or intermediary output made from such molasses all of which has cost and consequences, Rohit Pawar, vice president, WISMA, said.