Material Recycling Association of India is a National Association representing the interest of Ferrous and Non-Ferrous metal scrap trade and Industry. There are around 5000 SMES and MSME Associated with the Recycling of Aluminium in India and produce 50% of aluminium product through recycling route.
Aluminium scrap is the main raw material for the aluminium recycling industry. Due to unavailability of good and uniform quality scrap in India. Anomaly in GST structure for metal scrap is causing hardship to aluminium recycling industry Director General of Valuation (DGOV) has issued a valuation alert basis, which Custom authority are over valuing 20% to 30% above the invoice value for assessment of Custom Duty and IGST, due to which huge amount of GST is accumulated.
Also Value Addition in Aluminium Recycling is hardly around 12% to 15% of which Major items like Fuel and Fluxes are coming in GST. So the Net Value Addition is around 8 to 10 % whereas Duty is being paid on 20 to 30% to the higher value due to which Custom Authorities are not following custom act rules 14(1) for valuation and because of this, the GST had started accumulating in the books right from the beginning.
According to the above facts, the SMES and MSME are facing the heavy crunch of funds due to the blockage of funds in GST. On one side, they are paying Interest to Bank and on another side, their Crores of Rupees is lying with Government at Zero Interest. If this is not sorted in time, then it will be a big setback for the Aluminium Recycling Industries that gives Employment to around 1.50 Lac people in India of which 30% are Women Workers.
The GST on Scrap, which is at 18%, must be reduced to 12% in order to overcome the problems caused by Accumulation of the GST. In addition, there will be no loss for the Government, as the Finished Goods will be continuing to be charged at 18% as earlier. Our demand is to reduce GST on Scrap and not on Finished Goods. The Scrap should also be assessed on the Transaction Value and not the as per the Alerts of DGOV at Ports. This will help the SMES and MSMES to work with full efficiency, which is the Backbone of our Economy.