Price Hike on Petroleum products and reduction of Excise and Customs Duties?
CENTRAL Government has inserted S. No. 72B in Notification No. 21/02-Cus dated March 1, 2002 wherein all goods falling under Chapters 2710, 2711, 2712, 2713, 2714 or 2715 other than goods mentioned at S. Nos. 72 A, 73, 74A,74B, 75 E, 76, 77A, 488A and 488B shall attract a concessional basic customs duty of 5%.
In addition to this, the basis customs duty on motor spirit commonly known as petrol and high speed diesel oil is reduced from 7.5% to 2.5%. Further, all goods falling under Chapter 2709 00 00 i.e. crude oil are completely exempted from basic customs duty.
In the prevailing confusion, it appears that the Government has inadvertently imposed 5% basic customs duty on Aviation Turbine Fuel falling under Chapter 2710 19 20. In fact, goods falling under Chapter 2710 19 20 are notified at S. No. 77C of Notification No. 21/02-Cus. Since, the newly inserted S. No. 72B does not make any mention of excluding goods falling under 2710 19 20 notified at S. No. 77C, by virtue of the newly inserted S. No. 72B, Aviation Turbine Fuel falling under Chapter 2710 19 20 shall henceforth attract basic customs duty of 5%. Not exactly! ATF will now have two rates of duty – one is nil as per Sl. No 77C and one at 5 percent as per the newly inserted Sl. No. 72B. The importer can choose what rate he wants to pay!
Incidentally, India does not import ATF or petrol – Why then a Customs Duty? While deciding the domestic price of ATF, the Customs duty component is also taken into consideration and thus India sells the world's costliest ATF and petrol. The higher the Customs Duty, the higher the profits for the Oil Companies. So they may not want a nil rate and would be happy to have a 5 percent duty.
Further, the Central Government has also exempted High Speed Diesel Oil falling under Chapter 2710 19 30 and listed at S. No. 19 of Notification No. 4/2006-CE dated 01.03.2006 from levy of excise duty.
In addition to this, the Government has also exempted ‘c olour positive unexposed cinematographic film in rolls of any size and length' and ‘colour negative unexposed cinematographic film in rolls of 400 feet and 1000 feet' from levy of excise duty by inserting S. No. 73A in Notification No. 4/2006-CE dated 01.03.2006.
While Government has reduced basic customs duty on motor spirit commonly known as petrol, there was no effort to reduce basic excise duty.
NOTIFICATION NO. , Dated: June 25, 2011 and NOTIFICATION NO. , Dated: June 25, 2011