Is LPG not a petroleum gas? Is 4% additional duty leviable on LPG? - Board’s clarification needed.
NOTIFICATION NO. , March 1, 2006 exempts
1. Petroleum crude,
2. kerosene for Public distribution scheme,
3. liquefied petroleum gas for domestic household consumers,
4. petrol,
5. diesel,
6. coal,
7. coke and
8. petroleum gases and fuels
falling under Chapter 27 from the 4% additional duty imposed on all goods this year. The TRU DO letter dated the 28th February 2006 also clarified as follows,
The 4% special CV duty, under section 3(5) of the Customs Tariff Act, 1975 which was imposed last year only on ITA goods and their parts/components, has been extended in general to all imports. It will apply to both agricultural and industrial products. This additional duty will not be included in the assessable value for levy of education cess on imported goods. Manufacturers will be able to take credit of this additional duty for payment of excise duty on their finished products. Articles of jewellery will, however, attract a lower rate of special CVD at 1%.
Some categories of imports, however, have been exempted from this special CVD. These are:
(a)Goods exempt from VAT;
(b)Goodsexemptedbothfrom basicandCVduty (includingCVduty exemption by way of excise duty exemption);
(c) Petroleum crude, kerosene for PDS, LPG for domestic supply, petrol, diesel, coal, coke and petroleum gases and fuels of Chapter 27;
So it can be seen that liquefied petroleum gas for domestic household consumers is exempted from the 4% duty, but there is another item petroleum gases which are also exempted. Both the notification and the TRU letter indicate these items.
Now an LPG importer imports LPG through different ports. Their contention is that LPG is a petroleum gas falling under Chapter 27 and so is eligible for exemption under Notification No. 20/2006 and some Custom Houses find reason in their plea and allow the exemption. But some other Custom Houses feel that the exemption is allowed only for LPG for domestic use.
But the notification exempts petroleum gases and there can be no dispute that LPG is a petroleum gas. If all petroleum gases are exempted, why mention LPG for domestic use specifically? Does such mention exclude LPG from the purview of Petroleum gases?
The poor importer is worried, confused and helpless, more so as the notification is understood differently in different Custom Houses. All his efforts to contact TRU failed. Contacting government officers over the phone is almost an impossible task.
This importer has another doubt. Can he pass on this 4% to his customers who are manufacturers? His doubt is because this duty is in place of VAT/Sales Tax.