To prevent oil flight, India imposes additional duty

Chennai, July 1 The Central government on Thursday announced a special additional excise duty on exports of crude, petrol, diesel, and aviation turbine fuel, but it will not have any impact on domestic prices.

The measure is taken to discourage exports and to avoid artificial scarcity in the domestic market.

The government announced the levy cess of Rs 23,250/ton on crude oil as special additional excise duty, since domestic crude producers sell to domestic refineries at international parity prices, and as a result, are making windfall gains. Taking this into account, a cess of Rs 23,250 per tonne has been imposed on crude.

Import of crude would not be subject to this cess.

Further, small producers, whose annual production of crude in the preceding financial year is less than two million barrels, will be exempt from this cess.

Also, to incentivise additional production over preceding year, no cess will be imposed on such quantity of crude that is produced in excess of last year production by a crude producer, the government said.

As regards diesel and petrol exports, additional excise duty/cess of Rs 6/litre on petrol and Rs 13/litre on diesel were announced.

While crude prices have increased sharply in recent months, the prices of diesel and petrol have shown a sharper increase.

The refiners export these products at globally prevailing prices, which are very high. As exports are becoming highly remunerative, it has been seen that certain refiners are drying out their pumps in the domestic market, the government said.

At the same time, the export policy condition has been imposed by the Directorate General of Foreign Trade (DGFT) that the exporters would be required to declare, at the time of exports, that 50 per cent of the quantity mentioned in the shipping bill has been/will be supplied in the domestic market during the current financial year.

Similarly in the case of ATF exports, a special additional excise duty of Rs 6/litre has been imposed.