Special additional duty on bulk petro products likely

Anupama Airy & Santosh Tiwary

New Delhi, Oct 14: The Centre is actively considering levying a special additional duty (SAD) of 4 per cent on bulk petroleum products including naphtha, fuel oil, high speed diesel (HSD), LSHS, aviation turbine fuel (ATF), bitumen and base oils.

However, this 4 per cent SAD will not be levied on LPG, kerosene and petrol, which are currently under the administered pricing mechanism (APM) and are being consumed directly by the retail sector through the dealers network.

Confirming the move senior finance ministry officials told The Financial Express that an announcement to this effect is expected to be made in the budget for 2002-03 and will be part of the measures to be taken by the centre for dismantling of APM from April 1, 2002.

Official sources disclosed that a simplified system of ad valorem excise duty was also likely to be adopted under which single uniform assessable tariff value would be fixed for each petroleum product.

As a result of this, officials said that depot-wise/destination wise assessable values need not be worked out for payment of excise duty. This move is also expected to reduce huge administrative costs to the oil companies as well as the excise collecting authorities.

Giving details, finance ministry officials said that levying a 4 per cent SAD is aimed at providing a level playing field to the domestic refineries vis-a-vis the direct imports being carried out by the consumers of these bulk products for their own consumption. This move, officials said will also take care of the sales tax anomalies prevailing in the country on these petroleum products.

“Bulk products which face threat from imports are mainly naphtha, fuel oil, LSHS, HSD, bitumen and base oils. Import of these products by the direct consumers for their own consumption and export of the same products by the refineries would create several logistics problems on account of port constraints. This will also result in huge losses to the country’s economy. To remove the sales tax anomalies and to provide a level playing field, it has been decided to levy a SAD of 4 per cent,” officials said.