Date:21/04/2005 URL: http://www.thehindu.com/2005/04/21/stories/2005042105061800.htm

Business

Panel favours duty recast in oil products

Special Correspondent

The panel has expressed `serious concern' over excise hike

Any price reform in the oil sector should keep the interests of the customer in mind.

NEW DELHI: Concerned over the prospect of higher consumer prices for petroleum products, a parliamentary panel has called for restructuring of excise duties levied in the budget to ensure that these are "revenue neutral.'' It has recommended that the new excise duties on oil products should be so structured that the additional revenue of Rs. 3,000 crores is neutralised in line with the commitment made in the budget.

The committee, headed by N. Janardhana Reddy, has noted that some changes were made in the tax levies on crude oil and petroleum products from March 1 this year in the budget proposals for 2005-06. Though these changes were projected to be revenue neutral by the Finance Ministry, they actually resulted in an incremental revenue of Rs. 3,000 crores to the Central Exchequer. This was possible, it stated, as the effect of the customs duty cut was not only neutralised, but also supplemented by the changes made in excise levies. "Thus, whatever has been given by one hand has been taken away by the other,'' it said.

The committee's report, which was laid on the table of the Lok Sabha today, anticipates that the added burden on the excise front would be passed on to the customer in the name of the exorbitant rise in international prices of these products. It has expressed "serious concern" over the excise duty hike in the most commonly used petroleum products, especially at a time when the international prices of these products have reached an all time high.

"Any price reform in the oil sector should keep the interests of the customer in mind and attempt at rationalising the duty structure in such a way that the cascading effect of international petroleum prices does not weigh down the customer,'' it says.

The committee has also urged the Government to direct the public sector oil companies to pull up their socks and not miss the deadline for Euro III fuels all over the country and the revised deadline for Euro II diesel in the remaining States.