Jet fuel import may be freed

New Delhi: In a move that could provide some respite to ailing airline companies, the government is looking at allowing them to import jet fuel on their own. Import of jet fuel under the open general licence (OGL) would allow airlines to avoid high sales tax levied by state governments varying from 12% to 23%.
OGL is the most liberalised form of import licence that does not place any export obligation on the importer. The airline industry, which suffered an estimated loss of Rs 10,000 crore in 2008-09 mainly on account of high fuel prices, excess capacity and weak demand, has sought the government’s support. Jet fuel is about 40-45% of the total operating cost of an airline.
The finance ministry is examining a proposal in this regard, a government official told ET. At present, aviation turbine fuel (ATF) can only be imported by Indian Oil Corporation, which is the designated agency, as it is a canalised item. While there is nil Customs duty on ATF import, it faces a countervailing duty of 7.5% in lieu of excise duty levied on domestic production.
However, when airlines purchase ATF for domestic consumption, they have to bear the burden of not just 7.5% CVD or excise duty but also sales tax levied by various states. Moreover, operators of airports, where fuelling takes place, also levy throughput or service charges that range from 3-4% over and above this.
20/08/09 Deepshikha Sikarwar & Nirbhay Kumar/Economic Times

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Categories: Foreign Aug 2009, Indian Aviation- In General Aug 2009, New Aug 2009