Ministries Lock Horns On Lpg Excise On Lpg

The finance and petroleum ministries have locked horns over the assessable value for imposing excise duty on liquefied petroleum gas (LPG).

The revenue department feels the price of gas at the refinery gates should be the reference price. The petroleum ministry maintains that the assessment should be on the basis of the retail price of LPG cylinders.

Public sector oil companies are battling it out with the revenue department over this contentious issue. Indian Oil Corporation (IOC) has appealed to the Central Excise and Gold Control Appellate Tribunal (Cegat) against an order by the revenue department that confirmed a duty of Rs 43.47 to be paid by the company.

The excise commissioner (Baroda) had earlier confirmed a duty of Rs 43.3 crore against IOC in October 1997 as duty payable on its gas cleared in bulk. Similar cases came up in Calcutta and Mathura.

IOC deposited Rs 10 crore with Cegat in June for its appeal to be taken up by the tribunal. The decision of the Cegat could break the impasse.

According to petroleum ministry officials, the retail price of LPG cylinders is much lower than the price of gas cleared from the refineries because of the subsidy on LPG.

The ministry has pointed out that since the LPG cylinders are ultimately sold to the consumers at subsidised rates, it would amount to an additional burden on the ministry if excise duty is imposed on the higher bulk price of gas.

The petroleum ministry maintains that in case of gas purchased by industrial buyers, excise assessment could be on the basis of the bulk price. However, for LPG cylinders, the subsided retail price should be taken as the assessable value.