The finance ministry lost Rs 1,347 crore in revenue from crude oil imports during the first half of 2004-05 since about 30% of the crude imported was duty-free."There was a marked increase in import of crude oil under various exemption schemes for exports. Customs duty amounting to Rs 1,347 crore was foregone because of duty-free import of 11.58 million tonne under the exemption schemes," petroleum ministry officials said, citing explanation received from finance minister P Chidambaram. But for the loss, total revenue from crude would have been Rs 5,826 crore.In order to insulate consumers from the sharp spike in international crude prices, the petroleum ministry had been making a case for cutting import duty on crude saying the exchequer ought to have got higher revenues from increased crude prices and halving customs duty to 5% would be revenue-neutral.The finance ministry is refusing to cut duty, saying there had been no windfall profits from last year's spike in global crude prices."Customs duty realised on crude imports is considerably lower because of increase in duty-free imports, both in quantity and value terms. So long as this facility of duty-free imports continue, the growth in revenue from customs duty on crude imports would be substantially lower than the growth in value of crude imports," Chidambaram wrote topetroleum minister Mani Shankar Aiyar.
